Re Contract

Rolls-Royce PLC
18 December 2000


VICKERS SPECIALIST ENGINES APPOINTED PREFERRED BIDDER FOR 
A £50 MILLION MOD CONTRACT

Rolls-Royce subsidiary, Vickers Specialist Engines, has been appointed
preferred bidder for the support of Deltic engines for the Royal Navy's Hunt
class vessels by the UK Ministry of Defence (MOD).  Ultimately, this support
will include training, for the Royal Navy, and on board service visits. 

The project, which through life has an estimated value of £50 million, will
provide a comprehensive support package for Deltic engines. Initially this
will cover the repair, overhaul and supply of associated spares. As preferred
bidder, Vickers Specialist Engines will work exclusively with the MOD to agree
an optimised Smart Acquisition contract for signature during February 2001.

Since July, Vickers Defence Systems and its associated businesses, including
Vickers Specialist Engines, have been selected as preferred bidders for
defence contracts worth £400 million.

Crewe-based Vickers Specialist Engines has a wealth of experience in
supporting Royal Navy equipment, with Hunt and Sandown class generator sets
already part of the Vickers Specialist Engines product portfolio.

Jim Vickerman, Managing Director, said, 'As a measure of our commitment to
this project, we have invested heavily in the design of a facility to ensure
the necessary engineering and process solutions are in place to improve the
future reliability and cost-effectiveness of the engine. Our strong in-house
engineering capability will be backed by a robust contractor logistic support
package to provide an efficient, smooth running service to the Ministry of
Defence. It also underpins an all-round capability for the UK's mine warfare
fleet power requirements.'


Mike Botley, Marine Propulsion Systems Integrated Team Leader at the Ministry
of Defence commented: 'I look forward to working with Vickers Specialist
Engines to develop an innovative contract which I anticipate will provide the
Fleet with the level of support it has a right to deserve.'

The bid to support the Deltic engine marks just one of the naval programmes
Vickers Specialist Engines is working on.  The company's capabilities have
resulted in bids or studies submitted for marine generator sets for the Royal
Navy's Type 45 frigates, alternative landing ship logistic, hydrographic
survey vessels, and roll-on roll-off ferry programmes.
Ends. 


Notes to editors

As part of the Rolls-Royce group, Vickers Specialist Engines operates as a
business unit within Vickers Defence Systems.  The business provides creative,
whole-life solutions for demanding, Defence-related power applications.

Vickers Specialist Engines is a medium size autonomous enterprise with an
annual turnover of circa £10m achieved with a total workforce of 95 people. 

Vickers Specialist Engines is an existing contractor to the Ministry of
Defence, both Navy and Army, for the design, manufacture and support of diesel
engines and generator sets. 

In July 2000, Vickers Specialist Engines was appointed preferred bidder for
the UK Ministry of Defence's Field Electrical Power Supplies (FEPS) programme.
 This is a private finance initiative (PFI) project that involves design,
development, supply, maintenance and finance of a fleet of over 1,300
trailer-mounted, field mobile generator sets for the British Army.  

For further information please contact:

Karen Fenwick
Tel: [phone]