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Legal challenge delays £4.35bn DIO contracts

The Defence Infrastructure Organisation has suspended the award of three contracts worth up to £4.35bn after one of the tenderers challenged a contract award.

Babcock issued a statement which said it had not been awarded any of the latest Next Generation Estates contracts by the DIO.

The remaining three Regional Prime contracts covering the South-west, South-east and Central regions were due to be awarded on 1 June, and DIO head of future procurement Matt Foley told Construction News last month the Treasury had already signed off the contracts.

The central contract will be worth between £800m and £1.8bn over 5-10 years. The South-east deal is expected to be worth between £500m and £1.2bn and the South-west deal between £600m and £1.35bn.

A DIO spokesperson said: DIO is due to award contracts for the second tranche of its Prime contracts for the delivery of repair and maintenance services across the built estate. We will announce the successful bidders in due course.

“The award decision for Regional Primes contracts, Central, and South East and South West England has been formally challenged by one of the tenderers. As a consequence, contract award has been suspended. We are working to resolve the issues raised as quickly as possible to minimise any further delay.”

Babcock statement

“Following a legal challenge that is delaying the announcement by the Defence Infrastructure Organisation of the outcome of Tranche 2 of the Next Generation Estates Contracts, Babcock has discussed the situation with the DIO and has concluded that Babcock will not be awarded any of the contracts forming part of Tranche 2.”

For the South-east, the shortlist comprises Babcock Support Services, Carillion Enterprise, KBR (Kellogg Brown & Root and Balfour Beatty Workplace JV) and PriDE (Interserve Defence and SSE Contracting JV).

In the South-west, Babcock Support Services, Carillion Enterprise and Landmarc Support Services are in contention for the contract, while the Regional Prime Central contract (covering Wales, the North, the Midlands and East Anglia) sees Axiam (Interserve Defence and DynCorp International JV), Babcock, Carillion Enterprise and KBR in contention.

Last month, the DIO awarded two Next Generation Estates Contracts worth £778m to a Carillion and Amey joint venture.

Carillion/Amey beat Babcock Support Services and a joint venture between Kier and Turner Facilities Management to the £626m National Housing Prime contract covering repairs and maintenance across 49,000 military homes.

The joint venture also saw off competition from Babcock Support Services, Interserve and a joint venture between Turner Facilities Management and Henry Brothers to win the £152m Scotland and Northern Ireland Prime Contract.

For more

Click here for Construction News’ interview with DIO head of future procurement Matt Foley

Readers' comments (1)

  • The DIO must have construction professionals on their contract evaluation Panels.
    It is surprising therefore that these Panels concluded that awarding all the housing and regional Prime Contracts to what is effectively a single contractor, would achieve 'best value' for the public purse.
    Perhaps the Panels were impressed by the contractor's pre-payment scheme whereby their supply chain 'pay' the contractor if they wish to receive monies due before 120 days.

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