Tories promise Cosford move review

Tories promise Cosford move review***

Gem 29 January 2010

Mr Smith said: “I welcome Carwyn Jones’s firm commitment to the St Athan project.
“I want people here in the Vale and across Wales to remember that both the UK Government and the Welsh Assembly Government are fully behind the Defence Technical College going ahead at St Athan.
“They have repeatedly backed up their words of support with deeds. To date, the Government has underwritten over £110 million of essential works linked with the project to get the site ready for construction.

Half of this £110M is for Metrix/Sodexo preparations and studies for training reorgn and for developing the site.£60M  is for infrastructure, half supposed to be for the DTC and half for the ABP, the latter met by WAG.

.. yes, they've spent money like water, though the advantage of PFI was supposed to be that the private sector carries the risk.  Land Securities Trillium pulled out after spending their own £20M, but Sodexo when taking over seem to have got a guarantee that the MoD would cover its spending prior to go-ahead.

 

What about plan B  - the MoD's contingency plan to continue to use the Blandford base which has sufficient housing and support services (200 experienced managers plus local suppliers) for the reduced-size DTC (under 2500 tri-service trainees) now planned by Metrix/MoD?

I hope Welsh leaders are qwuestioned on this...and as for Plaid Cymru leader Ieuan Wyn Jones seems to have forgotten that his party policy opposed PFI projects when he said it was vital to maximise the employment prospects of people already living in the area.He said: "The knock-on effect of such a large project on the community will require great investment in health, education and transport services and it is therefore essential that the government invests adequately in the area." And this is about job relocation not job creation! Many Plaid C are opposed to the DTC in principle and in practice, because they oppose the militarisation of Wales but Plaid Cymru gets in to bed with New Labour and didtches its principles! 

 

For the Lib Dems, Vince Cable also said the College might have to go because it was so expensive at a time of recession, though the Welsh branch of his party disagreed with him and weren't consulted on the matter and so he was quickly shut up. Welsh politicans all ignote the elephant in the room!

***Thursday 15th April 2010, 12:47PM BST
Controversial plans to transfer jobs from RAF Cosford to Wales would be reviewed if the Conservative Party came to power, it was claimed today.

Mark Pritchard, Tory prospective parliamentary candidate for The Wrekin, said the government's Defence Training Review "would be reviewed and examined in fine detail" if David Cameron became Prime Minister.

As part of the programme the Defence College of Aeronautical Engineering (DCAE), based at the airbase near Shifnal and providing training for aircraft engineers and tradesmen across the British armed forces, will move to St Athan in Wales from 2014.

It led to fears the Shropshire site could be "mothballed" with hundreds more jobs under threat as civilian staff based there would have nothing to do.

Last month the Ministry of Defence said plans to move troops based in Germany to Cosford, to replace those leaving, had been delayed by two years.

Defence Minister Bill Rammell said the planned movement of 2,600 troops and their families from Germany to Cosford as part of Operation Borona, due to start in 2016, would now not take place until 2018.

Military chiefs blamed the need to "accommodate other defence resource priorities" for the delay in moving 102 Logistic Brigade to Cosford.

Mr Pritchard, who has been campaigning to secure the future of the 70-year-old base, said today: "If the Conservatives form the next government we are committed to a major Strategic Defence Review which will examine every major defence spending commitment by Labour ministers.

"This will include the flawed Defence Training Review programme which will tear the heart out of Cosford and the local community."

Mr Pritchard's Back RAF Cosford campaign on Facebook has attracted more than 700 followers.

By Wayne Beese

Privatisation of military speeds up

Not a word from Plaid Cymru AMs or MPs on this..so much for their opposition to PFI and militarisation of Wales....no almighty uproar.....? Why? More important things to do like twittering about their blackberry's!

If they hadn't kept so quiet on this we might have stopped it....blood on plaid cymru hands.... as more of our young people will be enticed in to the military to be canon fodder. And there goes Welsh independence with this UK training base in Wales.

QinetiQ Group: Metrix Awarded GBP31 Million Training Pact By MOD
CNNMoney.com - USA
-The Early Training Transformation (ETT) contract will see the consortium, the Preferred Bidder for the MOD's DTR Package 1 Project, take the first ...

