Rolls-Royce Submarines (Foundation Contract)

Wednesday 13th February 2013 Written Statements

[The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne)]

I am pleased to announce that the Ministry of Defence has awarded a 10-year foundation contract to Rolls-Royce Submarines worth around £800 million that will underpin the future delivery and support of the UK’s nuclear propulsion capability. This is the first of three foundation contracts, to be signed as part of the MOD’s submarine enterprise performance programme (SEPP), and will enable savings to the MOD of around £200 million.

The SEPP aims to deliver at least £900 million of savings across the Royal Navy’s submarine programmes by 2020-21, by improving commercial arrangements with industry partners. This was announced in “Securing Britain in an Age of Uncertainty: The Strategic Defence and Security Review” (Cm 7948, 19 October 2010).

The foundation contract covers the overhead, running and business costs at Rolls-Royce Submarines’ sites. Historically, these costs were included in each individual contract placed with the company. This new foundation contract, however, will consolidate these costs, focus on efficiency, and will secure key terms and conditions for future contracts between the MOD and Rolls-Royce Submarines.

The foundation contract will help sustain around 2,000 jobs at Rolls-Royce Submarines in the UK, which provides a unique national strategic capability that has a vital role to play in meeting the present and future defence and security needs of the UK.

The MOD is in similar negotiations with its other tier 1 industry partners in the submarine enterprise: BAE Systems Maritime—Submarines; and Babcock Marine. I shall make further announcements in due course.