Re Contract

BAE SYSTEMS PLC
30 January 2003

                           MOD SELECTS BAE SYSTEMS AS

                      UK AIRCRAFT CARRIER PRIME CONTRACTOR

The UK Ministry of Defence has chosen BAE SYSTEMS as the Prime Contractor for
the design, development, construction, systems integration and support of the UK
Royal Navy's two new aircraft carriers, as announced by the Secretary of State
for Defence, Geoff Hoon.

These two new flagships will be the largest warships ever ordered and ever
constructed in the United Kingdom. This will also be the largest single naval
procurement, production and support programme which the UK has seen in more than
50 years, with an overall government budget of £10 billion through a service
life of up to 50 years.

As a result of the size and complexity of the programme, BAE SYSTEMS' approach
throughout the competition has been based on collaboration with key partners in
UK and US industry. The MOD has chosen the Thales team's carrier concept design,
and BAE SYSTEMS welcomes Thales as a key supplier, who will bring many strengths
to the programme. The approach the MOD is taking in the next stage will
capitalise on the significant work done thus far in the competition by both
teams.

BAE SYSTEMS, Thales and the MOD will now engage in discussions to determine the
detail for the structure of the proposed alliance. In parallel, that team will
ensure that critical elements of the design work continue to move forward, so
that the programme remains on schedule.

Chris Geoghegan, Chief Operating Officer, BAE SYSTEMS, said 'We are delighted
that BAE SYSTEMS has been chosen to be Prime Contractor for Britain's biggest
ever warship contract, the next generation Carrier. We will be taking
responsibility for the design and integration of the highly complex systems, as
well as for the construction and support of a vital British naval system
expected to be in service for the next 50 years.'

'Our task now is to work with the MoD to bring together the best industrial
capability Britain can offer. We look forward to working with key suppliers,
including Thales, to deliver to the Royal Navy a world class sea system, vital
for the protection of our national interest.'

Nigel Stewart, BAE SYSTEMS Future Carrier Managing Director, said 'Our
collaborative approach throughout has been consistent, as a project of this size
and complexity can only succeed through partnership and collaboration. We have
secured robust relationships with industrial partners. We are looking forward to
building on our current relationships with Thales and all the other supplier
companies, continuing the excellent working relationship we have with the MOD
and the Royal Navy customer on this very important programme.

Key to this team's success will be devising a successful approach to the rest of
this programme, and the excellence of the major suppliers chosen.

'The MOD cited our clear understanding of the programme and our excellent
relationship with our UK shipbuilding partners as key influencing factors in
their decision. We are going to build on those, and the new team's expertise, to
form up around the MOD and get on with building these formidable warships for
the Royal Navy.'

Issued by

BAE SYSTEMS, London


                      This information is provided by RNS
            The company news service from the London Stock Exchange