QinetiQ and Sodexo JV Metrix wins £31 mln MoD training contract
Proactive Investors UK - London,England,UK
The financial close on the overall DTR programme remains on track for 2010, ... TheDTR Package 1 Project aims to transform the way the MoD delivers ...

Metrix is a consortium led by QinetiQ, which leads the training delivery arm and Sodexo, an international facilities management group, and war profiteer chosen by the MoD to provide training design and development services. It will also build and run the MoD's Defence Technical College in St Athan, South Wales

Why is this massive PFI to be imposed on Wales?

formal response.doc
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Annex FOI Request 3132.doc
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Sodexo annnouncement: DTR programme.txt
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Sodexo backgrounder.txt
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Annex FOI Request 3132 - Metrix PFI project

1. Why is this massive PFI to be imposed on Wales?

The PFI in question is a Ministry of Defence project. The Welsh Assembly Government has endorsed this investment as a major opportunity for Wales and the South East Wales regional economy. It will complement our plans for the development of an Aerospace Business Park on the St Athan site. Accordingly, the Assembly Government actively promoted the site to potential bidders and we welcome this significant investment in jobs and engineering skills training in Wales.

2. When is there going to be a debate in the Assembly about the St

Athan Metrix PFI?

The First Minister made an oral statement in the Senedd on 17 January 2007. Since then, Assembly Members have on several occasions raised with Ministers the development proposals for St Athan during oral questions in the Senedd. It should be noted that public input on the development proposals for St Athan has been actively sought from the beginning, firstly through the St Athan Development Brief which was published in July 2006 following public consultation; and the current round of public consultation events which commenced last summer and is continuing through to Spring of this year. Further information about the public consultation is available at www.st-athanconsultation.co.uk.

3. Is the DTR PFI on the brink of collapse and have AMs and WAG

questioned the viability of the project?

Questions about the financial viability of the Defence Training Review Package 1 programme are a matter for the Ministry of Defence as sponsors of the project. Plans for the St Athan Development Scheme, which include the Defence Technical College and an Aerospace Business Park, are being actively pursued. Public consultation events on the draft plans are currently on-going to help inform the planning applications which are expected to be submitted in early May 2009.

Request for information about the activities of Assembly Members should be addressed to the National Assembly for Wales Commission, Cardiff Bay, Cardiff, CF99 1NA.

4. What amount and from which sources is taxpayer's money involved?

How much of this is coming from Wales?

Funding for the Defence Technical College is a matter for the Ministry of Defence to whom questions about this public private partnership programme should be addressed. The Welsh Assembly Government is facilitating the St Athan development, including our plans for an Aerospace Business Park, through land assembly and the provision of infrastructure. As there will be shared use of infrastructure, arrangements are currently being negotiated with the Ministry of Defence for the proportionate repayment of costs. At this stage therefore the funding attributable to Wales has yet to be agreed. I will write to you with the funding implications for Wales as soon as agreement has been reached.

5. Have the Welsh Assembly Government been briefed on the latest

funding situation since the withdrawal of LST?

The funding of the Package 1 DTR programme is a matter for the Ministry of Defence and Metrix. The Assembly Government has noted the announcement by Metrix of a new equity partner to replace LST.

6. Will Metrix make up cash shortfall by training private armies,

regardless of their human rights record, and is there anything the

WAG or AMs can do to stop them doing that?

The question concerns the operational arrangements for the new Defence Technical College and as such should be addressed to the Ministry of Defence and the Metrix consortium.

7. Why has the St Athan consultation website not been updated and

why is still no feed back from the consultations that have already

taken place as long ago as July 2008.(http://www.st-athanconsultation.co.uk/)

The website has now been updated and contains detailed information about the consultation programme to date, including the analysis from the summer/autumn 2008 events. I am sorry it has taken longer than we expected. I should explain that it wasn't until November/December that the analyses, involving fairly detailed comments in some cases, could begin as the feedback period for the public to submit comments did not close until end October. It remains our intention to post on the web site as quickly as possible a report of the workshops and interest group meetings held this year. I would encourage you to contact the consultation helpline - 0845 6160016 or e-mail xxxxxxxxx@xxxxxxxxxxxxxxxxxxxx.xx.xx - if you have any specific questions about any aspect of the proposed development.

8. How much is the WAG contributing toward this consultation?

The public consultation concerns the St Athan Development Scheme, which broadly comprises the Defence Technical College and plans to create a new Aerospace Business Park. The latter is being developed by the Welsh Assembly Government and we have therefore agreed to contribute approximately £85,600 towards the overall costs of the public consultation.

