Investing.com -- Rolls-Royce (LON:RR) on Friday said that it has won the biggest defence contract in its history, as the UK Ministry of Defence (MoD) awarded the engineering giant a £9 billion deal to oversee the development and support of nuclear reactors for the Royal Navy’s submarine fleet.
Known as the Unity (NYSE:U) contract, this eight-year agreement integrates various aspects of the submarine programme, including research, design, manufacturing, and maintenance.
The Unity contract will support not only the Royal Navy’s existing submarine fleet but also the construction and commissioning of the new Dreadnought-class submarines.
Additionally, it includes the early stages of the SSN-AUKUS programme, a trilateral defence initiative between the UK, the US, and Australia to develop nuclear-powered attack submarines.
This agreement combines several existing and future projects into a single framework. It aims to streamline operations, enhance efficiency, and provide consistent support for the Royal Navy's submarines.
“The contract is the first of its kind awarded by the UK MoD and is the culmination of years of planning between Rolls-Royce and UK MoD, potentially creating a new way of doing business between Government and industry,” the company said in a statement.
This project will benefit the UK economy by creating 1,000 new jobs within Rolls-Royce Submarines. Most of these jobs will be based in Derby, but new offices in Glasgow and Cardiff will also see growth.
The Unity contract is anticipated to enhance the UK's nuclear expertise. This is crucial as demand for these skills grows in both defense and civilian sectors.
“This investment in Britain’s defence will deliver a long-term boost to British business, jobs and national security,” said John Healey, Secretary of State for Defence of the United Kingdom (TADAWUL:4280), in a statement.
Rolls-Royce stressed the importance of developing domestic talent. The contract is expected to strengthen the overall UK nuclear industry and improve long-term resilience.
The contract will benefit the UK supply chain, as most suppliers are located within the country.
The extended project duration and scope will foster stronger supplier relationships, leading to increased capabilities, competition, and economic advantages.