DTR costs could rise by a further £1bn

From Defence management

DTR costs could rise by a further £1bn
Tuesday, February 24, 2009

The cost of the Defence Training Review (DTR) may rise by a further £1bn Defence Management has learned.

In a report that first appeared in the South Wales Echo, the cost of the project was listed as £13bn, an increase of £1bn since the last officials figures on the DTR were released late last year.

The initial contract projected the DTR's costs to be £11bn. But the finances for the consortium ran into trouble when their main source of income: the selling of vacant MoD land, was affected by the recent slump in property prices.

The Metrix consortium which is running the programme has resubmitted a business plan which defence ministers have said is close to being approved. The proposal estimated costs to be art £12bn.

The latest cost projection of £13bn could factor in contingency funding or other unforeseen added costs. With the economy now officially in recession the financial markets have proven become more and more volatile with lenders timid to lend money, even to public service related projects. An attempt to raise revenue for the DTR through a bond initiative was scrapped a few months ago due to poor returns.20

The newspaper did not explain the rise of £1bn.

MP John Smith who's contingency includes St Athan where the DTR is to be built compared the region to the Gold Rush in the US.

"There will be a long queue of companies and organisations rushing to Barry and the Vale because this area will be at the heart of a world-leading centre of excellence in technical skills training.

"Where else but here in Wales will thousands of trainees from our Army, Navy and Royal Air Force receive training in highly-prized and transferable technical skills under one roof? The opportunities created by this project for people and businesses in Barry and the Vale are huge," Smith told the South Wales Echo.

Officials from PCS, the union representing the vast majority of civilian trainees who will either have to move to St Athan or lose their jobs, continue to fight the proposal. The have argued that St Athan does not have the infrastructure in place to be a suitable training academy and that forcing employees to move from all over the country to rural Wales is unacceptable.

Paul Bemrose PCS National Official said, "Should this project go ahead it will be an economic disaster for the local economy."

Sodexo under fire over defence deal

Daily Mail - CITY FOCUS: Sodexo under fire over defence deal

By Karl West Last updated at 10:28 PM on 23rd February 2009

Rarely has the future training of Britain's armed forces been so important. Fighting on two fronts in Iraq and Afghanistan, is this really the right time to outsource to a profit-making consortium?

This vexed question is all the more contentious when one of the main partners in this group - Metrix - is the controversial French catering group Sodexo.

The company took its place as one of the two equity partners earlier this month alongside QinetiQ (down 4¼p at 137p), the equally controversial defence research company.

Sodexo replaced property giant Land Securities, which quit the consortium in December citing the soaring cost of the £12billion contract, known as the Defence Training Review.

Sodexo is not widely known in the UK, but serious questions remain about its suitability to help run such a strategically important contract.

Only a few years ago it was dragged through the US courts by thousands of its own African-American staff, who claimed they had been discriminated against on the basis of their race.

More...

• 30-second guide to defence spending (thisismoney.co.uk)
• Defence funding in the firing line (thisismoney.co.uk)
• Defence allies in £16bn bid (thisismoney.co.uk)

The company fought the legal action, which claimed it systematically denied promotions to 3,400 black mid-level managers, but in 2005 agreed to settle for $80million.

Sodexo has also made headlines over the quality and preparation of its food. The 2004 film Super Size Me slammed its policies on child nutrition in US schools, where it supplies catering services.

In Britain, a 2004 Channel 4 documentary exposed the unhygienic preparation of food by Tillery Valley Foods, one of its subsidiaries.

Sodexo has also come under fire in Britain for its management of the Harmondsworth Detention Centre, which is home to many asylum seekers.

In 2006, Anne Owers, HM Inspector of Prisons, criticised the company for allowing Harmondsworth to 'slip into a culture and approach which was wholly at odds with its stated purpose'.

She said this was 'essentially a problem of management'. The report followed two deaths at the centre in 2004.

A spokesman said: 'The allegations regarding TVF and Harmondsworth are over three years old and do not reflect how these establishments are run.'