9. Visitors to the DTA exhibition complained of a “lack of detailed

information”. Have the issues raised there been addressed? Will the academy be an “isolated, gated village“? Would nearby towns see an increase in “squaddie rowdiness and drop outs from the academy”?

It was made clear from the outset and explained to those attending the exhibitions that the master plans was still evolving and therefore many of the details had still to be agreed. The public consultation events provide scope for local residents and the public to influence the emerging site plans. Follow up workshops and interest group meetings have been held to discuss the sort of issues you have raised, for example the Community Welfare Interest Group held on 4 March addressed, amongst other things, how military and civilian populations will integrate and issues around site security and access for civilians. A report on this event will be published on the consultation website in due course.

10. In related news `Wales on Line' reports - £100m plus plan that

is being considered, to build a new road to Cardiff International

Airport: It has been suggested that the road would be to serve the

St Athan training academy. is this true? Would it not be an outrage to spend such huge amounts of Welsh public money on feather-bedding the training academy project?

The airport link road study is a completely separate exercise and does not form part of the plans for the St Athan development. Clearly however, improvements to the road network to the airport from the M4 could also benefit the St Athan development given its close proximity to the airport. When developing proposals, the airport link road study team has to take cognisance of the planning status of various developments which could impact on the study. The teams working on these two sets of proposals are therefore liaising closely to ensure that the relevant improvements to road links in the Vale are considered in a joined up way.

11. Why should Welsh taxpayers subsidise private organisations?

The Defence Technical College is a Ministry of Defence Public Private Partnership project. The Welsh Assembly Government is investing in new infrastructure at St Athan as part of our plans to develop an Aerospace Business Park.

12. How many meetings have AMs had with Metrix officials?

The Welsh Assembly Government does not hold information on meetings held by Assembly Members. Request for information about the activities of Assembly Members should be addressed to the National Assembly for Wales Commission, Cardiff Bay, Cardiff, CF99 1NA.

13. As a new partner Sodexo is involved in a much greater capacity, what information have the WAG got or asked for about this company?

The consortium structure is a matter for Metrix. The Metrix consortium informed us on 10 February 2009 about the announcement that it had secured a new partner - copies of the relevant e-mails are attached.

Sodexo - key strengths!

1.  Member of the consortium from the beginning:


* Know the project well so we don't need to start from scratch - can transition easily
* We know each other well which is good from a relationship perspective



2.  Bring extensive experience in the PFI and PPP projects including the UK:

* No of significant PFI contracts in the UK: 17 and aggressively looking to grow portfolio across healthcare, defence, education, prisons
* Total value of PFI contracts in the UK in last financial year (August 2008): £221m pounds in annual service turnover, which equates to 20 per cent of UK turnover
* Significant long-term contracts - approx average length of contract: 30 years
* Provide a wide range of services, including design, construction, management and funding.



PFI examples:

* Queens Hospital, Romford - £18m pa in turnover. Fully integrated facilities management to one of the largest acute hospital trusts in England [serving a population of around 750,000]
* HMP Addiewell, Scotland - projected annual turnover of £17.5m when fully operational. Kalyx, the correctional arm of Sodexo, awarded contract to design, construct, manage and fund Scotland's first new prison for almost ten years housing 750 prisoners



3.  They know the MOD very well


* understand MOD ethos and military culture
* eg Colchester Garrison - turnover £18m pa.  £2bn contract to provide working and living accommodation for more than 4,200 military and civilian staff, including the construction of over 130 buildings.



4.  Property experience but service provision more important anyway


* eg 3 prisons and over 130 buildings at Colchester
* Property relatively straightforward - we wanted their expertise in service delivery


5.  Financially sound multinational company:


* UK and Ireland - 43,000 employees providing food and facilities management service at over 2,300 locations
* part of the Sodexo Group, the number one global provider of food and facilities management services, with more than 355,000 employees at more than 30,000 sites in 80 countries.
* strong balance sheet / cash

Christopher Moseley

Metrix UK

Second Floor

10 Great George Street

London SW1P 3AE

Tel. +44 7941 126064

Email: xxxxxxxxxxx.xxxxxxx@xxxxxxxx.xxx

What Peter Collins doesn't tell the people of Wales

Peter Collins drummer boy for Metrix military academy PFI!

