Rolls-Royce Signs $2B, 10-Year Sub Agreement

Pictured is the HMS Vanguard nuclear submarine.

Rolls-Royce signed a 10-year contract with the UK Ministry of Defence worth $2 billion to help keep Royal Navy submarines at sea. The contract covers support of nuclear powerplant systems on board the current fleet of 13 Swiftsure, Trafalgar and Vanguard class submarines and the new Astute class submarines when they enter service.

The contract breaks new ground – Rolls-Royce and MoD will form a joint team to set agreed service levels, and the company will be paid for meeting those targets rather than through individual contracts.

Rolls-Royce will also receive additional incentive payments for improvements which create savings for the Ministry when the submarines are in service. Both parties will also share any savings made through improved business efficiency and effectiveness. The new working arrangements respond to the Ministry’s requirement for closer co-operation from its contractor base to better manage costs, as outlined in the Defence Industrial Strategy White Paper.

Minister of State for Defence Equipment and Support, Lord Drayson, said: “This landmark partnering contract ensures the United Kingdom secures its ability to manufacture and support this strategic equipment in the future. It will deliver more cost-effective management of submarine maintenance and safeguard jobs and essential skills in the UK. This is a key element of the Defence Industrial Strategy aimed at maximising benefits to the front line, and is a major step forward for the reshaping of those parts of our industries that support the vital military capabilities provided by Royal Navy nuclear submarines.”

Steve Ludlam, Rolls-Royce President – Submarines, said: “We are committed to working ever more closely with the MoD to reach jointly agreed goals. The long-term nature of the agreement allows both sides to better plan and prioritise, sharing the benefits of savings made.”

The contract covers technical support, management of spares, the provision of plant safety cases and product development capability. It is also another example of the Rolls-Royce strategy of adding value to customers’ operations across all sectors by developing long-term service agreements.