The company was also accused of supplying catering at Guantanamo Bay in Cuba and the Abu Ghraib prison in Iraq. Although Sodexo is the preferred catering contractor of the US Marines, the companydenies having ever worked at either facility.

'We have never been involved with these contracts. We manage US marine bases only on US territory,' a spokesman insisted.

Aside from these concerns, there are also serious misgivings in the defence industry about whether Sodexo has the capability to plug the gap left by Land Securities.

Sodexo said it was 'confident' it has the relevant expertise for the project, pointing out it is involved in 17 private finance projects and manages a range of services.

This includes taking responsibility for over 130 buildings at Colchester Garrison in Essex.

The key to Metrix's DTR plan is to slash the number of MoD training bases from 30 sites to about ten, with a main campus at RAF St Athan in South Wales, former home of the Vulcan bomber.

It had planned to keep the cost of the project in check by offloading the unwanted MoD sites to commercial property developers.

But since being appointed preferred bidder in January 2007, the value of land has plummeted and debt costs have soared.

As a result, the cost of delivering Metrix's plans have risen by £1billion to £12billion, making the government's biggest ever private finance deal look increasingly unviable.

As previously reported in the Daily Mail, the spiralling cost of the scheme has also attracted the attention of the National Audit Office, which has indicated it might probe the deal.

One industry source noted Sodexo's core competency, as a provider of 'soft' facilities management and catering, is completely different to the expertise in property development and estate management that Land Securities brought.

The source added: 'It suggests therefore that the MoD is going to take the risk on the land values dropping. It's all down to the taxpayer taking the risk.'

The MoD said the sale of surplus land is a 'long term process' and would not be affected by shortterm fluctuations in value. It added: 'The DTR... project is not dependent on funds raised through these (surplus land) disposals.'

While the bill for bailing out Britain's banks spirals ever higher, taxpayers can ill afford the additional financial burden.

And with the quality of soldier training on the line, the question of who runs this high profile contract might literally be one of life and death.

business as usual for academy - Oh no its not!

‘It’s business as usual’ for the academy Oh no its not! What a panto!

Peter Collins article ‘It’s business as usual’ for the academy is so misleading and unbalanced - Metrix talk of partnerships with WAG who seem to be happy to continue with this unfeasible fantasy which is unpopular with the military top brass and even more unpopular with PCS the union representing the skilled workforce involved. How can boss Barrington from Metrix claim that privatised training is more efficient or cost effective when they are cutting courses by 25% jeopardising effectiveness or in plain English - putting our soldiers at risk-as a desperate measure to reduce costs already £2 BILLION over budget. Rumour is that Qinetiq and Raytheon don't seem to see eye to eye which doesn't bode well for training delivery. Qinetiq shares have dropped because of the likelihood of a collapse of the (DTR) St Athan project. We must not forget there have been protests worldwide against Raytheon weapon suppliers, there is a massive protest now in Bristol however it is very likely that permanent protest will be coming to St Athan with Raytheon.

Write to Wales online ecletters@mediawales.co.uk and Peter Collins

peter.collins@mediawales.co.uk

write to us no2militaryacademy@inbox.com

NAO -St Athan unaffordable

NAO acknowledges DTR cost problems

The Defence Training Review (DTR) continues to face an uphill struggle to reach a finalised contract after a leaked memo from the NAO confirmed that costs and delays were continuing to increase.

The DTR is designed to consolidate training for armed forces personnel into one location, much of it conducted by private trainers rather than civilian personnel. In 2007 the Metrix consortium which is leading package 1 estimated that the costs would be £11bn.

Up until now the NAO has not weighed in on the DTR since the project was in contractual negotiations and therefore not on the government’s balance sheet. But in a letter to MP Mark Pritchard who’s constituency covers one of the training bases designated for closure if the DTR comes to fruition in St Athan, Wales, the NAO admitted that Package 1 of the contract was now unaffordable.

The provisional contract was awarded to Metrix in January 2008 but by May it had already encountered severe financial problems. According to the NAO’s letter, Metrix submitted a revised proposal in September that was less dependent on raising revenue through the sales of MoD land. If the proposal is accepted, the contract could reach financial close at some point i n 2010, two years after it was first awarded to Metrix.

