Subsid's Contract

Rolls-Royce PLC
11 July 2000


VICKERS SIGNS £70 MILLION CONTRACT WITH MOD


Rolls-Royce announced today that its wholly-owned subsidiary Vickers Defence
Systems (Vickers) has won a £70 million contract to supply spare parts and
logistics services to the Ministry of Defence in support of the British Army's
Challenger 2 main battle tank.

The ChallengeR Innovative Spares Provision (CRISP) contract is estimated to be
worth £70M and will be for an initial period of seven years. If significant
cost and service performance benefits are realised, then the contract could be
extended to cover the full in-service life of Challenger 2 - some 25 years.

Under the CRISP contract Vickers will enter into an agreement with the newly
formed Defence Logistics Organisation.  CRISP will reduce the cost of
ownership of Challenger 2 to the MOD and improve spare part availability for
the British Army.  Spares will be provided 'when needed' rather than produced
in bulk, thus reducing stockholding and repair times.

Vickers is working with Multipart Defence Managed Services to deliver the
service standards required under the CRISP contract. Multipart enjoy a proven
track record in high quality and efficient logistic support.  Vickers has a
prime contractor and design authority responsibility for Challenger 2. 
Collaboration between the two companies will result in a seamless supply chain
solution.

Colin Clark, Chief Executive, Vickers Defence Systems, said 'The signing of
this contract is an excellent example of Smart Procurement in action. It
represents work for at least seven years - but more importantly - it allows us
to continue to develop partnerships with our customer well after the product
has been delivered.  We hope that CRISP will become a flagship for the
management of all of the Army's armoured vehicle fleet.'

Major General David Judd, Director General Equipment Support (Land) commented,
'This contract is the culmination of 18 months negotiation by the Tank Systems
Support Integrated Project Team.  It marks the beginning of a new phase in
MOD-industry relations in the SMART procurement era.  Though underwritten by a
contract with taut performance measures, we anticipate working with Vickers
and their service provider, Multipart, in a 'win-win' partnering style.  The
service will not only reduce whole life costs but importantly, it will
substantially improve the level of service received by soldiers in the field. 
We are very happy with our selected partners and look forward to demonstrating
success and subsequently building on that success to develop further ideas.'


Notes to Editors

Rolls-Royce plc is a global company providing power on land, sea and air. The
company has established leading positions in civil aerospace, defence, marine
and energy markets. Its core gas turbine technology has created one of the
broadest product ranges of aero engines in the world, with 55,000 engines in
service in over 150 countries. Customers include more than 500 airlines, 2,400
corporate and utility operators and 160 armed forces, using both fixed and
rotary wing aircraft. 

Rolls-Royce is the global leader in marine power systems with a broad product
range and full systems integration capability. Over 2,000 marine customers and
more than 30 navies use Rolls-Royce propulsion. The company is investing in
new products and capabilities for energy markets which include the oil and gas
industry and power generation. It also develops its own power projects through
Rolls-Royce Power Ventures Ltd.

Rolls-Royce pioneered gas turbine technology for aerospace, power generation
and marine propulsion and is involved in major future programmes in these
fields. These include the Trent aero and industrial engines, the Eurofighter
Typhoon and Joint Strike Fighter combat engines, the WR21 marine engine and
leading edge water jet propulsion systems.

The Strategic Defence Review (July 1998) emphasised the need for joint forces
to meet the varied challenges of the modern world, and recommended the
creation of a single Defence Logistic Organisation (DLO). As part of the UK
Ministry of Defence the DLO provides the armed forces with more flexible, more
effective and more efficient logistics support. The DLO, based in Bath, is
responsible for managing an annual budget of £4.6 billion.

Multipart offers clients a wide range of services including; warehousing and
distribution; technical data management, purchasing and procurement, sale and
marketing support, customer support, financial services and information
technology.  Multipart is a Lex Service company.  Lex Service is the UK's
leading automotive and support services group, offering a unique range of
services for users of cars, vans, trucks and other equipment.

For further information please contact:

Martin Nield                             Karen Fenwick
Rolls-Royce plc                            Vickers Defence Systems
Tel:  [phone]                     Tel:  [phone]
Fax: [phone]                     Fax:  [phone]
e-mail:  [e-mail]              
e-mail:  [e-mail]