Re Contract

Rolls-Royce PLC
3 July 2002

                                                                    July 3, 2002



            ROLLS-ROYCE SUCCESS WITH MoD PRIVATE FINANCE INITIATIVE:

               £200M ARMY CONTRACT FOR VICKERS SPECIALIST ENGINES



Vickers Specialist Engines, part of Rolls-Royce plc, today (Wednesday, July 3)
signed a contract worth over £200 million, under a Ministry of Defence (MoD)
Private Finance Initiative (PFI).



The Field Electrical Power Supplies (FEPS) contract comprises the design,
development, supply, maintenance, management and finance of a fleet of 1,300
trailer-mounted field mobile generator sets to the British Army for a 15-year
service period.



The contract was signed by Jim Vickerman, Managing Director of Vickers
Specialist Engines and Les Lloyd, Leader of the Ministry of Defence Battlefield
Infrastucture Integrated Project Team (BFI IPT) at Army 2002, the industry
exhibition and equipment demonstration event.



Defence Procurement Minister Lord Bach, commenting on the announcement, said: '
The Armed Forces use trailer-mounted power generators in a wide spectrum of
operations and our experiences in Afghanistan and Sierra Leone show the demand
for efficient and reliable supplies is ever increasing.



'This contract will help us standardise the type of equipment we use. In
addition, the new equipment is far superior in terms of low radar and thermal
signatures, making it safer to deploy in the field.



'This Private Finance Initiative contract is another example of the way MoD is
getting excellent new equipment into service with the Armed Forces at lower
cost. Our analysis shows that using the PFI achieved savings of about 5%,
compared with the costs of a traditional procurement.'



Vickers Specialist Engines' Managing Director, Jim Vickerman, said: 'This
contract announcement is the culmination of several years of design and
development activity, working alongside the MoD to provide the right solution.
It also marks the start of a new phase for Vickers Specialist Engines which will
ensure that those using FEPS in the field will have equipment they can rely on
when and where it matters.'



The contract follows the announcement in July 2000 that Vickers Specialist
Engines had been selected as the preferred bidder.



Designed for worldwide operation in hostile and demanding environments, the
range of highly mobile, diesel-powered generators has been developed to
incorporate 'stealth' type technology, including acoustic, thermal and radar
signature reduction features, to provide an improved counter-surveillance
capability over existing equipment.



Outside FEPS' role with the British Army, the sets can be used for many
specialist defence and civil applications.  They will be compatible with other
NATO and US Army power generation and field electrical distribution equipment,
putting FEPS in an ideal position to meet the requirements of key customers
outside the UK.



FEPS will be supplied to all three services by Genistics, a special purpose
company established by Vickers Specialist Engines (VSE) to provide the full PFI
service. Both Genistics and VSE are fully owned by Rolls Royce Plc.



For further information contact:

Martin Nield, Rolls-Royce plc

[phone]





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