The contract covers repair, maintenance, spares provision, upgrade work and technical support, which will be undertaken at the Harrier fleet's main operating base at RAF Cottesmore in Rutland.
The current role of the Harrier aircraft in Afghanistan is to undertake close air support to troops on the ground, as well as non-traditional intelligence surveillance reconnaissance to determine enemy activity and provide information to troops on Op HERRICK.
The Minister for Defence Equipment and Support, Quentin Davies, said:
"The Harrier force continues to play a vital role on operations in Afghanistan. This is a significant contract that builds on our existing excellent partnering arrangements with industry.
"Such contracts have already resulted in considerable financial savings, as well as ensuring that the Harrier force is fully prepared to meet front line requirements."
MOD Defence Equipment and Support Harrier team leader, Group Captain Andy Ebdon, said:
"Today's announcement is great news for the future support of Harrier. It is a testament to the tremendous sustained effort by MOD and industry to build on the successes already achieved. Joint Force Harrier is now assured of cost-effective support throughout its remaining service."
Joint Force Harrier (JFH) is also responsible for providing aircraft for the Royal Navy's aircraft carriers and seeks to undertake all strike and reconnaissance roles from sea as well as land.
Along with the Op HERRICK commitment in Afghanistan, JFH is amongst the RAF's most frequently deployed assets.
RAF Cottesmore in Rutland has been home to the Harrier maintenance line since 2005, where work has been carried out under JUMP (Joint Upgrade and Maintenance Programme), which has produced savings of around £50m.
The new contract has been awarded to BAE and will secure the future of approximately 300 civilian jobs. The previous support contract and its proven efficiency and financial benefits will now transfer to the new HPAC (Harrier Platform Availability Contract) helping to secure existing jobs on site and at BAES Systems' sites at Warton, Samlesbury and Farnborough.