Power systems provider Rolls-Royce has signed a £1 billion contract with the UK''s ministry of defence to maintain nuclear power plant systems on board the Royal Navy submarines'' current and future fleets for the next 10 years.

Rolls-Royce has designed, manufactured and maintained nuclear propulsion systems for the Royal Navy for more than 40 years. Its naval business provides products and services to 70 navies and coastguards and powers 400 ships.

The contract covers technical support, management of spares, the provision of plant safety cases and product development capability, for the Royal Navy''s current submarine fleet that comprises 13 Swiftsure, Trafalgar and Vanguard class along with the new Astute class submarines.

Rolls-Royce and the British ministry of defence will form a joint team to draw up agreed service levels, and the company will be paid for meeting those targets rather than through individual contracts. Rolls-Royce will also receive additional incentive payments for improvements which create savings for the ministry when the submarines are in service.

The company will share with the defence ministry any savings that result from improved business efficiency and effectiveness.

Steve Ludlam, Rolls-Royce President Submarines, added: "The long-term nature of the agreement allows both sides to better plan and prioritise, sharing the benefits of savings made."

Lord Drayson, minister of state for defence equipment and support, said, "This landmark partnering contract ensures the United Kingdom secures its ability to manufacture and support this strategic equipment in the future. It will deliver more cost-effective management of submarine maintenance and safeguard jobs and essential skills in the UK."

Under a contract formally known as ''flotilla reactor plant support'' that does not include power plant manufacture, Rolls-Royce is conducting a £137 million long-term service and support contract for gas turbines which power 27 ships in service with the Royal Navy, and French, Belgian and Royal Netherlands navies, and is part of a team providing support to four Royal Australian Navy amphibious and afloat support ships for seven years with options for a further five.