The HMS Queen Elizabeth is pictured in Rosyth dockyard. Managed service providers aim to help keep British procurement programs on track. (Getty Images)
LONDON — Two US contractors have landed key contracts to help overhaul the way Britain’s Ministry of Defence runs its £14 billion (US $23.4 billion) procurement and support organization.
Bechtel has been nominated as preferred bidder to become the managed service provider for the Royal Navy and Royal Air Force while CH2M Hill will be responsible for the British Army and joint forces command projects, according to news reports.
The two contractors were the final bidders vying for the controversial scheme to turn the Defence Equipment & Support (DE&S) organization into a government-owned contractor-operated operation (GOCO) before it was abandoned when a CH2M consortium withdrew its offer at the last minute.
The MoD was forced to adopt an alternative and less favored plan known as DE&S Plus, which saw the organization become a trading entity with the freedom to appoint outside contractors to help run the business, pay staff private sector salaries and introduce other initiatives aimed at improving performance.
The Ministry of Defence declined to comment on whether the companies had been selected for final negotiations but a spokeswoman said “negotiations to bring in managed service providers are still underway in order to secure the best value for the taxpayer; it would be inappropriate to comment further at this point. We plan to award contracts next month.”
The managed service provider contracts are intended to improve project delivery as part of a wider business transformation plan being implemented following the establishment of the DE&S organization as an arm’s length trading entity operating within the MoD.
The service providers will give strategic assistance to DE&S as well as help current and future programs achieve on-time and on-budget performance.
Bechtel and CH2M, along with Atkins, Deloitte, Jacobs, KBR, McKinsey and URS, were invited to bid for the new contracts earlier this year after the GOCO plan collapsed.
CH2M’s withdrawal from the GOCO left Bechtel as the only bidder, forcing the British government to abandon the plan as it was unable to conduct a proper competition. The government said it may look again at implementing the GOCO scheme at a later date.
In the new competition, contractors were able to bid for all four packages of work but competition rules allowed a company to secure no more than two deals.
The contracts will run for three and a half years with options of two one-year extensions. Contract values are unknown but are expected to total between £200 million and £400 million.
Two other work packages aimed at improving DE&S’ performance have also been contested by industry.
Media reports said that professional services contractor PwC has been selected to support human resources activities. A third package aimed at upgrading finance, management information and information technology capabilities is also being competed. ■