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News story: £140 million contract signed for sale of Defence Support Group

MoD_RSS

War Hero
The Defence Support Group (DSG) maintains and repairs key military equipment and manages the storage of the land vehicle fleet.

The deal includes a 10-year contract with Babcock for the maintenance, repair, overhaul and storage of current military vehicles and light weapons.

The contract award follows the announcement of the preferred bidder last month, and will see Babcock continue the services DSG currently provides.

As well as the £140 million that the sale will generate upfront, the Army will also benefit from considerable savings over the next 10 years, seeing a transformation in the way its vehicles such as Challengers and Warriors are maintained.


A Challenger 2 main battle tank during a live firing exercise in Grafenwöhr, Germany (library image) [Picture: Corporal Wes Calder RLC, Crown copyright]

Minister for Defence Equipment, Support and Technology Philip Dunne MP said:


I am delighted with the successful outcome of this transaction. Signing this deal with Babcock will put the Defence Support Group on a sustainable long-term footing and will transform the equipment maintenance and repair support that the Army relies on both at home and overseas.

Babcock will provide market-leading engineering and fleet management expertise to optimise vehicle availability to the Army at better value for the taxpayer.

The £140 million income from the sale and the significant savings over the life of the contract represent outstanding value for money for the tax payer and will allow us to continue to focus our resources on the front line.

Contract completion is planned for 31 March 2015 and the service provision contract will start on 1 April 2015.

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As well as the £140 million that the sale will generate upfront, the Army will also benefit from considerable savings over the next 10 years

Considering all of DSG's fixed assets, that seems quite cheap. If Aunty Betty retains ownership, I suppose liability for all the assets stays as well. I wonder what that risk and business case looked like.

So they will provide considerable savings over the next 10 years and make a commercial profit. DSG must have been fairly crap, then; unless the various Treasury rules and constraints have suddenly evaporated.
 
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