MoD awards record £8 billion contract

6 April 2006
More news

07 April 2006

The Ministry of Defence yesterday awarded its largest ever private finance initiative (PFI) contract - worth £8 billion - to construction consortium Aspire Defence.

The 35-year contract, Project Allenby-Connaught, is for the refurbishment, management and operation of facilities at Aldershot and garrisons in the Salisbury Plain area.

It will see the construction of more than 350 new buildings, refurbishment of 140 and the demolition of more than 400, providing accommodation for 18,000 military and civilian staff.

The MoD said a PFI procurement for this "highly complex construction programme" offered the potential for better value for money and improved service delivery compared to traditional procurement methods.

An MoD spokeswoman told supplymanagement.com that to prevent any delays or cost overruns - one of the biggest criticisms of PFI agreements - Aspire's payment would be performance-based. And it could incur fines for any delays or inability to meet contract conditions.

"We will be working very closely with Aspire to ensure that contractual obligations are met and to highlight any potential difficulties which can then be resolved early to mutual satisfaction.

She added: "Payments to the contractor will be linked to performance and it will be in the contractors' interest to deliver on time and to specification; otherwise financial penalties will be imposed."

Don Touhig, under-secretary of state for defence, said the contract was a "major step forward."

Aspire Defence, a joint venture between construction firms Carillion, Kellogg Brown and Root and the HSBC bank, was formed specifically to bid for the project. It was awarded preferred bidder status in 2004.

Aspire will also be providing more than 20 different services to the garrisons, including housekeeping, mess management, grounds maintenance, store management and the provision of utilities and fleet management services.

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