LONDON – Britain has sold the state-owned Defence Support Group (DSG) to Babcock for £140 million, the Ministry of Defence announced Wednesday.
Babcock was named preferred bidder for the armored vehicle maintenance and overhaul company last month, beating out proposals from DynCorp International and a KBR/Rheinmetall team.
The MoD said the sale includes a 10-year service provision contract with Babcock for the maintenance, repair, overhaul, and storage of current military platforms and light weapons like the Challenger 2 tank and the Warrior infantry fighting vehicle.
It does not include work for the Army by General Dynamics on 589 machines under the £3.5 billion Scout Vehicle program that was announced in September.
The first of those vehicles is to be handed over in 2017 and an open competition to support the program is likely.
The sale does not include the electronics and avionics side of DSG; that is being retained as a state-run operation.
The deal with MoD includes a possible five-year extension of the arrangement with Britain's leading defense support company.
Details of the deal and Babcock's plan for the business are expected to be unveiled in the new year.
DSG was put up for sale by the Conservative-led coalition government as part of the 2010 strategic defense and security review.
Estimates of the value of DSG had previously put the figure in excess of £200 million.
One industry executive with knowledge of the bidding said the estimates by analysts and media "were always pie in the sky."
Even with a £140 million price tag, the executive said that there was clear water between Babcock's commercial and financial proposals and those of its rivals.
Defence procurement minister Philip Dunne said "signing this deal with Babcock will put the DSG on a sustainable long-term footing, and will transform the equipment maintenance and support that the Army relies on both at home and overseas."