Rolls Royce agrees $1.3 billion nuclear contract with MoD

A view of one of two Rolls Royce Trent 1000 engines of the Boeing 787 Dreamliner during a media tour of the aircraft ahead of the Singapore Airshow in Singapore February 12, 2012.

LONDON (Reuters) - Aero engineer Rolls-Royce (RR.L) has agreed a new ten year contract with the Ministry of Defence (MoD) which will help the department save up to 200 million pounds and sustain up to 2000 jobs in the UK.

The company said on Wednesday that the new contract, which is worth around 800 million pounds, would help deliver cost savings around the provision of nuclear propulsion systems for Britain's existing and future submarine flotilla.

Rolls-Royce said the deal reinforces Britain's commitment to the submarine programme.

Britain's 2010 Strategic Defence and Security Review (SDSR) set the course for future UK defence spending, in which the government said it would cut spending by 8 percent up to 2015.

The government has been trying to bring order to a defence ministry widely lambasted by watchdogs and others for its chaotic and expensive weapons programmes.

(Reporting by Brenda Goh; editing by Rhys Jones)