Babcock will provide key support services for the UK Royal Navy under a long-term strategic terms of business agreement (ToBA) signed with the Ministry of Defence (MoD).
Under the 15-year ToBA, Babcock commits to the progressive delivery of guaranteed cost savings to the MoD.
The company will perform particular types of engineering work in support of the navy's major warships and nuclear-powered submarines from 2010 to 2025.
In addition, Babcock will extend its management roles at the Clyde and Devonport Naval Bases from 2013 to 2025 at a value of around £2.5bn ($3.7bn).
Savings made over the committed levels will be shared between Babcock and the MoD.