Defence Infrastructure Organisation

Monday 9th June 2014 Written Statements

[The Secretary of State for Defence (Mr Philip Hammond)]

Further to my statement of 10 March 2014, Official Report, column 2WS regarding the preferred bidder for the strategic business partner (SBP) to operate with the Defence Infrastructure Organisation (DIO), I am able to announce that the contract has now been awarded to Capita in conjunction with URS and PA Consulting.

The introduction of a strategic business partner will enable the DIO to make a significant contribution to departmental savings as set out in the 2010 strategic defence and security review and will strengthen the service we provide across defence.

Following the establishment of the DIO in April 2011, a significant transformation programme was instigated and in early 2011 the Ministry of Defence board considered the outline case for the introduction of an SBP for DIO.

The case set out the potential financial benefits of adopting a different business model in DIO whereby an SBP would be engaged to drive the transformation of DIO further and deliver rationalisation and efficiency improvements. The key areas were:

a. access to market-competitive skills and a right-sized organisation through organisational optimisation work during the short-term transformation phase of the contract;

b. access to greater capacity for transformation and specialist skills through reach-back to the partner company;

c. access to private sector funding that might be brought into use for pump-priming estate rationalisation and for spend-to-save on efficiency improvements.

Capita in conjunction with URS and PA Consulting has been selected as the strategic business partner for a 10-year contract on a predominately incentive based gain-share arrangement. The DIO will now undertake further trade union consultation with the intention of creating a GovCo to manage defence infrastructure from 2016.