The training centre was scheduled to be opened by in 2013 but with delays the contract the centre's operational date may be pushed back further.

NAO officials acknowledged that the cost of the programme had now risen to £12bn. However according to a freedom of information request provided to the PCS Union, the initial cost of the programme was £10bn not £11bn, meaning that costs have already risen by £2bn in less than three years.

PLANET PFI MoD off its rocker

From Private Eye no 1224 28 Nov 2008

PLANET PFI

DEFENCE

MoD off its rocker (and the WAG in bed with it)

The national audit office has sugared yet another PFI report - this time on the "allocation and management of risk" in Ministry of Defence PFI projects - with its standard introduction whitewash declaring that "deals are delivered satisfactorily, on time and on budget".

Only the small print reveals that they were only "on time and to budget following the contract signature". Given that costs frequently go through the roof in the 45 months it takes on average to get to this stage for deals worth more than £50m, the statement is therefore meaningless.

For example, the cost of the MoDs headquarters rocketed by £99m, or more than 20% of the value. Yet the NAO finding provides the perfect endorsement to please defence PFI enthusiasts such as MoD commercial director Amyas Morse (formerly of PwC which advised on the the HQ deal) and the various firms represented on the "expert panel" consulted for the latest study, including, er, PwC, KPMG, and BAE systems.

Elsewhere the report highlights the common absurdities of PFI contracts. Under a 20 year waste water PFI deal at Tidworth Garrison, for example, "foul sewerage flooding to the indoor premises would...incur a £150 penalty." One particular hair-brained scheme was the PFI deal to effectively privatise the Armoured Vehicle Training Service under which squaddies would learn how to drive and fire Challengers and other tanks. After 6 years and £5m in costs, in 2005 the deal was pulled with no contract in sight, amid confusion
over wheezes that could only exist on planet PFI, such as the "transfer of course pass rate risk" whatever that means. £13.5 million then had to be paid to the disappointed bidders, over half of it for "intellectual property rights" which have yet to be used.

Undeterred, as the Eye has reported, the MoD now plans a £12bn PFI deal to privatise defence training across all the services. Unsurprisingly about 30% of this plan has already been pulled and the rest is way behind schedule.

Incompetence turned into fraud, meanwhile on the "defence fixed telecommunications system" PFI contract with BT. The NAO reported that "staff in call centres operated under the contract were artificially inflating call numbers to meet targets for successfully completed calls". Though the filched "service payments" of £1m have been repaid, as has the £122K cost of an MoD police investigation, no compensation or fine has been paid and BT keeps its £200m a year contract. A few junior staff have been fired and the MoD is "confident that the current good working relationships can be maintained and that it has been resolved in a professional manner by senior staff" So that's all right then.

PS trustworthy BT is meanwhile also running the national medical record "spine" on a £1bn NHS contract.

Rhodri doesn't understand the reality of the DTA!!!

A MoD bulletin has recently been issued to advise PCS members on the latest information regarding the deferred decision on the Defence Training Review (DTR). The bulletin focuses on an recently published DTR newsletter that was circulated to all staff:
Rhodri Morgan should get his facts right and so should the other AMs blindly following his lead and supporting this crazy doomed project!

Ministry of Defence

20^th October 2008 MoD/BB/112/08

To: MoD Branch Secretaries

Cc: Group Executive Committee

Instructional Officer Committee

DTR. Non Announcement on package 1. Further Delays- further Frustration

Introduction

After the recent delays in announcing anything of substance, members in scope of package 1 of DTR were expecting some clarification on their futures. Any such hopes were dashed by Ainsworth’s statement to the House of Commons.

Meetings with senior officers had previously revealed that package 1 “was just about affordable”. Given this was before the credit crunch, before the fall in house prices and before the fall in land prices, PCS had been hopeful that the MoD would gracefully abandon this foolish enterprise.

