In fact, Thornely is remarkably calm – considering. He is a former director of WS Atkins' PFI operation, and has been in post as head of army works at the Army Estates Organisation for only seven months. Thornely says that his job amounts to an endless jigsaw puzzle. At present, that puzzle is made up of 270 live projects, and every time he makes a procurement decision on any of them, he has to take into account no fewer than 40 initiatives.
The army estate is part of the Ministry of Defence, which is the second largest landowner in the UK – only The National Trust has more ground. In turn, the AEO is the body that oversees the lion's share of this land – 8.2 million hectares of it, worth a total of £4bn. The army owns 39,000 buildings (excluding married quarters, which are managed by Defence Housing Executive). To look after this empire, Thornely gets to spend £130m on a capital works programme for 2003 – a sum that will rise over the next five years to £350m. This year, £180m will be spent on maintenance alone.
The reason Thornely is faced with these challenges has its roots in the government's strategic defence review of 1998, the 250-page document that began the most determined rethinking of Britain's armed forces for 20 years. Among the review's conclusions was that, nine years after the fall of the Berlin Wall, Britain probably did not need to station an army in Germany. But those personnel could not be brought home until accommodation had been provided for them. What was more, it had to be high-class: the only chance the army had of persuading young people to fill its depleted ranks was by offering them the creature comforts they were accustomed to at home.
In short, the army was going to have to upgrade its whole physical structure – an enormous task that had to be undertaken as rationally as possible. Cue the introduction of integrated supply chains and whole-life costing.
The detailed battleplan was to procure the big projects, those worth more than £30m, using the PFI. Meanwhile, the UK would be divided into five regions, each overseen by a regional "prime contractor". The firm appointed to this post would offer a single point of responsibility for all maintenance and capital works worth more than £10m in its theatre of operations. The first of these contracts is due to be signed in April.
The stalled PFIs and prime contracts have dominated the headlines, but they are only part of the story. The AEO's annual construction spend will not all be funnelled into their pockets. The army is anxious to enlist the support of many more companies, both to handle the jobs worth less than £10m and to tackle one-off emergency projects. The problem it faces is that it has almost as bad an image with contractors as it does with teenagers.
The AEO is trying to combat this by trying to convince the private sector that it is not as bad as it has been painted. It may have been caricatured as a penny-pinching, bureaucratic and neurotic but the truth is that companies just need to understand its peculiar culture and concerns. As Thornely puts it: "Contractors fall into two groups – those who take the trouble to understand the ministry and those who don't. The latter tend to be involved in individual projects, while the former develop ongoing relationships and wide presence across the MoD Estate."
So much for the history lesson – the question is, how do firms go about joining the army?
Who's in charge
The main player in army procurement is the AEO. This was assembled last October to act as the army's estate client for major capital projects. It works with Defence Estates, the MoD's principal procurement agent, and represents the estate interests of the two budget holding groups in the army – Land Command, which runs the field army and regional forces, and the Adjutant General, which is responsible for recruitment, personnel and training.
We’re trying to look 25 years ahead, which means that what we build now must meet the needs of soldiers who haven’t yet been born
John Thornely, head of army works, AEO
Contractors for major projects are selected by an "integrated project team". This is a combined front of officials from the AEO, Defence Estates and the end user. The AEO and Defence Estates also work together on planning the army's procurement strategy. As Thornely explains, AEO is in the middle of reprioritising how estates management works: "We are revisiting the way we manage estates, funding and procurement policy. The whole basis we use for making decisions is changing."
Exactly how it is changing will be made clear when a revised version of an internal document called Army Estate Strategy is published – although Thornely admits that, for inspiration, he will have to look beyond the off-white walls of the dingy prefab terrapin block that houses his office.
"We have to consider what influences people's decision to join the army, and whether they stay or go," he says. "We are trying to look 25 years ahead, which means that what we build now must meet the needs of soldiers who haven't yet been born. What will the soldiers be like? How can we recruit, retain and support them? This is what we are asking contractors to consider."
