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MOD awards £800 million submarine propulsion contract

The MOD has awarded an £800 million contract to Rolls-Royce to deliver and maintain the UK's nuclear propulsion capability for submarines.

Under the 10-year contract, which will help sustain around 2,000 jobs across the UK, Rolls-Royce will deliver and maintain the nuclear power source for the Royal Navy’s Astute Class and future Successor deterrent submarines.

Part of the Submarine enterprise performance programme (SEPP), this contract will also help the company to transform its operations to carry out its work at best value for the taxpayer. By consolidating costs into one agreement, MOD and Rolls-Royce expect to make savings of around £200 million over the next decade.

This contract goes a long way towards meeting the government’s commitment to SEPP, as announced in the 2010 Strategic defence and security review, to make at least £900 million of savings by restructuring the UK’s nuclear submarine industry.

Productive negotiations between MOD and Rolls-Royce mean the savings secured by this contract will not lead to any reduction in the required level of output for the submarine programme, which includes the production of the propulsion systems for the Astute and next-generation Successor classes of submarines.

Minister for Defence Equipment, Support and Technology Philip Dunne said:

This contract provides the company with long-term certainty and stability which will help sustain around 2,000 jobs whilst also providing a better deal for the taxpayer and ensuring our future plans remain affordable.

By making sure the submarine industry is aligned to the needs of the MOD we are able to press on with the Astute and Successor submarine programmes safe in the knowledge that the value of our significant investment is being maximised.

Mr Dunne added:

Rolls-Royce’s work in the production of submarine propulsion systems is an important national strategic capability. It is necessary in order to meet the present and future defence and security needs of the UK and this contract ensures the MOD can continue to benefit from this unique capability on the best possible business terms.

Contracts to deliver further savings with BAE Systems Maritime Submarines and Babcock Marine are expected to be announced in due course.

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