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MARK AUSTIN THOMAS: America’s biggest defense companies are looking for takeover targets in Britain according to the London Times. The paper reports Lockheed and Boeing are seeking acquisitions as a way of winning more contracts in the U.K. From London, Stephen Beard reports.

STEPHEN BEARD: Boeing and Lockheed Martin, says the Times, are looking to spend up to $10 billion buying British defense companies.

The spending spree has been triggered by the British government. Last year the Ministry of Defense ruled that foreign-owned companies would be awarded key British defense contracts so long as the company was firmly based in Britain.

The message could not have been clearer, says David Robertson of the Times.

DAVID ROBERTSON: If you’re an American company, a Boeing or a Lockheed Martin, and if you want to win British military contracts you have to have a British presence, you have to be employing British people, British scientists, British engineers. Otherwise you have no chance.

But the influx of foreign owners isn’t popular with everyone.

The head of one of Britain’s biggest engineering firms has warned that foreign companies are turning the U.K. into an aircraft carrier, an outpost for other countries raiding profits here and not investing in the U.K.

In London, this is Stephen Beard for Marketplace.

THOMAS: Speaking of defense contracts, three auditors who reviewed contracts for Iraqi reconstruction aid had some sobering news for Congress yesterday.

During testimony on Capitol Hill they said $10 billion had been wasted due to things like overcharges and unsupported expenses. They also warned more taxpayer money could be wasted with plans to send additional troops to Iraq.

Senator John Kerry is co-sponsor of a bill to get tough on contractors.

JOHN KERRY: We’re gonna provide steeper penalties for war profiteers, fuller disclosure of contracting abuse. No more contracts to companies that cheat us. You don’t cheat and turn around and come back and get a chance to cheat again.

So far the government has spent more than $350 billion on the war in Iraq and reconstruction.