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DIO begins the hunt for private sector partner to manage contractors

The Defence Infrastructure Organisation has taken the first step on the road to appointing a private sector partner to manage the MoD estate and the procurement and management of construction contracts.

In a notice issued this morning DIO said it wanted to “explore prospective roles for the private sector” as it bids to find £1.2 billion efficienciesin the running of the MoD estate, which includes the £5bn Next Generation procurement programme, much of which is currently out to tender.

“The soft market testing is intended to test the thesis that ‘best value for money’ for the MOD could be achieved through greater private sector involvement in the management of DIO, and to test the interest of the private sector in entering into contractual arrangements with MOD,” the department said.

DIO first floated the idea of a private sector partner to help run the estate last February, two months before the body was officially created by then defence secretary Liam Fox.

Acting chief executive Andrew Manley told a press briefing attended by CN at the time that DIO would not consider contractors bidding the Next Generation contracts for the role.

DIO is targeting savings of £1.2bn over the next four years through the sale of surplus land and buildings alongside other efficiency measures.

According to the notice, the options under consideration include:
— DIO places its operational activities into a government owned contractor operated  vehicle for which the private sector operational management is contracted on the basis of cost recovery and performance improvements,
— To form a joint venture or partnership with DIO to manage the operational activities (placed either with a separate corporate vehicle or held separately within MoD) with the partner similarly remunerated from pre-agreed cost savings and performance improvements.

Between 10 and 15 companies will be invited to make presentations to DIO as to how the process could be managed and what the private sector could offer.

Companies which chose not to apply, or are not invited will not be exempted from any procurement process which would be staged at a later date.

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