Date: Embargoed until 09:00 (GMT) Wednesday 22nd August

MOD short-lists trio of potential infrastructure partners

The Defence Infrastructure Organisation (DIO), the Ministry Of Defence’s (MOD) property and services provider, has selected three consortia to continue to the next stage of the competition to potentially become its private sector business partner.

Following a robust procurement exercise, launched in May 2012, three consortia have been selected. They consist of:

• Telereal Trillium / KPMG / Mace;
• Serco / DTZ / Bechtel;
• Capita / URS / PA Consulting

This marks a significant step in DIO’s Transformation Programme. Long-term partnering with Industry may enable DIO to harness the expertise available in the private sector to create a world-class sustainable, efficient and professional organisation at the best cost to the taxpayer.

Philip Hammond, Secretary of State for Defence, said:

“I am pleased to announce that three consortia consisting of: Telereal Trillium / KPMG / Mace; Serco / DTZ / Bechtel; and Capita / URS / PA Consulting have been selected to continue in the competition to become the Defence Infrastructure Organisation’s Strategic Business Partner.

“Nineteen months ago DIO embarked on a major internal transformation with the intent of becoming an efficient, world-class supplier of infrastructure, providing the level of service that our Armed Forces deserve, in a way that provides best value for money to the taxpayer. This work includes a radical transformation of the business processes and management information systems that underpin the DIO.

“Our search for a Strategic Business Partner is expected to extend the capability of the DIO further by allowing it access to private sector skills and innovation. This is an example of where the Private Sector can add significant value in working with the Public Sector through a long-term strategic partnering arrangement to deliver benefits for both parties. In this regard, DIO is at the forefront of a larger Transformation Programme across Defence, as recommended by Lord Levene in his 2011 report on Defence Transformation. If this type of partnering arrangement proves successful, it offers the potential for further use in other parts of Defence in future.

“I look forward to the competition progressing over the coming months and working with officials in DIO to ensure that we choose the best partner for the DIO.”

In addition, Andrew Manley, Chief Executive, DIO, said:

“We were delighted with both the quality and quantity of responses from Industry, which allowed us to carry out full and thorough evaluation, before arriving at our choice of candidates to take through to the next stage of the process.

"This is an exciting stage in our Transformation process, which, is already well advanced in changing the way that we work. We are on the way to becoming a world leading Infrastructure provider, and we welcome the potential involvement of an Industrial Partner to extend our transformation further.”

DIO plans to issue the three selected consortia an Invitation to Negotiate (ITN) in the next few weeks. The consortia will be asked to further prove that they can provide the MOD with the right skills and expertise, before the DIO makes a final decision regarding their preferred Strategic Business Partner next summer. However, a contract will only be awarded if it can be found to provide value for money to the MOD and the taxpayer.

Further information:

Press enquiries to:

Tony Moran, DIO Press Office: 0121 311 2418 or sonia.southern101@mod.uk

DIO website: www.mod.uk/dio

Notes to editors

1. The Defence Infrastructure Organisation (DIO) is part of the Ministry of Defence (MOD). It is responsible for managing and maintaining land and properties to meet the current and future needs of the MOD and personnel at home and abroad, and to support current operations.

2. Our work includes providing, supporting and improving: operational units; single living and service family accommodation; training areas and historic military sites. DIO actively manages these to ensure the needs of Defence are met, value for money is achieved, our heritage is protected and to achieve our environmental goals.

3. DIO was formed on 1 April 2011 when the former Defence Estates (DE) organisation was brought together with other property and infrastructure functions within the MOD to form a single organisation. DIO manages the MOD’s property infrastructure and ensures strategic management of the Defence estate as a whole.

4. DIO is responsible for the management and delivery of the MOD’s infrastructure both in the UK and abroad. Since its formation in April 2011, following the SDSR, and in line with the changes recommended in Lord Levene’s Defence Reform Report, DIO has embarked on a transformation journey that will run for a number of years.

5. The Defence Infrastructure Transformation Programme (DITP) seeks to determine both the future operating model and the most appropriate corporate structure for DIO. It is a key pillar of the Transforming Defence agenda, which will deliver the Future Force 2020 structure set out in the SDSR, supported by a smaller, capable and flexible Department, within the resources available for Defence.

6. DIO sought industry views and feedback on potential future business models in a successful ‘soft market testing’ exercise conducted earlier this year. A decision to appoint an SBP will be subject to DIO obtaining necessary MOD and HM Treasury approvals, demonstrating it is the best value for money option and meeting any legislative requirements.

7. Through the procurement process, DIO is testing whether an SBP could help it in:

- Managing DIO’s operations and staff, initially as part of DIO’s existing organisation. It is envisaged that this will include reviewing the organisational structure presently being put in place by DIO to advise on what further efficiencies can be driven from the business, what additional skills are required to deliver DIO’s strategic objectives and the options for providing those skills;

- Developing and implementing a strategic asset management plan to increase the utilisation of the estate, which will lead to rationalisation and commercialisation opportunities; and

- Further developing and implementing the transformation of DIO Managing existing and new suppliers and other third party arrangements Developing contracting strategies to drive further efficiencies and deliver better value for money for the MOD across its estate

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