Let me raise just a few of the points Peter Collins didn’t make.

Peter Collins just forgot to mention that new labour Ministers have used a sneaky and secretive parliamentary device to quadruple to £40 million the level of taxpayers money to underwrite the privatising of military training in the biggest PFI ever instead of making a ministerial statement. I expect they hoped no one would notice!

So why are we privatising profits and nationalising risk to help huge multination companies like Raytheon arms dealers and Qinetiq who has already been condemned for fiddling the taxpayer? Is he accusing the financial times of being anti Wales?

Pater Collins didn’t report either the risks to the quality of training for our troops which the MoD top brass themselves are worried about! And that was before the French catering firm Sodexo took a 50% stake in the project.

Do the people of Wales want their soldiers to be trained by a French caterer and American arms dealers? Is the Daily Mail being anti- Wales reporting on concerns about sodexo being 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. Ir that in Britain, a 2004 Channel 4 documentary exposed the unhygienic preparation of food by Tillery Valley Foods, one of its subsidiaries. Sodexo is also accused of supplying catering at Guantanamo Bay in Cuba and the Abu Ghraib prison in Iraq.

Peter Collins didn’t mention the fact that the noise levels will be unacceptable to local residents? Nor did he mention the track vehicles ...tanks and such.

Peter Collins omitted to report that that MoD added to the planning permission for a golf course and a field exercise area!

If the people of Wales had the true facts they would NOT support privatising military training or this dodgy school for mercenaries coming to Wales.

Peter Collins Wales on line

THIS week, your Man On The Street has come in for severe criticism for his positive reporting of the multi-billion pound plan for the Defence Technical Academy at St Athan.

The attacks have come from the No To The Military Academy campaign whose members accuse me of, among other things, being dishonest and “chasing fool’s gold” by reporting the economic benefits the scheme could bring, not just to South Wales but to other parts of the Principality.

The campaign often quotes London-based newspapers which question the economic viability of the scheme. Everyone agrees it has had its problems. It would be surprising if it had not been affected by the economic downturn.

Most worryingly, the Financial Times has flagged up concerns about the project.

These doubts have been reflected in the pages of this newspaper, albeit not in the stark terms employed by some other newspapers across the border. The decision to bring the academy to Wales was never that popular in England and so it is not surprising that some there would like to see it fail.

Constant attacks on the project by people in Wales serve to give succour to those in England who lost out and still oppose it coming to Wales.

The other arm to the No To The Military Academy campaign is that it will be run by “arms dealers and war profiteers” and attract “all those trainees from the not-so-democratic Saudi Arabia”.

That is one way of looking at it. But not, I think, a view shared by the majority. The Echo, and thousands of its readers, supported the bid to bring the academy to South Wales.

John Smith attacks Park Pritchard over academy PFI

John SmithVale of Glamorgan, Labour Link to this | Hansard source | Video match this

I am grateful for the opportunity to speak in the annual Welsh affairs debate. We do not have many opportunities in the House nowadays to discuss Welsh issues exclusively, so the debate is welcome.

As previous speakers have said, our debate today takes place against the backdrop of a serious global economic crisis—possibly the worst international financial crisis in the past 100 years. I would therefore like to take the short time available to me to refer to three projects in my constituency, but not parochially, because they all have valuable strategic Welsh importance. I want to use today's opportunity to draw the House's attention to several issues surrounding the projects.

The Conservative spokesperson has already mentioned the first project. It will come as no surprise to hon. Members when I refer to the defence technical academy in St. Athan in my constituency. It is progressing well. It was recently announced that Sodexho is to be the equity partner, replacing Land Securities Trillium, which had to withdraw because—let us make no bones about it—of the financial crisis. However, in many respects, Sodexho is a better fit. Unlike its predecessors, its core activity is facilities management, and it has been involved in the scheme from day one. It was always involved, but it has just become a 50:50 equity partner.

The Minister for the Armed Forces made a statement in the House, saying that the negotiations were progressing well and were on track. A clear timetable is developing. A detailed planning application for the scheme will be submitted in May this year and construction will commence around August next year. That timetable is important, because we have lost time in the past two years, mainly because the project is so large and complex. It is the biggest single Ministry of Defence investment and its importance for Wales cannot b e overestimated.

