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Vickers Signs 70 Million Pounds Sterling Contract With MOD

11 July 2000

Vickers Signs 70 Million Pounds Sterling Contract With MOD

    LONDON - Rolls-Royce announced today that its wholly-owned subsidiary 
Vickers Defence Systems has won a 70 million pounds sterling 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 70 Million pounds 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:

    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 pounds.

    Multipart offers clients a wide range of services including:  warehousing
and distribution; technical data management; purchasing and procurement; sales
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.