Engineering giant Rolls-Royce has struck an £800m deal with the Ministry of Defence, cementing its place as supplier of nuclear propulsion technology to the military for the next decade.
In a deal which the MoD says will save the public purse £200m and sustain 2,000 British jobs, the government has committed to covering Rolls’ overhead costs for the next 10 years.
The contract follows on from an agreement made in June last year, when Rolls secured £1.1bn from the government to revamp its Derby production plant.
It consolidates around 100 existing contracts between the manufacturer and the MoD and is the first of three deals the Ministry is expected to sign.
In a written statement to MPs, Defence Minister Philip Dunne said the contract covered the overhead, running and business costs at Rolls-Royce Submarines sites.
He said the new deal consolidated costs, focussed on efficiency and secured future terms and conditions between the firm and the MoD.
Jason Smith, Rolls-Royce chief operating officer and head of its submarines unit 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.”
The deal was struck weeks before Chancellor George Osborne unveils his 2013 budget, which is widely expected to feature further defence spending cuts, after the MoD absorbed around a fifth of total savings announced in the Autumn statement.
Britain’s 2010 Strategic Defence and Security Review (SDSR) set the course for future UK defence spending, in which the government said it would cut spending by 8pc up to 2015.
Source – The Telegraph