Rolls-Royce and MOD agree new contract to deliver cost savings

Rolls-Royce, the global power systems company, and the Ministry of Defence (MOD) have agreed a new ten-year enabling contract which will sustain up to 2000 jobs in the UK and deliver up to £200 million savings to the MOD.

This new 10-year contract, worth around £800 million, provides the long-term commitment required to deliver a step change in operational efficiency, enabling cost savings in the provision of nuclear propulsion systems for the UK's existing and future submarine flotilla.

Jason Smith, Rolls-Royce President Submarines and Chief Operating Officer – Nuclear said: "I am pleased that we have agreed this enabling contract with the MOD which delivers significant savings to them over the next ten years and provides us with the stability to deliver these activities efficiently. It further reinforces the commitment to the submarine programme."

Contracts for products and services to deliver the submarine programme will continue in parallel to this enabling contract.

The 2010 Strategic Defence and Security Review led to a commitment by the industry, including Rolls-Royce, to deliver cost savings of in excess of £900million over a ten-year period by the creation of a Submarines Enterprise Performance Programme (SEPP). The savings enabled by this contract represent a significant step forward in meeting that commitment.

Source: Rolls-Royce Plc (LSE: RR.L)
Date: Feb 14, 2013