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UK firms vie for £650m US embassy

Five UK firms are lining up for a chance to build the new $1 billion (£650 million) US embassy in Battersea despite widespread reports the job would be available only to American contractors.

Construction News has learned Balfour Beatty, Mace, Laing O’Rourke, Skanska and Sir Robert McAlpine have all prequalified as part of joint bids with US firms.

US law dictates the contract must be led by an American firm. They are among six bids that prequalified earlier this summer.

Despite US government claims that UK firms would only be eligible for subcontracted packages, just one of the successful bids - Hensel Phelps - is US only.

The other five teams will see a US firm leading a joint bid with a UK partner.

US contractor Caddell is pairing up with Balfour Beatty, Clark with Mace, Walsh with Skanska and Plaza with Laing O’Rourke.

Sir Robert McAlpine is understood to be the final bidder and is believed to be partnering US firm Harbert.

The prestigious and highly secretive project will see the US embassy relocated from its home of 50 years in Grovesnor Square to the new site in the London Borough of Wandsworth.

The new 12-storey building, which will be able to house 1,000 staff, covers 45,000 sq m.

Its budget is among the most expensive taken on to build a new embassy, alongside recent developments in Baghdad and Islamabad.

It is one of the largest projects set to be awarded in the capital next year and contractors expect the bidding process to be fiercely contested.

A number of other companies are understood to have looked at the scheme but did not prequalify.

One subcontractor who did not wish to be named said he was “amazed” not to see Lend Lease prequalify for the job, “bearing in mind its history on big London projects”.

Last week, CN revealed a Davis Langdon survery that suggested new entrants may soon break into the top tier of commercial contractors.

Work is not expected to start on the embassy until 2013 and is scheduled for completion in 2017.

Architect Kieran Timberlake’s glass cube design was chosen last year. Mr Timberlake’s plans pay close attention to security and include a multi-level garden and moat which will act as a barrier to car and truck bombs.

The construction process will be carried out under the strictest security conditions.

It is expected that only US citizens will be eligible to work on the top two floors of the project due to its highly sensitive nature, and all workers on site will be closely supervised by security personnel to ensure they do not plant bugs and surveillance equipment.

Consultant Cushman and Wakefield held a briefing for the shortlisted bidders in London earlier this summer.

US officials have previously said they do not expect to pay VAT on the scheme.

The embassy site forms a major part of the 450-acre Vauxhall/Nine Elms/Battersea Opportunity Area between Battersea Park and Lambeth Bridge on the south bank of the Thames.

The Greater London Authority’s planning framework for the area anticipates up to 16,000 new homes and 25,000 new jobs will be created as the district regenerates.

Developer Ballymore sold the five-acre plot to the US government while retaining 15 acres around it where it plans to build a major mixed-use development called Embassy Gardens.

The Embassy Gardens scheme includes 2,000 new homes, up to 55,700 sq m of office space, over 9,300 sq m of retail and leisure space and a 100-bed hotel.

Work is already under way elsewhere in the VBNO, with developer St George having started on its Vauxhall Tower scheme.

Last week Berkeley-owned St James Group broke ground on its £300m Riverlight residential project.

Outline planning permission has been granted for Treasury Holding’s £5.5bn Battersea Power Station scheme which looks set to move ahead despite recent funding problems.

Lenders to the scheme waived a debt maturity deadline earlier this month while talks with new equity partners continued.

Lloyds and Ireland’s National Asset Management Agency are the senior lenders to the scheme.

Applications have now been submitted for the redevelopment of Marco Polo House, Royal Mail’s Parkside scheme and Ballymore’s Embassy Gardens plans.

More major landowners in the Opportunity Area are preparing to redevelop their plots, including National Grid, Sainsbury’s, Covent Garden Market Authority, Green Properties and Klum.

An estimated £1bn of new infrastructure is supporting the area’s growth, including a two-station extension of the Northern Line. The planning process is under way for the new tube link and developers are considering using tax increment finance to help fund it.

 

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