Bechtel and CH2M Hill, both U.S.-based firms, have been chosen by Britain to operate sections of its military equipment buying program.
The British Ministry of Defense (MOD) has made the move in an effort to restructure its equipment purchasing programs for the armed forces, by trying to utilize public spending. This reportedly involves renovating the Defense Equipment & Support (DE&S) segment. The DE&S has been criticized for multiple delays and budget overruns. The MOD plans to do so by splitting larger operations into lesser contracts.
The companies will be called “managed service providers” under the contracts terms, which will be awarded in September. Each of the four contracts is estimated to be valued between £50 million and £100 million. Other companies that could also have been interested in the contracts are Balfour Beatty, Fluor Corp., Atkins, and KBR.
Bechtel has been awarded the preferred choice for the Navy and Royal Air Force equipment contracts, and CH2M Hill will handle the army and joint command contracts. Negotiation details are currently ongoing, according to a Reuter’s industry source. Both the companies are already working on the Crossrail, London’s £15 billion rail project.
The MOD will also perform bidding on its finance and I.T. services, which will start later in 2014. It is possible that the bidding will start after the current one for a human resources contract will end.
An annual budget of £14 billion is available to the DE&S to purchase and support all services and equipment in the army, navy, and air force. The British department predicts an expenditure of £164 billion within 2013 and 2023.