Service Contract for RB199 Engines

Thursday 15 December, 2005

  MINISTRY OF DEFENCE AND ROLLS-ROYCE SIGN £185 MILLION SERVICE CONTRACT FOR   
                                 RB199 ENGINES                                 

The Ministry of Defence (MoD) and Rolls-Royce have signed an
innovative service support contract for the RB199 engine, which powers the
MoD's fleet of Tornado aircraft in service with the Royal Air Force.

Under the £185 million agreement, Rolls-Royce will undertake responsibility for
the full engine support and will guarantee an agreed level of availability.

This new five-year RB199 Operational Contract for Engine Transformation (ROCET)
follows on from a successful pilot scheme, under which Rolls-Royce guaranteed
availability on three modules of the RB199 engine.

This demonstrated substantial cost savings due to a 34 per cent reduction in
module repairs, despite the number of aircraft flying hours exceeding the
originally planned level.

Under the terms of the contract, Rolls-Royce is the prime contractor for all
repair and overhaul activity, encompassing full responsibility for spares
provisioning, inventory management, technical and logistics support to the
first line customer.

Other contractors that will support the engine availability include Goodrich
Engine Control Systems, Birmingham and Wood Group Accessories and Components
Ltd, Dundee.

Colin Green, President - Rolls-Royce Defence Aerospace, said: "This contract
award highlights the degree of confidence that the MoD has in Rolls-Royce to
provide innovative support arrangements that benefit both the customer and the
company. We have proved that, through Mission Ready Management Solutions, we
can improve operating availability and reduce costs. It's a win - win solution."

NOTE TO EDITORS

 1. One of the key concepts that has been successfully demonstrated since
    service delivery began on October 1 2003 is the benefit of a common
    incentive to minimise the cost of RB199 support, through a contractual
    mechanism which enables all parties to share in the financial rewards.
   
 2. This "win-win" arrangement allows industry to satisfy its requirement to
    provide a return to shareholders, whilst delivering cost reduction to the
    DLO, which contrasts with the traditional "win-lose" arrangement through
    which industry profits were only increasable by increases in DLO cost and
    vice versa.
   
 3. Rolls-Royce will manage all repair and overhaul work, using its own
    facilities at Ansty, near Coventry, and Wood Group Accessories and
    Components Ltd. Rolls-Royce has also undertaken all spares provisioning.
   
 4. In order to deliver sustained reduced cost of ownership, Rolls-Royce has
    demonstrated a significant improvement in repair turnaround times and
    reduced spares consumption.
   
For further information please contact:

Nick Britton
Communications Manager - Defence
Rolls-Royce plc
Tel: [phone]
Email: [e-mail]

Bob Bates
DLO Sec (Strike) Media Enquiries
Tel: [phone] x7801
Fax: [phone]
Email: [e-mail]