BAE Systems PLC (BA.LN), a defense company, said Tuesday BVT Surface Fleet, the maritime joint venture between BAE Systems and VT Group (VTG.LN), has signed a legally binding 15 year Terms of Business Agreement, or ToBA, with the U.K. Ministry of Defence, or MoD, that will reduce the cost of warship building and support for the Royal Navy, secure the long-term sustainable future of the U.K. warship building industry and deliver efficiency savings for the U.K. taxpayer.

MAIN FACTS:

-Signed between the MoD, BVT, BAE Systems and VT Group, the agreement provides a minimum of 15 years exclusivity to BVT for the design, build, integration and aspects of support on specified MOD shipbuilding programmes, including the Future Surface Combatant.

-It provides a commitment to maintain key industrial capabilities, as outlined by the Government's Defence Industrial Strategy.

-It provides a contractual guarantee to deliver GBP350 million of financial benefits to the MoD over the duration of the contract.

-It also provides an incentive mechanism for achieving savings and key transformation milestones.

-Through the ToBA, the MOD and BVT will transform the delivery of shipbuilding and support to the Royal Navy on a through-life basis, delivering significantly enhanced value for money for the taxpayer and increased shareholder value through improved efficiency and effectiveness.

-By London Bureau, Dow Jones Newswires; Contact Ian Walker; +44 (0)20 7842 9296; ian.walker@dowjones.com
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