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

Wednesday, 13 February 2013

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.

  1. Rolls-Royce is a world-leading provider of power systems and services for use on land, at sea and in the air, and has established a strong position in global markets - civil aerospace, defence aerospace, marine and energy.
  2. Annual underlying revenue was £11.3 billion in 2011, of which more than half came from the provision of services. The firm and announced order book stood at £60.1 billion at 30 June 2012, providing visibility of future levels of activity.
  3. Rolls-Royce employs over 40,000 people in offices, manufacturing and service facilities in over 50 countries. Over 11,000 of these employees are engineers.
  4. In 2011, Rolls-Royce invested £908 million on research and development, two thirds of which had the objective of further improving the environmental performance of its products, in particular reducing emissions.
  5. Rolls-Royce supports a global network of 28 University Technology Centres, which connect the company's engineers with the forefront of scientific research.
  6. Rolls-Royce has a large and highly experienced nuclear skills base with approximately 3,000 employees in the UK, France, the Czech Republic, North America and China.
  7. The Group is the sole Technical Authority for the UK Nuclear Steam Raising Plant and has powered the whole of the UK's Royal Navy submarine fleet for 50 years.
  8. In the civil nuclear market, Rolls-Royce provides nuclear power utility vendors and operators with integrated, long-term solutions and support services. These services span the whole reactor lifecycle, from concept design through to obsolescence management and plant life extension.

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