Rolls Royce agrees contract with MoD worth 800m pounds

Rolls-Royce, the FTSE 100 global power systems company, has shaken hands with the Ministry of Defence (MoD) on a new 10-year enabling contract that will sustain as many as 2,000 jobs in the UK.

The contact, which is valued at around £800m, will deliver costs savings of £200m to the MoD in the provision of nuclear propulsion systems for the UK's existing and future submarine flotilla.

The cost-savings will be brought about by the delivery of a step-change in operational efficiency, the group said.

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Jason Smith, Rolls-Royce President of Submarines, continued: "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."

Back in 2010, Rolls-Royce, as part of an industry-wide move, committed to the delivery of cost savings of in excess of £900m over a ten-year period by the creation of a Submarines Enterprise Performance Programme (SEPP). The company said the savings enabled by the contract "represent a significant step forward" in meeting that commitment.

The share price climbed 1.54% to 986p by 14:14.