Defence Estates' preferred procurement routes are prime contracting and PFI. Prime contracting entails the supplier taking overall responsibility for the management and delivery of the project to agreed specifications. As well as meeting cost requirements, the prime contractor is responsible for all aspects of the job.
In line with severe delays in awarding key prime contracts, Defence Estates recently announced an overhaul of its procurement. This will aim to reduce red tape and increase the speed at which projects are awarded. Although it will remain as Defence Estates, the organisation's structure will be simplified to create six customer divisions: army, navy, RAF, defence logistics, overseas and defence procurement.
Current and future projects
The Ministry of Defence and its Defence Estates organisation are still progressing a number of very large PFI, PPPs and prime contracts. Projects valued at £1.9bn have recently been awarded, although £1bn of this total relates to the Colchester PFI deal.
Prime contracts will form the majority of work over the next few years, although finalising these is taking much longer than expected. The Scottish prime contract will be the first to be awarded – the four main remaining contracts will not be awarded until 2004 or 2005. The South-west contract recently went out to tender, with an award expected in March 2004. Central will go to tender in early 2004, with a contract award expected May 2005. The South-east contract is expected to go to tender this summer, and be awarded late 2004. Finally, the Eastern prime contract will go to tender mid-2004, with an award expected a year later.
Overall, Defence Estates' expenditure on construction-related work is expected to remain close to £2bn a year over the next few years. Major projects let over 2001 and into 2002 totalled £1.9bn, and there is about £5.8bn of work planned. This figure includes prime contracts amounting to £3.4bn. One of the largest projects outside of the key prime contracts is the £500m redevelopment of barracks in Salisbury.
Defence Estates comprises close to £14bn worth of assets in land and buildings. It recently announced that it is set to revive a major prime contract at Woodbridge Airfield in Suffolk. The project had been put on hold after all bidders priced the scheme well in excess of the original £38m budget. The new contract is expected to be worth close to £60m. The original plans involved demolition of existing buildings to make way for 650 homes.
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