MoD suspends £4bn defence race amid 'legal challenge'

The Ministry of Defence has suspended the award of a tranche of construction contracts worth more than £4bn after facing a legal challenge to the procurement.

In a statement this afternoon, the Ministry of Defence’s estate arm the Defence Infrastructure Organisation (DIO), said it had “suspended” the award of three defence estate construction contracts, together worth up to £4.35bn, after the contract award decision was “formally challenged by one of the tenderers”.

The three Next Generation Estates Contracts (NGEC) contracts, due to be awarded this month, comprise: the £1.8bn Regional Prime Central contract; the £1.35bn Regional Prime South-west contract; the £1.2bn Regional Prime South-east contract.

The DIO did not say which firm had challenged the procurement or when it now expected the contracts to be awarded, only that an announcement would be made “in due course”.

Procurement on the contracts began February 2012, with the shortlisted contractors announced in June 2012.

The legal challenge and delay is the latest on a long line of problems to hit the procurement of the massive tranche of NGEC contracts, some of which suffered delays of more than three years.

A DIO spokesperson said: “The award decision for Regional Primes contracts, Central, and South-east and South-west England has been formally challenged by one of the tenderers. As a consequence, contract award has been suspended.

“We are working to resolve the issues raised as quickly as possible to minimise any further delay.”

News of the legal challenge emerged after contractor Babcock, which was in the running for all three of the contracts, this afternoon put out a statement saying it did not expect to be awarded any of the contracts.

Babcock said it was prompted to make the announcement that it was not expecting to win any of the contracts after a legal challenge - brought by another unnamed contractor - had delayed the announcement of the contract awards.

The firm said: “Following a legal challenge that is delaying the announcement by the DIO of the outcome of Tranche 2 of the NGEC, Babcock has discussed the situation with the DIO and has concluded that Babcock will not be awarded any of the contracts forming part of Tranche 2.”