Armed forces minister Adam Ingram broke the news to the preferred bidder, the RMPA Services consortium of Sir Robert McAlpine, Sodexho and Atkins, two weeks ago. It is understood that problems with the scheme include delays in carrying out archeological and wildlife surveys on the site and issues over the diversion of footpaths.
The capital cost of the development is to be partly financed by the sale of nearly 130 ha of land occupied by the garrison. Further funding is expected to come from sponsors, third-party equity and a bond issue or bank debt.
The project involves the creation of a "city within a city" and the supply of support services throughout the contract's life. The construction work is worth about £200m.
Work will include the construction of offices, workshops, stores, training facilities and messes.
Colchester is not the only large MoD project facing planning problems: the Chelsea barracks public–private partnership has suffered lengthy delays after problems finding an alternative site.