London is prepared to spend $802 million on the project, and has selected two companies to begin work.
"The Ministry of Defence has chosen BAE Systems and Rheinmetall Landsysteme as preferred bidders for the assessment phase of the Challenger 2 life extension project," a spokesman for the Defence Equipment & Support organization said on Wednesday, according to Defense News.
"[This is an] important step forward as we continue to work with industry to deliver a key equipment program for the UK’s armed forces."
Each company will receive roughly $28 million for the initial phase.
Lockheed martin, CMI Defence of Belgium, and RUAG of Switzerland placed bids, but were ultimately not chosen.
"We have been informed that we have not been taken forward as a preferred bidder for the Challenger 2 life extension project," a spokeswoman for Lockheed Martin UK said.
"We are disappointed in this decision as we believe our proposal showed our capability and experience, creating and safeguarding British jobs and offering a de-risked yet innovative solution."
While the Ministry of Defense is primarily focused on updating the tank’s turret systems, other aspects of the vehicle will also be looked into.
"Our team has put together an innovative proposal to solve not only the obsolescence issues of the Challenger 2 but to also cost effectively enhance the capabilities," Ben Hudson, head of Rheinmetall’s Vehicle Systems Division, said in a press statement, according to Defense News.
"One example of this is that our solution can integrate either the existing 120mm L30 rifled gun or our proven 120mm L55 smooth bore system that is in service with the German Army."
"When combined with the new optronics, situational awareness and fire control systems our solution will allow the Challenger 2 to fight, survive and win on the battlefields of today and tomorrow," he added.
