Legal challenge delays £4Bn defence contract awards

Legal challenge delays £4Bn defence contract awards

Over £4Bn of Defence Infrastructure Organisation (DIO) contracts are being held up by a legal challenge to a shortlist that was selected two years ago.


The DIO announced its shortlist of contractors for three regional contracts that are part of Tranche 2 of the Next Generation Estates Contracts in June 2012 when it said final awards would be made by April this year, with construction work to begin on site later in the year.


Babcock has revealed however that following talks with the DIO about a legal challenge made by another as yet unidentified party it would not be awarded any work under the programme.


Babcock was on the shortlist along with five other contractors, mostly in joint ventures, including Carillion, Amey, Kellogg Brown & Root, and Balfour Beatty.


In a statement Babcock said that following the legal challenge it had discussed the situation with the DIO and has concluded that it will not be awarded any of the contracts.


The contracts are the £1.8Bn Regional Prime Central contract, the £1.35Bn Regional Prime South West contract and the £1.2Bn Regional Prime South East contract.


The DIO has also announced award of a £400 million, ten-year strategic business partner contract to Capita working with URS and PA Consulting to transform the estate facilities and services like facilities management to support the armed forces. 


Legal challenges to public sector contract awards are becoming increasingly common, with the successful challenge to the West Coast Mainline franchise process the most high profile in recent years.  The most recent challenge in construction was against the award of a £100 million hospital framework agreement in Northern Ireland that was awarded to McLaughlin & Harvey.


One of the losing bidders on the Omagh hospital, John Sisk & Son,  started legal proceedings on the grounds that the procurement process was unlawful and in breach of the Public Contracts Regulations 2006 and European Union law, but last month the High Court ruled that the framework could go ahead.



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