The contract, which will benefit the UK's torpedo industry, covers all aspects of support and maintenance for the heavyweight Spearfish torpedoes that arm Britain's submarine fleet and the lightweight Sting Ray torpedoes which are carried on Royal Navy ships and helicopters and Royal Air Force Nimrod maritime patrol aircraft.
Minister for Defence Equipment and Support, Quentin Davies, said:
"This contract is an excellent example of the principles of the Defence Industrial Strategy in action. The contract will provide a more cohesive and efficient approach to our torpedo support programme and ensures that the UK sustains this important capability into the future.
"These potent British-designed and built weapons arm the Royal Navy's submarine fleet, surface fleet and helicopters and Royal Air Force Nimrod patrol aircraft. The contract further demonstrates our continued investment in high-technology defence equipment for our Armed Forces."
The contract will safeguard around 120 posts at BAES Insyte in Portsmouth, while further jobs will be sustained at a number of UK subcontractors.
MOD Defence Equipment and Support Torpedoes Project Team Leader, Captain Jim Johnson RN, said:
"This ten-year availability contract is a radical improvement over legacy arrangements and has significantly reduced costs. It delivers more coherent and affordable support for torpedoes and also provides the foundation for the development and upgrade of the Spearfish weapon.
"The adoption of partnering principles and close collaborative working with BAES Insyte was pivotal to delivering the optimum support solution."
Spearfish is a submarine-launched heavyweight torpedo and is embarked in current attack (Swiftsure and Trafalgar) and deterrent (Vanguard) submarines. It will be deployed in the Astute class from 2010.
Spearfish is optimised for anti-submarine warfare, while retaining a credible anti-surface capability. Spearfish is powered by a high-performance thermal engine and communicates with the launch submarine via a wire-guided link.
Sting Ray is a lightweight anti-submarine torpedo carried aboard RN ships, Lynx and Merlin helicopters and RAF Nimrod maritime patrol aircraft. It is fully autonomous once launched. Sting Ray has recently undergone a mid-life update, improving its capability against modern threats.