MoD prime contracts attract interest despite criticism that too much responsibility rests with the contractors and that the system is too slow
Contractors are eyeing a £500m contract to provide and maintain single living accommodation (SLA), totalling 20,000 beds across the UK, for the Ministry of Defence (MoD) under its prime contracting initiative — one of just a handful to be brought to tender since the initiative was launched.

David McLaughlan, the commercial officer for SLA, said the MoD has called for expressions of interest in the deal, which will see potential contractors design, build, procure and maintain the accommodation. The MoD is considering whether to include additional facilities management services in the deal.

According to McLaughlan, the UK-based tender, which excludes Northern Ireland, should be awarded by the end of the year. The five-year, £500m contract is one of the MoD's largest, but, said McLaughlan, other prime contracts for regional management will be worth more — some up to £750m.

The MoD's plans to outsource procurement, construction and maintenance for its £14bn portfolio under the prime contracting initiative have progressed slowly. To date only a few prime contracts have been awarded, and the system has been criticised for taking too long to become established.

An MoD prime contract for Scotland is currently at the prequalifer stage. Covering nearly 400 sites, it was the first of the regional prime contract deals to be announced. It is worth £460m over five years with an option to extend to 10 years.

There are four other larger contracts in England and Wales due to be put up for tender over the next two years.

Under the prime contract model a contractor becomes the sole point of contact for the client and takes responsibility for managing a number of other contractors.

Prime contracts offer better margins over a longer period, repeat work, but with higher liability. Critics say too much responsibility for making sure the building is ideally suited to the project is loaded onto the contractor.

Contractors have objected to the 'fitness-for-purpose' conditions and to the stipulation that sub-contractors must be paid before the main contractor is paid by Defence Estates.

Early this year Citex landed a £41m prime contract for the redevelopment of the MoD's Andover North site in Hampshire.