Ainsworth Announces

During the defence debate the Minister made the following comments:

“As in all areas of defence, we continue to examine how we can improve training. The House is aware of the defence training review programme. The review will transform how we deliver specialist phase 2 and phase 3 technical training on a defence-wide basis, and, once complete, will help us to adjust to changes in demand, to make more efficient and effective use of training personnel, to improve accommodation and to make better and more efficient use of the training estate… Hon. Members will be aware that progress on defence training review package 1 has been more difficult and prolonged than expected. However, I can report that considerable progress has been made in driving down costs and towards achieving an affordable, value-for-money package 1, which is on track for an investment decision next spring, with the contract signature to come approximately 15 months later.”

IPT Team leader meeting with Trade Unions

Geoff Nield met with the trade unions shortly before Ainsworth’s comments in the House. A part of the information imparted was that the fall back position is MORE expensive than proceeding to contract. This is a staggering confession and beggars the question that if the fall back position is more expensive, then how can it be a fall back position at all? This appears to be more smoke and mirrors from Nield’s team and it is something that PCS will be taking up at the next meeting with the IPT.

IPT issues propaganda rag

Some of you may already have seen the latest DTR Package 1 Update. The eight page “newsletter” includes some useful information sandwiched between thinly disguised propaganda.

The newsletter includes a revised timeline for DTR package 1:

• Main Gate Approval- Spring 2009
• Financial close- Summer 2010.
• Vesting day- Autumn 2010
• Start of construction- Autumn 2010
• New service commence- 2014-2015.

This in itself appears to be wishful thinking and PCS expects further slippage to the right as time goes on, as is fairly common with projects in the MoD.

Rhodri Morgan tells PCS members not to worry- they'll love moving

The newsletter, incredibly contains a message from Rhodri Morgan, the First Minister for Wales! The piece is nothing more than a thinly disguised attempt to prepare PCS members for the “inevitable” transfer to St Athan. Rhodri tells readers of presumable success stories in bringing work to the Vale of Glamorgan. He has the nerve to include DARA in this.

DARA's “Red Dragon” hanger is available for redevelopment within the footprint of DTR, not because of success but because the End to End review moved much of DARA’s work to RAF forward bases.

The First Minister waxes lyrical about the transport and communication links to St Athan, but forgets to mention the local MP's (John Smith) call for a new railway station and roads to service the Defence Technical Academy. If links are so good then what is Smith talking about?

Rhodri Morgan also talks glowingly of the relocation of Civil Service jobs to South Wales- in particular he mentions Home Office, Department for Transport, Patent Office, Statistics Office, DVLA etc and how “brilliantly” this has worked for thousands of Civil Servants. What's more he assures readers that there are packages to help Civil Servants make the move...the only problem is that staff in scope of DTR package 1 will NOT BE CIVIL SERVANTS. Obviously it’s too much to expect the First Minister and his entourage to understand the reality of the DTA and PCS members’ opposition to it.

It seems to PCS that “Team Wales” has a lot to learn.

Compression, rationalisation and harmonisation = Job losses

The newsletter contains an article by Steve Krosnar-Clarke that talks about CRH- being Compression, Rationalisation and Harmonisation. These methodologies will reduce the length of courses by 25%.

What Krosnar-Clarke does not say is what that means going forward. If you keep the same number of courses but compression them, then the total number of hours training is reduced and the number of trainers required must, by the same token, be reduced. Therefore CRH is the prelude for redundancies- potentially in the region of 25%.

Given that these plans are already being made PCS will be liaising with experts within the union to ascertain whether or not such a programme is in contravention of the recently signed Cabinet Office Protocol on privatisation and TUPE transfer.

Risky business

The newsletter also contains an article by Chris Brand on risk. It might be a Freudian slip but calling DTR a risky business has been exactly the PCS position for a substantial period of time.

Worryingly, the article's longest paragraph is one about the risks of crossing a road. The article advises that there are risk mitigation plans that are regularly updated. In fact the biggest risk and the one that forced a reappraisal of methodology in package 2- i.e. teaching staff refusing to relocate has the flimsiest of plans attached to it. It seems to consist of begging Instructional Officers not to leave and in the meantime training would be Instructors in colleges around the Vale of Glamorgan.

