Rolls-Royce, the British engineering firm, has secured its largest contract to date with the UK’s Ministry of Defense—a £9 billion ($11 billion) agreement to produce nuclear submarine reactors for the Royal Navy.
The eight-year Unity contract with Rolls-Royce Submarines will see the company design, manufacture, and provide support services for nuclear reactors used in the UK’s submarine fleet.
“This investment in Britain’s defence will deliver a long-term boost to British business, jobs and national security,” said the defence secretary, John Healey. “National security is a foundation of our government’s plan for change, and this is a clear demonstration of our commitment to the UK’s nuclear deterrent, which is our ultimate insurance policy in a more dangerous world.”
Healey is set to unveil the deal during a visit to Rolls-Royce’s nuclear reactor facility in Derby. The deal will improve UK national security, boost economic growth, create over 1,000 new jobs, and protect 4,000 existing positions, the UK government said in statement on January 24.
The nuclear deterrent, which has been in place since 1969, ensures that at least one Rolls-Royce-powered, nuclear-armed submarine is always on operational patrol.
The UK government said the new contract “streamlines” previous deals and “incentivizes more efficient delivery”, with estimated savings of £400 million during contract’s eight-year term.
“This will generate more efficiency and allow for effective risk and opportunity management, providing incentives to produce more for no increase in cost,” the government said. “Including on work such as the building of Dreadnought class submarines.”
The government said the deal also showed its commitment to the “triple lock” nuclear deterrent, which includes building four new nuclear submarines at Barrow-in-Furness in Cumbria, and maintaining a “continuous at-sea deterrent”.
UK’s nuclear ‘triple-lock’ commitment
The deal reinforces UK government’s commitment to the “triple lock” nuclear deterrent, which includes constructing four new nuclear submarines in Barrow-in-Furness, Cumbria, and ensuring a “continuous at-sea deterrent,” it added.
“This long-term contract enables us to invest in the right skills, equipment and facilities to play our part in protecting UK interests at home and overseas,” said Steve Carlier, the president of Rolls-Royce Submarines.
Rolls-Royce was nominated as the reactor provider for a new fleet of nuclear submarines in March 2023, as part of a defense pact between the UK, US, and Australia named Aukus. The submarines will be built in Britain and Australia but will technology from all three member countries.
The AUKUS pact has faced challenges, including a €550m (£465m) settlement paid by Australia in 2022 to France’s Naval Group after canceling a $90bn contract for attack-class submarines. Replacing the deal, AUKUS involves the US and UK aiding Australia in acquiring at least eight nuclear-powered submarines and advancing technology collaboration.
Meanwhile, Rolls-Royce launched a nuclear skills academy in Derby in 2022, aiming to train 200 apprentices annually for a decade.
Rolls-Royce Submarines is expanding its Raynesway site, doubling its size, and has recently begun operations in newly constructed warehouses at Pride Park.
“[The deal] is a clear signal of our commitment to deliver greater effectiveness, efficiency and agility to meet the needs of the defence nuclear enterprise and support the Royal Navy’s submarines now and in the future,” said Chris Gardner, the chief executive of the Submarine Delivery Agency. “It will also enable a critical pipeline of home-grown nuclear skills and provides Rolls-Royce with the longer-term contractual security to plan and develop the existing and future workforce”.