Babcock International PLC (LSE:BAB) has bagged a six-month extension to its naval support contract with the UK Ministry of Defence, maintaining continuity of critical submarine and base services while negotiations on a longer-term deal are finalised.
The FTSE 100-listed defence contractor said this is a bridging agreement, put in place as its five-year Future Maritime Support Programme contract ended on 31 March.
The Ministry of Defence provided a letter of intent, signalling commitment to a new long-term partnership. Babcock noted that it is the sole provider of in-service submarine support to the Royal Navy.
The future contract is expected to support increased activity, including the transition from Vanguard to Dreadnought class submarines, and aligns with the government’s defence strategy.
The agreement covers support for the UK’s naval bases and nuclear submarine fleet, including operations at Clyde and Devonport, where Babcock runs the Royal Dockyard.
Chief executive David Lockwood said the agreement "reinforces our joint intention to move to a new long-term agreement that will see even more investment in skills, communities and infrastructure, while growing this critical, sovereign capability together".
Lockwood is due to retire later this year, after five years in the role, with Harry Holt, chief of Babcock's nuclear division, taking over.