AW, agree that it would be nice to be buying off the shelf stuff but economically it just makes no sense, and it's money that the guys with the purse strings care about. If we buy from westlands etc then it's 40>50% cheaper than the face value in the long run, as HMG gets all the tax straight back in to the coffers, from the tax on the company, the tax on the wages their employees earn and the tax on the money their employees subsequently spend.
For small projects (eg body armour!) this really shouldn't be a factor as it's peanuts in the grand scheme, but when it comes to projects on the scale of T45/Merlin (and to a lesser extent Typhoon, as it's multinational and therefore the reaped revenue will presumably be less) the amount of money regained is huge.