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U.K. Seeks Savings by Rewriting BAE, Rolls-Royce Contract Rules

The U.K. government plans to renegotiate 42-year-old rules governing contracts with defense suppliers including BAE Systems Plc and Rolls-Royce Group Plc to save millions of pounds to help cut a record budget deficit.

Companies such as BAE, which builds Astute class submarines, and Finmeccanica SpA’s AgustaWestland unit, which makes Merlin helicopters, may no longer be able to charge the government for part of their office running costs, as they can now under guidelines drawn up in 1968, the minister in charge of defense procurement, Peter Luff, said today.