The Ministry of Defence (MOD) has awarded Babcock International (Babcock) a contract worth £900 million over a 10-year period to transform the way the Army's vehicles are maintained, repaired and stored. The contract has the potential to grow to around £2 billion as a result of plans, subject to value for money, to optimise a broader scope of services.
The contract has been awarded as part of the sale of the Defence Support Group (DSG) land business to Babcock for £140 million, which was announced in December last year. From April this year Babcock will deliver the services currently provided to the Army by the DSG land business.
Over its lifetime, the £900 million contract will generate total savings to the Army of around £500 million. This represents a reduction of over a third of the current costs.
Minister for Defence Equipment, Support and Technology Philip Dunne MP said: “This contract is excellent news and puts DSG on a sustainable long-term footing to support maintenance and availability of land platforms for the Army, in a similar manner to existing contracts for support of platforms for the other services.
MP Dunne added: “Babcock will provide DSG with key engineering and fleet management expertise which it has built up over 15 years of working with the Army. DSG will also gain the potential to provide vehicle maintenance to other existing heavy vehicle customers, which it is unable to do while owned by the MOD. The contract will also ensure the Army's continued access to improved vehicle repair and maintenance support - all at significantly better value for money for the taxpayer.”
Babcock has committed to develop DSG and has already identified commercial work for DSG from within the Babcock Group.
No MOD sites will close on sale.. All DSG land business staff will transfer to Babcock with their terms and conditions protected. Babcock will lead a business improvement programme over the first three years which is aimed at optimising the performance of the business.