An outsourcing company recently given clearance to bid for government contracts following a six month suspension, is the front runner for a £400m contract to manage the country’s entire military estate.
Serco is one of three consortiums in the race to win a 10-year privatisation deal to run and maintain the Ministry of Defence’s 230,000 acres of land. The firm was suspended from all Government contracts, along with it rival G4S, and reported to the Serious Fraud Office after claims it overcharged on electronic monitoring contracts. The company announced that the ban had been lifted yesterday, along with a profit warning that led to a 15 per cent fall in its share value.
The two other contenders for pioneering deal are Capita, one of the UK’s leading management providers, and Telereal Trillium which has a proven track record in managing large, complex property portfolios.
The vast MoD estate — which includes conservation sites, office blocks, barracks, homes and military bases in just about every county of Britain — is currently managed by the Defence Infrastructure Organisation (DIO). It has been charged with cutting eight per cent from its £37bn annual budget.
The DIO itself is not immune from controversy. Its chief executive, Andrew Manley, remains suspended from his post on full pay until a probe by the MoD is completed. Manley, who was appointed chief executive three years ago, allegedly claimed £5,500 expenses last year for a series of stays at a luxury hotel close to the DIO’s Sutton Coldfield headquarters.
In a statement the MoD said: “We are considering appointing a strategic business partner from the private sector to provide infrastructure support. This could help the MoD unlock knowledge, skills and resources that are currently unavailable within the organisation. A number of bidders are currently being considered but no final decision has been taken.”
The DIO is responsible for training, housing and deploying troops, and its outsourced management will help to shrink the infrastructure as the Government presses ahead with plans to cut the defence budget and shrink the Army to its lowest number since the Napoleonic Wars 200 years ago.
As the manager of 1.1 per cent of the UK’s land mass, the DIO’s 130,000 assets include natural conservation sites such as Salisbury Plain and prime central London properties. Included among these are the Old War Office in Whitehall, where Sir Winston Churchill once worked, and which are expected to be put up for sale. In 2007, the MoD sold its 12.8 acre Chelsea Barracks site for almost £1bn to Qatari Diar, the real estate development arm of the Qatar Investment Authority.
Another Army property earmarked for sale is Deepcut Barracks in Surrey. Approval has already been granted for a hybrid scheme to build 1,200 homes, community facilities, and shops including a Sainsbury’s supermarket on the site. The barracks is currently the headquarters of the Royal Logistic Corps and the Defence School of Logistics.
And in Oxfordshire the DIO has already sold off the former RAF Bicester airfield to make way for a business park dedicated to motoring and aviation. A World War II bomber base, the site will now be redeveloped by Bicester Heritage Ltd which plans to finance its museum project by building and letting office and industrial units.
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