The project will provide 5,000 direct jobs and train annually 25,000 service personnel from all three services. It will provide a defence training strategy in some of the most sought-after skills in the world—technical, engineering and information technology skills. I have always argued that the real value to Wales as a whole—not only to my constituency—is not the 5,000 jobs or the £12 billion private finance initiative investment over 25 to 30 years, or even the revenue, which runs to tens of millions of pounds, that will go directly to the local economy, but the transformation of Wales's reputation to that of a country that has a centre of technical and skills excellence. Our reputation for being dominated—still—by metal manufacture and mineral extraction can be transformed into a reputation for high value-added technology. That is the benefit: a change of reputation and an ability to attract inward investment.

I am delighted that a Command Paper was put before the House on Tuesday, offering a contingent liability of £40 million to prepare the plans for this year and the design to get on with the construction next year.

Add your comment

David Jones (Shadow Minister, Wales; Clwyd West, Conservative) Link to this | Hansard source | Video match this

As the hon. Gentleman will know, we on the Conservative Benches also strongly support the St. Athan project. Does he agree that one of the key benefits of St. Athan will be to improve the perception of the military as a career for young people, with the high-quality jobs that if offers, and in particular as a career for Welsh young people? Does he agree that, today more than ever, going into the military is a good, attractive career for young Welsh people?

Add your comment

John Smith (Vale of Glamorgan, Labour) Link to this | Hansard source | Video match this

I agree with every word that the hon. Gentleman just said. Indeed, he should forgive me if I have not referred to that point, because the overriding benefit of the project will be to improve training in the military. Perhaps I should remind the House that, unlike now, every technical20qualification that will be achieved at the new academy will be a civilian-recognised qualification. We will be producing engineers for the future, including civilian engineers, so I accept the hon. Gentleman's remarks. We also had all-party support, which in my view is one of the reasons why we won the bid in the first place.

Add your comment

Lembit Öpik (Montgomeryshire, Liberal Democrat) Link to this | Hansard source | Video match this

I applaud the cross-party work that the hon. Gentleman has done to secure those jobs. Does he agree that one of the opportunities for Wales will be not to repeat the errors at Deepcut Army barracks—I understand that they are being shut down, with some of the work perhaps coming to Wales—where Cheryl James, the daughter of one my constituents, was, I believe, murdered?

Add your comment

John Smith (Vale of Glamorgan, Labour) Link to this | Hansard source | Video match this

Of course I agree with that.

St. Athan has been a huge success story for Wales and for Welsh politics. We won the bid because we were united across the parties and because—let us be clear about this—ours was the best bid. However, I must sound a rather disconcerting note this afternoon. The Command Paper was presented to the House on Tuesday, but—I have given notice of this to the hon. Gentleman involved—it was blocked. An obscure procedural motion was used on Tuesday on a point of order to block the contingent liability of £40 million. The process cannot be stopped, but the effect of what was done on Tuesday could be to delay a recession-busting project that is vital for our country.

I am sure that every Welsh Member of this House will condemn Mark Pritchard. I understand why he objects to the scheme: because he lost the bid. His bid did not win. I understand his protesting, but what is reckless and unacceptable is his bid to block the progress of the scheme. It is important that we move ahead with the planning in May. I call on all hon. Members to condemn his action. I am afraid that I must say to Conservative Members in particular: for goodness' sake, bring some=2 0influence to bear on him, because he is delaying a vital project.

Add your comment

Stephen Crabb (Preseli Pembrokeshire, Conservative) Link to this | Hansard source | Video match this

I understand the hon. Gentleman's passion and commitment to the St. Athan project. We would all recognise and applaud that. However, it is deeply unfair of him to talk in such terms about my hon. Friend Mark Pritchard, who is not here and who does not have an opportunity to defend himself.

Add your comment

John Smith (Vale of Glamorgan, Labour) Link to this | Hansard source | Video match this

I gave notice—I have been in the House long enough to realise that I should do that. What I am doing today I do with a heavy heart. I have never done it before, but the project is too vital to play silly political games with it. The future of Wales is at risk.

Add your comment

Daniel Kawczynski (Shrewsbury & Atcham, Conservative) Link to this | Hansard source | Video match this

As the neighbour of my hon. Friend Mark Pritchard, may I say that he is an assiduous constituency MP and works extremely hard? As Opposition MPs, it is the responsibility of us all to scrutinise Government decisions.

