Defence Estates, the property and construction arm of the Ministry of Defence, may be forced to mothball some of its buildings to deliver £50m of savings on its regional prime contracts this year

The body also confirmed this week that it was saving money by renegotiating contracts with its supply chain to cut works down to essential maintenance in the first instance.

It’s a question of nice versus need and how we can rationalise the estate

Steve Rice, defence estates

Steve Rice, programme manager for Defence Estates’ Next Generation Estate Contracts (NGEC), said: “We realise we may have to close buildings down if we don’t have the money. But these will be low priority buildings, ones where the function can be undertaken somewhere else. It’s a question of nice versus need and how we can rationalise the estate.”

Rice confirmed Defence Estates was renegotiating its regional prime contracts with contractors. Only essential maintenance will be included in each contract.

Rice said the original contracts stipulated that buildings be handed over at the end of the contract in a better condition than they were at the beginning. In future they will merely require that a “safe estate, the minimum requirement” is produced.

News of the £50m savings comes as a National Audit Office (NAO) report is published today on how big the MoD estate needs to be to meet operational needs. The findings show that 12% of the UK’s 571 defence sites are surplus to defence needs, 15% are needed for defence purposes up to at least 2015 and 73% are needed until at least 2030.

Defence Estates is preparing to open up the estimated £2.9bn it spends a year on running its estate to new supply chain members as it moves towards replacing its regional prime contracts with a BAA-style procurement model. Under this, projects between £15m and £50m will go through a framework and everything over that goes out for competitive tender.