PCS will be contacting Chris Brand for a full copy of the latest mitigation plans and will circulate them to branches if possible.

Still everything to play for

The DTR IPT is seeking to become a master of spin. This should surprise no one. But it is crucial that PCS members don't believe the hype and therefore consider defence training privatisation a fait accompli. To do so now will be a grave tactical error and one that the IPT would welcome.

Recent articles on Defence Management website state that Hutton is being told to adopt a “more realistic budget” in the wake of the £2 billion deficit and now the hundreds of billion pounds bail out of the banking system. The question of the fall back position being more expensive than the privatisation starts to look like a rather sorry attempt to save the privatisation at a time of major financial pressure on MOD budgets by positioning itself as “value for money” against keeping training in house. Again the contrast to emerging package 2 solutions is notable.

What can you do to support the PCS campaign?

• There are various activities that branch secretaries can initiate to keep people involved and active. Members can:
• Write to Rhodri Morgan and tell him that you don’t want to be relocated or privatised.
• Write to Bob Ainsworth and call upon him to meet with your union officials as he had previously promised.
• Ensure you have a delegate to IO conference and prime him or her to ask difficult questions of Major General Tim Inshaw when he comes to address conference.
• Support PCS in its national action to seek fair pay for hard pressed Civil Servants.
• Write to the National Audit Office and call for an investigation into the financing of the DTR programme.
• Pass any interesting stories (that do not breach confidentiality) to the PCS Defence Sector Instructional Officer Committee.

PCS will continue to campaign with you and for you.

GOVERNMENT PROPAGANDA HERE

St Athan deal on the ropes - QinetiQ dodgy share sale!

no 1219
One in the Eye (page 3) Private Eye Article

The Eyes exposure of the unaffordability and big military risks of plans to privatise defence training in a £12bn PFI deal has angered the man running the project Brigadier Geoff Nield. "I return to you on the subject of the leakage of DTR related material to the press," he writes in a memo. "You will be aware of most of the articles on package 1 [the main, PFI, element of training reform] which have appeared in Private Eye." What really riled Nield was our exposure of of the cancellation of a planned announcement before parliament broke up. "The act of someone to release this latter information to a private eye journalist is clearly illegal, contrary to to the official secrets act," he mutters darkly.

Nield might be over-egging it as the official secrets act contains a public interest defence. Or maybe he thinks the public would be better off not knowing that the deal, which the MOD has refused to justify financially or operationally, is on the ropes. Or that the MOD's own secret assessment betrays the risk that "training output fails to meet the requirements of of operational command ".

D-day is due this month with an announcement on signing the PFI contract - or given the problems and latest rumours that the sale of MOD sites on which the deal depends has fallen through - abandoning PFI altogether.

All of which makes the timing of last weeks sale by the MOD of its remaining 19.8% stake in QinetiQ, owner of Metrix, highly unusual. If the MoD pulls the defence training deal. QinetiQ's share price will be hit and questions will be asked about whether the forthcoming announcement was a factor in the sell off decision and if so, whether inside information played a part.

If the deal goes ahead and QinetiQ's stock rises, however, another badly timed government sale will have cost the government millions. Remember you read it here first.

pic Vale of Glamorgan - Council briefed on defence training academy plans

During a visit to South Wales, Major General Tim Inshaw and Brigadier Geoff Nield visited the Civic Offices to meet council cabinet members, ...

see also page 6 on EDS. (whose interest is he looking after?)
Former long serving armed forces minister Adam Ingrams appointment as £50,000 a year consultant for the Eye's favourite firm, EDS, is just reward for 6 years at the MoD helping booster the firms buisiness.

ED's notable successes in recent years include a £250m contract to take the forces payroll (with predictably disasterous results so far) membershiop of the Metrix consortium negotiating a £12bn (and rising) PFI deal to privatise military training and a 4bn contract won in 2004 to overhaul all military and civilian defence IT......

