Move comes one year into seven-year deal to manage 31 sites for defence company QinetiQ

Balfour Beatty has had a £105m seven-year contract with defence technology company QinetiQ terminated, in a blow to its facilities management business.

The contract to manage 31 sites for the client was cancelled after QinetiQ said it could do the work better in-house.

A spokesperson for QinetiQ confirmed the contract had been terminated a little over a year into the seven-year deal.

“We can provide better flexibility, better service and better responsiveness for our business requirements in-house,” it said.

QinetiQ is working with Balfour Beatty on a six-month transition plan and will take on all the Balfour staff affected, QinetiQ said.

A Balfour Beatty spokesperson said that Balfour Beatty WorkPlace, which includes the FM business, was “naturally disappointed” about QinetiQ’s decision. “Balfour Beatty WorkPlace has a number of contracts worth substantially more than the contract with QinetiQ with one worth some £1bn,” they said.

Since its creation, the division has won several facilities management contracts including a joint venture with Romec covering Royal Mail sites and a £25m contract for the Metropolitan Police. Last week it acquired Romec in a bid to boost its standing.

Latest group accounts available reveal that the FM business turned over £414m in 2009, which accounted for 5% of Balfour Beatty’s revenue for that year.