Add your comment

John Smith (Vale of Glamorgan, Labour) Link to this | Hansard source | Video match this

We have an overriding responsibility to behave responsibly. I will leave it at that, because I gain no personal benefit from making such comments, but it is important that I should make them today.

The second, related issue that I wish to raise is about an important piece of transport infrastructure: the M4 link road to Cardiff international airport—that is, to Wales's international airport. That has a bearing on the technical academy, because although we will not lose the academy if we do not get the timing for that road right, we might lose some of the benefits that could come to Wales. The onus is on us to maximise all the benefits from the investment, to ensure that Welsh people and Welsh businesses benefit first from the huge opportunity that is coming our way. We must get the transport links. Businesses in Pembrokeshire and west Wales will benefit, as will businesses in Monmouth and mid-Wales. We must get the transport infrastructure right and the M4 airport link road is a crucial factor in it, because it will serve the defence technical academy, and it will serve Barry—the second largest town in Wales—as well as providing a link to the airport.

A decision is imminent. We have had the public consultation and the Welsh Assembly Government's Deputy First Minister will take a decision shortly. The biggest decision to date has been about which route to choose. It is controversial—it will affect local people, so there is a lot of local concern about the impact on people's quality of life—but the decision on the route of the direct link to the airport is crucial. I call on the Minister to use all his influence with the Welsh Assembly Government to ensure that the decision is taken, and taken quickly.

I am deeply concerned that there may be prevarication and second thoughts about the strategic importance of this road; we should be in no doubt that this link road is crucial. We will never have a country seriously recognised throughout the world unless we have a serious international airport that provides comprehensive scheduled flights across the world. Air travel is still the cutting edge of business communication, even in comparison with broadband—I accept everything said about it earlier—and Wales must have a proper international airport. What we have now is a holiday charter airport; it is growing and doing well, but as the aviation White Paper said, it has a long way to go. This road is an absolutely necessary condition for the growth and expansion of Cardiff international airport. It may not be a sufficient factor, but as I say, it is absolutely necessary.

I flag up that issue because I hope that we will not make the mistakes of the past by thinking that some funding for a few extra routes or a few extra slots to European cities will provide us with the strategic advances that we need for the airport's future. The entire business community supports the road: the CBI in Wales, the Federation of Small Businesses, the Cardiff business club. Indeed, there is not a business in Wales that fails to recognise the importance of strategic access to the airport. It is supported by the planning authorities and it has been supported by every management of every company that has owned the airport over the past three decades.

It is a crucial issue—one of the most important road transport issues in Wales. We are really at the cusp, right on the edge, of making a decision on a matter that will drive the Wales international airport forward. The decision must be taken quickly and the right decision must be taken—that is, identifying what route to take, not having second20thoughts about whether we need such access to the airport.

State underwrites St Athan defence’s PFI project

Please see the attached which is a copy of document placed before the House of Commons with regards DTR. Mark Pritchard MP tabled an objection today and therefore there will have to be a further investigation prior to this going ahead. It would seem that the Department are getting ever more desperate to somehow give Metrix even more funding to enable them progress. Its looks like they were hoping to sneak this through..... This should be some serious debate asking if this programme should continue if we keep having to bail out Metrix and give them ever more time to try and balance the books to make it look palatable.

Ministry of Defence spends another ￡40m on ailing contract Daily Mail
The Defence Training Review (DTR) is the government's largest private finance deal. It aims to consolidate the MoD's training bases from 30 to about ten,...

Details that the taxpayer has underwritten almost £50million in investment in the project to outsource soldier training even before a brick has been laid has angered the Tories.

Mark Pritchard, MP for The Wrekin and secretary of the Conservative defence committee, has written to the Financial Secretary to the Treasury, Stephen Timms MP, asking him to explain the rising costs.

He said: 'There are serious underlying funding problems in the DTR project and it is incumbent on ministers, given the increased level of taxpayer money involved, to make an early statement on the reasons and justification for these new funds.'

...State underwrites UK defence’s PFI project
Financial Times - London,England,UK
Under the deal, taxpayers will underwrite a further £32m of risk in order to push through the Defence Training Review, the UK’s biggest private finance ...

