Re Contract

BAE SYSTEMS PLC
13 November 2003

                    OCCAR AWARDS €3 BILLION MISSILE CONTRACT

The international missile systems group MBDA has been awarded a multibillion
Euro contract by the European procurement agency OCCAR (Organisation Conjointe
de Co-operation en matiere d'Armement) for series production of the world's
first advanced ground-based and naval air defence system with an anti-ballistic
missile capability.

The €3 billion contract was signed on Wednesday 12 November in Bonn at the OCCAR
headquarters by OCCAR President Klaus Wendelin von Sperber and Guido Lami,
Managing Director of Eurosam, the joint venture between MBDA and Thales. MBDA's
share of the contract is valued at €2.3 billion.

OCCAR signed the contract on behalf of the French, Italian and UK Ministries of
Defence. The order covers series production of 18 SAMP/T Aster Block 1 missile
batteries for the French army, French air force and Italian army and production
of the Aster 15 SAAM (Surface-to-Air Anti-Missile system) vertical launch naval
missile system for the French and Italian navies' new aircraft carriers and
frigates.

The contract also covers €400 million placed by OCCAR on behalf of the UK MoD
with MBDA's wholly-owned subsidiary UKAMS for series production of Aster 15 and
Aster 30 missiles and support equipment for the PAAMS advanced naval air defence
system, which will equip the Royal Navy's first batch of Type 45 Daring class
destroyers.

In addition, funding is released for the full-scale development of the Aster
Block 1 Anti-Tactical Ballistic Missile (ATBM), an evolution of the Aster 30
missile designed for dedicated Theatre Missile Defence operations.

In total, the order covers production of almost 1400 Aster missiles plus
logistic support, associated equipment and training for the three countries.

'It is the creation of MBDA which has enabled us to sign this extremely
important contract today', said MBDA's Chief Executive Officer, Marwan Lahoud.

'The consolidation and rationalisation of the missile industry to form Europe's
leading missile system prime contractor has enabled us to deliver this critical
air defence capability for Europe's armed forces and bridge another significant
defence technology gap for Europe as well as provide the backbone for Europe to
develop a full wide-area ATBM capability,' he added.

Lahoud also noted the significance of the order, OCCAR's first major missile
procurement contract, as marking MBDA's success in bringing about the highest
level of defence co-operation in Europe by uniting the armed forces of France,
Italy and the UK around a common equipment programme.

The Aster SAMP/T missile system will provide area defence for forces deployed in
'out of area' theatres of operation, defending against both manoeuvring and high
speed targets such as aircraft, unmanned combat air vehicles (UCAVs), cruise
missiles and tactical ballistic missiles in severe ECM environments.
Air-transportable and interoperable with NATO air defence systems, SAMP/T will
enter service with the French army and air force and Italian army from 2007.

In capability terms, Aster PAAMS (Principle Anti-Air Missile System) will
provide multi-layer air defence to armed fleets or groups of unarmed support and
merchant fleets. Designed to protect against attacks from sub- or supersonic
missiles, aircraft and high-value UAVs, PAAMS incorporates three separate
mission capabilities in one naval air defence system; ship self-defence for
protection of the PAAMS warship; local area defence for nearby ship defence; and
medium and long-range fleet protection. PAAMS will equip the French Horizon
class frigates, the Italian Orizzonte class frigates and the Royal Navy's Type
45 destroyers from 2006.

'Europe's armed forces today need a highly mobile and interoperable extended air
defence capability to provide area protection for forces deployed out-of-area as
part of the overall force projection mix,' said Guy Griffiths, MBDA's Chief
Operating Officer (Operations). 'The commonality between both land-based and
naval Aster anti-missile systems further adds to the effectiveness of the
out-of-area force mix', Griffiths added.

'This will be the first system of its kind in the world', said Mario di Donato,
MBDA's COO (Technical). 'We are proud to deliver the most advanced missile
system in this class,' he added.

Notes

With an annual turnover exceeding € 2 billion, a forward order book of € 14
billion and over 70 customers world wide, MBDA is a world leading, global
missile systems company. MBDA is jointly owned by BAE SYSTEMS (37.5%), EADS
(37.5%) and FINMECCANICA (25%), with equal rights.

Issued by
BAE SYSTEMS plc

London


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