UK gives BAE 4 billion pound contract for AUKUS submarine programme

Britain's Conservative Party's annual conference in Manchester

MANCHESTER, England, Oct 1 (Reuters) – Britain has awarded BAE Systems (BAES.L) a 4 billion pound ($4.9 billion) contract as part of the AUKUS programme with Australia and the United States to build attack submarines, defence minister Grant Shapps and the company said on Sunday.

The U.S., Australia and Britain in March unveiled details of the AUKUS plan to provide Australia with nuclear-powered attack submarines from the early 2030s to help counter China’s ambitions in the Indo-Pacific region.

Britain, which will also operate the submarines, is pivoting its foreign and defence policy towards Indo-Pacific and is also seeking trade deals with fast-growing economies there after it left the European Union.

BAE Systems, which has said AUKUS will be “significant” for the company, said in a statement the defence ministry had awarded it the funding to cover development work to 2028, allowing it to start detailed design work on the submarines.

“This multi billion pound investment in the AUKUS submarine programme will help deliver the long term hunter-killer submarine capabilities the UK needs,” Shapps said in the statement.

The contract will secure funding for infrastructure work at the BAE Systems site in Barrow-in-Furness, northwest England, and the company said it would help fund 5,000 jobs.

BAE Systems said manufacturing of the submarines would start towards the end of the decade, with the first SSN-AUKUS vessel due to be delivered in the late 2030s.

“This funding reinforces the Government’s support to our UK submarine enterprise and allows us to mature the design, and invest in critical skills and infrastructure to support our long-term national security,” said BAE Systems Chief Executive Charles Woodburn.

Reporting by Andrew MacAskill and Alistair Smout; Additional reporting by Paul Sandle in London; Editing by Elizabeth Piper and David Holmes