Comment
Not a word of any problems like unaffordability and big military risks by Wing commander Richard Read in his propaganda article titled ACADEMY logbook in the Gem on Aug 5th ..although he is described as site director, working closely with Metrix and the MoD on the defence training review programme ....Read tells us "While much debate ensues over the precise number of jobs that will be created; even at its lowest, likely conservative, estimate it will be in the thousands with evident positive boost for the local and South Wales economy"!!!
..The new Defence Technical Academy is building on S
Cowbridge Today, Wales - News 11:13 8-Aug-08
No mention of these either by WAG and friends sham consultation.

..........................................................................................................................................
Notes

‘St Athan jobs dwindle while the costs rise’
Cowbridge Today, Wales - News 11:13 8-Aug-08

Plaid chief opposes St Athan academy
Wales Online - Politics News 07:26 6-Sep-08

Brig Geoff Nield. here

Vale of Glamorgan - Council briefed on defence training academy plans

During a visit to South Wales, Major General Tim Inshaw and Brigadier Geoff Nield visited the Civic Offices to meet council cabinet members, ...
www.valeofglamorgan.gov.uk/our_council/press_office/latest_news/2008/february.../military_academy_plans.aspx - 14k - Cached - Similar pages - Note this

Vale of Glamorgan council Reports of the Director of

7. Project Management Unit: (i) The Defence Training Academy and

[View Minute]

Silly John Smith!!

MP Calls for St Athan Rail Stop

Published by Cheryl under Cosford, MoD

Yesterdays article reported that the cost of the Defence Trainining Review had now increased by £1bn to £13bn. An article on WalesOnLine reports that Vale of Glamorgan MP John Smith is calling for a dedicated rail stop to be built at St Athan, which will add more cost to the project. He thinks this will benefit the Welsh economy and ease congestion:

A DEDICATED rail stop should be built to serve the Defence Technical Academy in St Athan, Vale of Glamorgan MP John Smith has said.

Thousand of trainees from the Army, Royal Navy and Royal Air Force will attend the £13bn academy.

Mr Smith said: “In order for the Welsh economy to take full advantage from this record investment, the St Athan site must be served by an improved transport system.

“There are operational railway tracks running within very close proximity to the site. I believe there is a very strong case for building a dedicated rail stop at the academy. It will help reduce road traffic congestion, and prevent commuters and visitors to the academy the inconvenience of having to get off at Rhoose or Llantwit Major stations and transfer to a bus shuttle service.

“I will be writing to the Welsh Assembly Government, the local planning authority and the consortium responsible for building the academy asking them to consider building a rail halt at the site for the good of the Welsh economy.”

In addition WalesOnLine reports that a proposed road link that will service St Athan could cost up to £135m of tax payers money. Currently there are approximately 600 Civil Servants plus many military and private sector workers employed at RAF Cosford, the majority of these staff would be expected to move from Cosford to St Athan if the Metrix plans go ahead. Cosford is situated 800 meters from a motorway and already has it’s own railway station.

Is it right that so much taxpayers money is needed to support the Metrix bid is surely a question that needs to be asked. This is another reason that we are asking members to write to the NAO and get them to scrutinise this project which has already cost the tax payer millions in wasted consultant fees.

• NAO letter template (download).

No responses yet

PRIVATE EYE keeps up the story!!

Defence Training Review Over Budget

Published by Cheryl under Cosford, MoD

The latest edition of Private Eye reports that Brigadier Geoff Nield has let it slip that the cost of the Defence Training Review programme had gone up and is now over budget.

At a local “Stakeholders” meeting in the Vale of Glamorgan, home to a proposed new defence academy, the Ministry of Defence’s officer in charge, Brigadier Geoff Nield, let slip that the price had gone up from £11bn to £ 12bn. As the deal was slated to save the MoD just £400m at the old price, it seems the scheme will not only expose the armed forces to serious operational risks (see Eye 1213) but will actually cost the taxpayer hundreds of millions more than keeping training in-house.

The increasing delays to implementing the project has led to the National Audit Office (NAO) pulling its plans to investigate the deal. Members are encouraged to write to the NAO requesting that they undertake a review of the public monies spent on DTR. There is a link to a sample letter below, this can be amended as you feel fit.

• The full article can be viewed here.
• NAO letter template (download).