Nasa has handed defence technology firm Qinetiq a timely boost with a £1.2 billion contract for engineering work at its Kennedy Space Centre.

Qinetiq, which employs 1,200 people in Malvern, won the deal through its North American operation and is expected to start work at the space centre in Florida next March, although final details of the deal are still being thrashed out.

The contract will last at least five years, with a base deal worth £99million and the possibility of a further £1.1 billion in work.

The move is a timely boost for Qinetiq which, despite revealing half-year sales growth of seven per cent last week to £864.9 million, has been hit by defence cuts as a result of the Government’s spending review.

It is facing a major spending clampdown by the Ministry of Defence, while it is also vulnerable to defence cuts in the US where it has significant operations.

But shares in Qinetiq – which had dipped about 10 per cent in the weeks following the spending review – rose in early trading after the announcement.

Claire Scotter, external communications manager for Qinetiq, said it was too early to assess the impact of the spending review on the firm.

She said: “It is early days. We are not a prime contractor – we don’t build warships or fighter jets – so it’s not a case of a contract being terminated which will impact directly.

“We supply a number of support services and provide an urgent operations requirement – if a problem is identified by the MoD they may ask us to look into it and make improvements – it is not as obvious because we plug into a number of areas across the MoD – providing expert technical advice – so it is not immediate or obvious where the impact will be, if any at all.”

Qinetiq’s work for Nasa will include designing and developing ground systems and equipment for ground processing of Nasa launch vehicles and spacecraft, as well as technology for Nasa mission requirements.

It has staff in nearly every North American state and does work for the Homeland Security Agencies and the Department of Energy. The US division was formed through a string of acquisitions, starting with American firms Westar and Foster-Miller in 2004.

The announcement came just days after the company revealed strong sales rises and a reduction in net debt from £452.3 million at this stage last year to £327 million.

Underlying pre-tax profits rose from £45.1 million to £51.6 million.