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Babcock International Group joint venture wins new Australian defence contract

Naval Ship Management (NSM), a 50/50 joint venture between Babcock International Group (LON:BAB), the engineering services business, and UGL, has been awarded a new contract by the Australian Defence Force, worth around AU$1.5 billion for up to 15 years. The contract is for an initial five years (Babcock share for this initial period AU$250 million) with the expectation of two further five year extensions.

The partnering agreement, which was won in a competitive process, sees NSM appointed Asset Steward of the largest vessels in the Royal Australian Navy: two flagship Canberra Class Landing Helicopter Docks (LHD) and their 12 associated amphibious LHD landing crafts. The joint venture will begin the work to sustain and support these critical vessels in July 2019.

This significant award builds on Babcock’s long standing relationship with the Australian Defence Force. NSM provides sustainment support to the Royal Australian Navy’s fleet of ANZAC class frigates through to the end of their life. Babcock also supports the Australian Defence Force’s ground support equipment.

Australian Minister for Defence, the Hon Christopher Pyne MP said:

“NSM has a proven track record in innovation, performance, collaboration and building the Australian workforce capability with similar sustainment programmes. We are looking forward to working with them to ensure safe delivery of the LHD assets, ensuring they are both available and performing as required.”

Babcock Chief Executive Archie Bethel said:

“We are delighted to have been chosen for this strategically important role which builds on our existing relationship with the Australian Defence Force. Through NSM we will apply Babcock’s digitally enabled asset management capabilities to support this strategically important capability over the next decade and beyond.”