黑洞社区

Interserve has launched a legal challenge to the award of 拢4bn worth of defence estate construction contracts to rival Carillion, prompting the Ministry of Defence to suspend the procurement process.

the Ministry of Defence鈥檚 (MoD) estate arm the Defence Infrastructure Organisation (DIO) has 鈥渟uspended鈥� the award of three defence estate construction contracts, together worth up to 拢4.35bn, after the contract award decision was 鈥渇ormally challenged by one of the tenderers鈥�.

The DIO declined to say which firm had launched the legal challenge, but 黑洞社区 now understands that it is Interserve, which was in line for all three of the Next Generation Estates Contracts (NGEC) contracts in three separate joint ventures (see box below).

It is also now understood that a joint venture between Carillion and Amey set to be awarded all three of the contracts, prior to the legal challenge launched by Interserve.

The award of the three disputed NGEC contracts to the Carillion Amey JV would mean the firms will have won five of the six NGEC contracts to be awarded this year 鈥� together worth as much as 拢5.5bn - after already picking up two other NGEC contracts last month, which were worth up to 拢1.2bn.

Both Carillion and Interserve declined to comment.

The three NGEC contracts in dispute, which were due to be awarded this month, comprise: the 拢1.8bn Regional Prime Central contract; the 拢1.35bn Regional Prime South-west contract; the 拢1.2bn Regional Prime South-east contract.

The contracts are for repairs and maintenance work across the defence estate, as well as facilities management and construction projects worth up to 拢3.9m.

Procurement on the contracts began February 2012, with the shortlisted contractors announced in June 2012.

The DIO did not say when it now expected the contracts to be awarded, only that an announcement would be made 鈥渋n due course鈥� and that it was working to 鈥渕inimise鈥� the delay.

The legal challenge and delay is the latest in a long line of problems to hit the procurement of the MoD鈥檚 suite of NGEC contracts.

Last month Carillion鈥檚 joint venture with Amey was awarded the 拢626m National Housing Prime contract as well as the 拢152m Regional Prime Scotland and Northern Ireland contract, while Interserve鈥檚 JV with PAE won the 拢322m National Training Estate Prime contract.

But these contract awards came after a series of delays, with the MoD extending the procurement process 鈥� which had begun in late 2010 and early 2011 - by two years. Earlier this year it again delayed the award of the contracts.

News of the legal challenge emerged after contractor Babcock, which along with Carillion and Interserve was also in the running for all three of the contracts, put out a statement yesterday saying it did not expect to be awarded any of the contracts.

Babcock said it was prompted to issue the statement after a legal challenge - brought by another unnamed contractor - had delayed the announcement of the contract awards.

The firm said: 鈥淔ollowing a legal challenge that is delaying the announcement by the DIO of the outcome of Tranche 2 of the NGEC, 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.鈥�

A DIO spokesperson said: 鈥淭he 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.

鈥淲e are working to resolve the issues raised as quickly as possible to minimise any further delay.鈥