The army has already begun to cater for the needs of future recruits with its £1bn SLAM project – Single Living Accommodation Modernisation – which will see the creation of 45,000 bed spaces over the next decade (see "What the army is up to", left).
As well as moving away from the image of the barracks as a warehouse for squaddies, the army is trying to integrate garrisons with their host communities. Thornely is keen to see more projects that follow the example of the Tidworth Leisure Centre, completed in October 2000, which was funded by the army and the local council and used by soldiers and civilians.
The army is extremely sensitive about security issues, which means that it is somewhat constrained in how it can procure projects. For example, Thornely points out, the army cannot follow the example of schools and hire out their facilities on evenings and weekends. "Opportunities for generating third-party revenue through public–private partnerships are limited, because it's hard to make a business use of a building for a third party when you need a very secure environment."
Thornely appreciates that AEO is demanding a lot from its contractors. He also appreciates, no doubt from personal experience, that the AEO is a complex animal to deal with. "We need people to understand how all our initiatives and policies fit in to the bigger picture and to provide the best value option through the whole-life approach. For this, we need people to work in new ways."
But the AEO is not putting the entire onus for change on contractors' shoulders – Thornely acknowledges that the army needs to reduce project lead times. "From flash to bang can be a very long time in military procurement," he says. "The Colchester Barracks PFI was at bidding stage for six years. So there is a huge potential for improvement here. In the past, too many people have been involved in the procurement process."
As a response to the need for streamlined decision-making, the MoD intends to create a new procurement organisation, the provisional title of which is the New Purple Body (purple is shorthand for an initiative that involves the army, navy and air force). The aim is to create an organisation whose core business is to manage suppliers – at the moment, the end users of the project are spending too much time managing supplies. So the NPB will be responsible for the regional prime contracts, as well as deciding which procurement route should be chosen.
Wait for it … What the army has in the pipelineMajor projects
Colchester barracks PFI project: Capital value more than £350m, total value over 35 years more than £1bn. Contract likely to be signed later this year. Project Allenby/Connaught: Capital value more than £1bn, whole-life value more than £3bn. These are separate PFI projects that are being carried out by the same team, and which are subject to ministerial approval. Army Estates Organisation hopes to issue an Official Journal notice soon for the Allenby project. Allenby covers the upgrading and rebuilding of army facilities around the Salisbury Plain Training Area. Connaught will do the same for the “home of the British Army” in Aldershot. A contract for the Connaught project will be in place by 2003, subject to ministerial approval. Project SLAM (Single Living Accommodation Modernisation UK): This is a 10-year project with a budget of more than £1bn. About 45,000 bedspaces including “Type Z” units (single rooms with toilet and shower for those who have completed the first part of their training) are needed. Soldiers should start to benefit by 2004. Project Aquatrine: A water and sewage PFI project that extends over the whole of the MoD’s estate. There will be three regional contracts. Tenders have been received for the first package (south-west England) and bidders have been shortlisted for the other two. Project Vanguard: A public–private partnership dealing with the management and maintenance of the army’s training estate. This is at the stage of tender evaluation. Project Puma: The equivalent of Project SLAM in Germany. This is conventional procurement route, as prime contracting is not yet applicable in Germany. Medium-sized projects
About 28 projects are planned for the coming year, ranging in value from £5m to £75m. Some are prime contracts and some are by conventional procurement. They include the following:
- Catterick Garrison: Redevelopment of two barracks, including technical accommodation.
- New barracks to be built at Woodbridge, East Anglia. Prime contract; tenders have been received and are being evaluated.
- New single-living accommodation at Wimbish, East Anglia. Prime contract to be signed in 2002.
- Barracks at Tidworth: A one-off emergency project, planned within the overall scheme of Project Allenby/Connaught but which needs to be completed earlier to accommodate personnel on a temporary basis.
- Refurbishment of barracks at Marchwood Sea Mounting Centre, near Southampton.
Project Reader: Worth £23m over two years, this has been set up to carry out rapid improvements to the army’s single-living accommodation that is in the worst condition.