---

MoD and Rolls-Royce Announce Partnership Arrangement

3 November 2000

MoD and Rolls-Royce Announce Breakthrough Strategic Partnering Arrangement

    LONDON, Nov. 3 The MoD's Defence Aviation Repair Agency
(DARA) and Rolls-Royce plc have (on 31 October) signed a strategic partnering
arrangement which establishes a framework for working together to provide
improved integrated logistic support for military engines.  The document was
signed by Steve Hill, DARA Chief Executive, and Sue Lyons, Managing Director -
Defence (Europe) for Rolls-Royce.
    The new arrangement means that closer links and better working
relationships will be forged between the two organisations.  This will help
them focus on developing and implementing new and innovative engine repair
solutions aimed at achieving cost effectively the needs of the Defence
Logistics Organisation (DLO).
    DARA and Rolls-Royce plan to establish best practice in the provision of
logistics support to their MoD customers.  Crucially, the arrangement provides
for full and open visibility of all relevant information and more effective
management of load, capacity and capability rationalisation while at the same
time satisfying each party's individual business objectives.

    Minister for the Armed Forces, John Spellar, said
    "I warmly welcome this ground breaking deal which should contribute
significantly to reducing support costs. By using the best skills of both the
public and private sectors, we can significantly streamline logistic support
to the front line forces"

    The key objectives the partners will focus on are:

    -- reducing repair and overhaul costs
    -- improving product reliability
    -- reducing lengthy lead times
    -- reducing repair turn round times
    -- improving provision of technical support

    In signing the arrangement, Steve Hill said:
    "This is a breakthrough for DARA and Rolls-Royce in the development of
strategic partnering arrangements between Industry and the MOD.  We have
created an opportunity to deliver joined up support at lower cost and the
arrangement is very much in line with the DLO's Lean Support Initiative.  Both
businesses now have the means to apply a single focus on meeting challenging
customer expectations."

    Sue Lyons said:
    "We are committed to the MoD Smart Acquisition initiative and see this
partnering arrangement with DARA as a key milestone in the drive for 'better,
cheaper, faster' integrated logistics support to the front line.  I am sure
that by combining our capabilities in this joint approach, we will be able to
deliver more cost-effective solutions to the customer.  The new arrangement is
good for Rolls-Royce, good for DARA and good for the Defence Logistics
Organisation.  I am confident it will provide significant opportunities for
improved performance."

    Notes:
    DARA is owned by the United Kingdom Ministry of Defence and provides
depot-level  repair for fixed and rotary wing aircraft for the Royal Navy,
Army and Royal Air Force as well as other overseas and commercial customers..
DARA operates from four sites in the UK:t Athan (nr Cardiff) is the
Headquarters, Fleetlands (Gosport), Sealands (nr Chester) and Almondbank (nr
Perth).
    DARA was launched as an Executive Agency on 1 April 1999 and employs
around 6500 staff of which 1000 are currently service personnel.  The
organisation has an annual operating budget of 200 million British pounds
sterling.