£800 million contract for nuclear submarine reactor production

The Ministry of Defence (MoD) has agreed a ten year contract worth around £800 million with Rolls-Royce Submarines to deliver and maintain nuclear propulsion plants for the Royal Navy's nuclear powered submarines.

The contract – described as an “enabling contract” by Rolls-Royce and a "foundation contract" by the Ministry of Defence – will assist the company in taking forward a programme for construction of nuclear power plants for the remaining Astute class submarines and for the 'Successor' Trident replacement submarine, if Parliament gives the go-ahead  for the Successor programme after the next election.  According to the Ministry of Defence, the contract covers overheads, running and business costs at Rolls-Royce Submarines’ sites. Historically, these costs were included in each individual contract placed with the company, but the new contract 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 new contract does not cover the delivery of individual reactors or components for the submarine programme, which Rolls-Royce says will be covered by separate contracts which will “continue in parallel to this enabling contract”.

The contract is part of the Submarine Enterprise Performance Programme (SEPP) – MoD's programme for reducing the costs of its submarine programme.  MoD expects the contract to deliver savings of around £200 million over the next decade.  The 2010 Strategic Defence and Security Review announced that SEPP would eventually deliver £900 million in savings from the defence budget by restructuring the UK's nuclear submarine industry.

MoD has said that further SEPP contracts with BAE Systems and Babcock International, the other major industrial contractors for its submarine programme, will be announced in the near future.

Rolls Royce is the sole Ministry of Defence Technical Authority for submarine nuclear steam raising plant and has manufactured reactors and propulsion plants for the whole of the UK's Royal Navy submarine fleet over its 50 years of operation.

In June 2012 MoD announced that Rolls-Royce had been awarded a £1.1 billion contract to sustain reactor core production at its Raynesway plant in Derby and refurbish the Raynesway site.

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