Babcock International Group (LSE:BAB) has agreed a two-month extension to the bridging agreement covering its Future Maritime Support Programme (FMSP) with the UK Ministry of Defence, starting 1 October.
The defence support group said the extension keeps critical naval base and nuclear submarine fleet support services running while it and the MOD finalise the successor deal, known as the Gateway Agreement.
The FMSP is Babcock's £3.5bn contract underpinning submarine and naval base support, and had already moved onto a six-month bridge at the company's June full-year results while the follow-on agreement was worked out.
The Gateway Agreement will set the long-term framework for Babcock's role as sole provider of in-service submarine support to the Royal Navy, backing the Continuous At Sea Deterrent and the Navy's shift to warfighting readiness.
Babcock said the new contract will also underpin delivery of the UK government's long-term investment in the submarine enterprise.
The extension adds to a run of contract activity disclosed in Babcock's September trading update, which included a CAD$1.2bn Victoria Class submarine support extension in Canada and preferred-bidder status on an eight-year French Air Force training contract.
Babcock expects to publish half-year results on 19 November.