Re Contract

    INTERSERVE CONSORTIUM NAMED PREFERRED BIDDER FOR £220m FLEET ACCOMMODATION   
                                  CENTRE PFI                                   

The Ministry of Defence (MoD) has announced that the consortium led by
Interserve is preferred bidder for the `ARMADA' PFI contract to provide and
service the single living accommodation (SLA) in the Fleet Accommodation Centre
at Devonport. The contract will involve Interserve companies supplying services
worth in the region of £220m in real terms.

HM Naval Base Devonport is the largest naval base in western Europe. The SLA
comprises en-suite accommodation for 55 senior officers, 195 junior officer,
600 warrant officers and senior ratings and 700 junior ratings. There will also
be 100 places for transient personnel.

Interserve Project Services Ltd will undertake the design and construction of
the new accommodation and refurbishment of existing facilities. Interservefm
Ltd will manage the ongoing operation of the accommodation and will provide
property and infrastructure maintenance, catering, cleaning, external guarding,
environmental management and grounds maintenance. Construction and the
provision of interim facilities services will begin following final signature
of the contract, which is anticipated for the third quarter of 2003. The
overall length of the contract, including this phase, will be 25 years.

Adrian Ringrose, Interserve's Deputy Chief Executive, welcomed the news: "Our
status as preferred bidder underlines both our ability to integrate a broad
range of services and our commitment to supporting the MoD in its operations.
We're looking forward to developing the relationship further in Devonport."



END