UK Prime Minister Rishi Sunak announced the contract on 15 November during the G20 intergovernmental meeting, which is currently underway in Indonesia.
The contract represents the next phase of the Type 26 or City-class vessel programme.
Also known as the Global Combat Ship (GCS) programme, it involves the construction of eight City-class warships.
Once delivered, the vessels will be deployed worldwide to maintain and defend the maritime interests and security of UK-allied and partner nations.
The contract is expected to generate and sustain around 1,700 jobs over the next ten years at BAE Systems’ facilities in Scotstoun and Govan in Glasgow, UK.
It will also support an additional 2,300 jobs for people involved in the supply chain across the UK.
In a statement, the UK Government said the contract will strengthen the country’s maritime capability and bolster regional security to counter increasing threats, including Russia’s invasion of Ukraine.
Sunak said: “As we give the Ukrainian people the support they need, we are also harnessing the breadth and depth of UK expertise to protect ourselves and our allies.”
The next-generation Type 26 vessels are being built to replace the RN’s existing Type 23 or Duke-class fleet.
The new advanced warships will primarily carry out anti-submarine warfare operations and safeguard the UK’s at-sea nuclear deterrent and Carrier Strike Group.
Last month, BAE Systems introduced its Adaptable Strike Frigate concept design to the European naval market.
Centred around modularity and autonomous systems, the platform was launched at the Euronaval exhibition at Paris Le Bourget.