State underwrites UK defence’s PFI project

By Alex Barker, Political Correspondent Published: February 25 2009 02:19 |

Ministers have quietly offered contractors bigger state guarantees as a means of rescuing the £12bn ($17bn) private finance project to centralise the military’s training, the Financial Times has learnt.

Under the deal, taxpayers will underwrite a further £32m of risk in order to push through the Defence Training Review, the UK’s biggest private finance initiative.

The offer was made as the government prepares to intervene to save a clutch of big private finance deals facing funding difficulties, in areas from school building to road construction.

Qinetiq, the defence group, is the lead contractor for DTR, a giant project designed to centralise all non-military technical training for army, navy and air force personnel in one academy in Wales.

The 25-year deal, which has seen significant cost increases, suffered a big setback late last year after an outsourcing arm of Land Securitieswithdrew from the process.

The doubts over its future were partly allayed when Sodexo, the French contract caterer, stepped in to replace Trillium in the Metrix consortium, which was awarded the contract to build and run the academy.

Fresh offers to underwrite parts of the deal, specifically on the design and planning of the new centre, appear to have removed the remaining sticking points.

In an “unnumbered command paper” slipped out to the Commons, the Ministry of Defence said fresh guarantees could be exercised only if it delayed the project. It said the Treasury had approved the plan in principle. The MoD said: “Underwriting the costs of this project is a sensible and prudent business practice.”

Copyright The Financial Times Limited 2009

MOD Document

DEPARTMENTAL MINUTE DATED 17 FEBRUARY 2009 CONCERNING THE REPORTING OF A CONTINGENT LIABILITY FOR THE COSTS ASSOCIATED WITH THE DEFENCE TRAINING REVIEW

It is normal practice, when a Government Department proposes to undertake a contingent liability in excess of £250,000 for which there is no specific statutory authority, for the Department concerned to present to Parliament a Minute giving particulars of the liability created and explaining the circumstances; and to refrain from incurring the liability until fourteen Parliamentary sitting days after the issue of the Minute, except in cases of special urgency.

The Defence Training Review Package 1 Project is a large and complex Private Finance Initiative project, with the Metrix Consortium as Preferred Bidder. It seeks to transform the way the Ministry of Defence (MoD) delivers specialist engineering and communications and information systems training on a Defence wide basis to support better the future needs of the Armed Forces.

In January 2008, a Minute was laid before Parliament outlining an initial contingent liability for the underwriting of an element of Pre-Contract activity with Metrix. This existing Pre-Contract Agreement Letter (PCAL1), which the Department committed to in March 2008, underwrites risk reduction activity up to a maximum value of £9.5M. At the time this was considered sufficient to carry the project to the main investment decision point, however, whilst PCAL1 achieved its strategic objectives in generating the momentum necessary to establish an affordable and acceptable programme, further risk reduction activity is necessary to mature the deal and maintain the mobilisation of Metrix resources to ensure the most effective programme to the point at which the Contract is let.

In order to maintain this momentum a second package of risk reduction activity valued at £40.40M is proposed. This work, of which £32.67M will be underwritten by the MoD, is predominantly focused around the design and planning of the estate solution at St Athan, and further development of the training solution. By undertaking these activities ahead of the main investment point, it will be possible for Metrix to make a planning submission in May 2009 (which is essential if construction at St Athan is to start on time in August 2010). Further development of the training solution will build customer confidence in the training solution, allowing quicker and more efficient drawdown of military manpower after Financial Close.

The costs of these risk reduction activities are to be recovered through the tendered contract and are already captured within the Metrix price. Provided that the Programme reaches Financial Close, the costs will be paid from within the planned budget at no additional charge to MoD. The MoD will only become liable to reimburse the underwritten value of these costs if there is a failure to achieve Financial Close for a reason not attributable to Metrix. This commitment will be subject to a clear Limit of Liability, in total and by specific activity area, with any reimbursement of costs subject to full cost analysis supported by open book provisions. Should this liability be called, provision for any payment will be sought through the normal Supply procedure.

The Treasury has approved the proposal in principle. If, during the period of fourteen Parliamentary sitting days beginning on the date on which this Minute was laid before Parliament, a Member signifies an objection by giving notice of a Parliamentary Question or by otherwise raising the matter in Parliament, final approval to proceed with incurring the liability will be withheld pending an examination of the objection.

MINISTRY OF DEFENCE

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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.

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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.