Memorandum of Understanding

Babcock International Group PLC
22 January 2001

                               

                Babcock International Group Plc
                               
   Babcock Engineering Services to work with MoD on warship
                       Support Programme
                               
A  Memorandum of Understanding will be signed with the MoD on
Wednesday 24th January 2001 on possible partnering arrangements between
Babcock Rosyth and the Clyde Naval Base to supply engineering maintenance and
support to the  Fleet, and other Naval Base services such as facilities
management.

This next phase of the MoD's Warship Support Modernisation programme is
scheduled to commence in Spring 2002.

Commenting on the MOU, Mr Murray Easton, Managing Director of Babcock
Engineering Services, said:

'Babcock is delighted to be involved with the MoD in this initiative which
could provide a major opportunity to increase the extent of our involvement in
the UK Warship Repair and Support activity.  This could take the form of
partnering for facilities management and engineering support at the Faslane
and Coulport sites, and of access to an increased market of competitive
opportunity, coupled with the probable allocation of the third aircraft
carrier, HMS ILLUSTRIOUS.'

Enquiries:

Murray  Easton    Babcock International Group PLC   01383 423 505
Ginny  Pulbrook   Citigate Dewe  Rogerson           020 7282 2945