A new front has opened in the war of words between the Ministry of Defence and the private sector over the prime contracting initiative.
The point of dispute is the ministry’s implementation of a European Commission directive that at least five consortiums compete in the final stages of the race for major projects. Contractors claim that the long shortlist, coupled with the large amount of design information that they are required to produce, means that the cost of bidding outweighs the likely rewards.

The Major Contractors Group confirmed that it is in talks with Defence Estates over the rules. So far, they have been used only on the £70m Catterick Garrison project in North Yorkshire. Eleven firms were invited to prequalify for the scheme, which will provide accommodation for 600 soldiers.

MCG director Bill Tallis said his members felt shortlisting of five was “somewhat excessive” and pointed out that it “did not seem to be required by other parts of the public sector”.

Michael Pengelly, Defence Estates’ commercial director, confirmed that talks were taking place with the MCG and individual firms.

Pengelly added that he would consult bidders before the Catterick scheme was tendered later this year. “Clearly there has to be a balance between what is reasonable to ask the industry, and us being able to judge who will be preferred bidder,” he said.

A senior source at one contractor said that each of the five bidders for a large scheme could expect to spend up to £1m. He said: “The cost is horrific, especially for one-off jobs.”