Re Contract

Babcock International Group PLC
25 March 2002


Date:                               25th March 2002
Contact:                            Gordon Campbell, Executive Chairman

                                    Bill Tame, Group Finance Director

                                    Babcock International Group PLC

                                    Telephone: [phone]
                                    Ginny Pulbrook

                                    Citigate Dewe Rogerson

                                    Telephone: [phone]



                        Babcock International Group PLC

                         New £300m - £400m Contract Win



Babcock International Group are delighted to announce that the Secretary of
State for Defence, Mr Geoff Hoon, has today confirmed the Ministry of Defence's
intention to place a 5 year partnering contract, with an option to extend, worth
some £300m - £400m with Babcock Naval Services Ltd for the provision of support
services at HM Naval Base Clyde. This announcement follows a rigorous evaluation
of the potential options for improving value-for-money associated with delivery
of services to the Royal Navy at Faslane and Coulport and forms part of the
MoD's Warship Support Modernisation initiative. Babcock will work with the MoD
to meet the joint aim of delivering high quality support to the Royal Navy
whilst also achieving the Defence Logistics Organisation's stated aim of
reducing operating costs by at least 20% by 2005. The contract is expected to
commence in the third quarter of 2002.

As part of this arrangement the MoD will transfer around 1750 staff to Babcock
Naval Services and Babcock will manage around 500 Royal Navy personnel on
secondment. The company will be responsible for all engineering support and a
wide variety of other services associated with the two facilities and the Royal
Navy personnel stationed there. The Ministry of Defence will retain overall
responsibility for the Naval Base and will continue to directly control security
and management of the Trident Weapon System.

Following this announcement, Babcock Chairman Gordon Campbell said 'We are
delighted to have this opportunity to work with the Ministry of Defence at
Faslane and Coulport. This major new opportunity highlights our expertise as a
leading supplier and is entirely consistent with our strategy of focusing on
support services and facilities management.'

Commodore John Borley, Director Naval Base (Clyde) said 'We are confident that
by working with Babcock we can provide the Royal Navy with improved levels of
service and obtain better value for money. The Company's recognition of the
skills and experience of the workforce is an important feature of their
approach, and I have noted carefully their commitment to work with the Trade
Unions and staff in implementing change. '

Notes for Editors: Babcock International Group PLC

Babcock International Group PLC is a support services business primarily
supplying technical support services and facilities management to the Ministry
of Defence. Sales in the 6 months to 30th September 2001 were £227 million.

Babcock's head office is in London and the Company's shares are quoted on the
London Stock Exchange. For further information, please visit Babcock's website
at www.babcock.co.uk.




  • Babcock have managed Rosyth dockyard since it was contractorised in 1987
    and subsequently privatised in 1997. Rosyth currently employs 2,100 people
    providing support to the Royal Navy and a number of other customers in the
    UK and overseas.

  • The Warship Support Modernisation Initiative has looked at options for
    dealing with over-capacity and reducing the cost of providing support at the
    3 Naval Bases (Clyde, Devonport in Plymouth and Portsmouth) and the
    dockyards in Rosyth, Devonport and Portsmouth.

  • The Faslane and Coulport sites which make up HM Naval Base Clyde currently
    employ around 2800 civilians.

  • HM Naval Base Clyde is home to the Vanguard class nuclear powered
    submarines which deploy the Trident Strategic deterrent as well as Nuclear
    powered hunter / killer submarines and a number of mine-warfare vessels.

  • The Defence of Logistics Organisation was created in April 1999 and is
    headed by General Sam Cowan as Chief of Defence Logistics.

  • The Warship Support Agency was formed in April 2000 following the merger
    of the MoD Ship Support Agency and the Naval Base Supply Agency. The WSA is
    responsible for the management of the 3 UK Naval Bases and the repair /
    refit activity which utilises, amongst others, the 3 naval dockyards.

  • HM Naval Base Clyde is a nuclear authorised facility under the regulation
    of the MoD Naval Nuclear Regulatory Panel.




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