Defence contracts up for grabs to SMEs

2 February 2011
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2 February 2011 | Angeline Albert  

The Ministry of Defence (MoD) is inviting small businesses to bid for six regional construction framework agreements that are under development.  

Under its Next Generation Estate Contracts (NGEC) programme, the MoD is creating regional capital works deals that are valued below £12 million each, as well as a national framework worth up to £50 million.

Companies bidding for the national capital works framework will need to demonstrate £75 million turnover related to construction projects and experience delivering a building project worth at least £15 million in the past three years. For the regional frameworks, construction-related turnover of £20 million and experience delivering a building project worth at least £5 million is required.

However the MoD said that SMEs below the threshold will be considered as subcontractors for the regional frameworks.  

David Olney, the deputy chief executive of Defence Estates, which manages £15.3 billion of property, said: “We recognise the potential for smaller enterprises to contribute here, alongside larger national and multinational suppliers. That is why we are opening these commercial opportunities up to a mix of company sizes.”

Steve Rice, head of the NGEC programme, said: “We have consulted widely with the DE customer community, industry and wider government, and have concluded that we need to widen the scope for suitably experienced companies in the SME category to be involved in smaller construction projects.”

The total value of the deals over the course of the four-year frameworks is estimated to be between £100 million and £250 million for each of the six regional deals and up to £400 million for the national framework.

Regional frameworks will cover: Scotland; the North East, North West and Yorkshire and the Humber; the West Midlands and Wales; the East of England and East Midlands; the South East (including London); and the South West.  

Up to five suppliers for each framework will be asked to submit competitive bids. The contracts are scheduled to be awarded by autumn 2012.

DE has also announced it will introduce “project bank accounts” to allow direct payments to main and sub-contractors in the supply chain working on the NGEC programme. The accounts will be established jointly with prime contractors and the aim is to eliminate late payments and provide greater certainty in the supply chain.

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