From 1 April 2011 the new Defence Infrastructure Organisation (DIO) will bring together roughly 7,000 staff, mostly civilian, who working on construction, maintenance and disposal of land and buildings across the MoD. The move represents a merger of Defence Estates with the infrastructure operations of the three armed services and other smaller organisations. Subject to consultation with trades unions, employee numbers will be reduced to 4,500 by 2014.
Establishment of DIO is the first change delivered by the Defence Reform Unit under Lord Levene.
The DIO will take on the estate management responsibilities of its predecessor, Defence Estates, overseeing the physical maintenance of buildings and equipment, including support services such as cleaning and catering, as well as energy and water for the estate.
It will also support military tasks on an overseas estate in Germany, Cyprus, the Falkland Islands and Gibraltar as well as operational theatres such as Iraq and Afghanistan. Management of infrastructure Private Finance Initiative (PFI) contracts is included in DIO’s remit.
Defence Estates chief executive Andrew Manley said: "This new organisation is being designed to ensure we have an affordable and sustainable military estate that gives our armed forces the best possible facilities in which to live, work and train.
"A single infrastructure organisation will provide better strategic management of the Defence Estate whilst also delivering significant savings in running costs and offering increased opportunities for estate rationalisation."
The DIO will take on the responsibilities of Defence Estates, which currently spends some £2bn each year, managing around 240,000 hectares of land and property on behalf of the MoD, making thedDepartment one of the country's largest landowners, responsible for an estate equivalent to 1% of the country's entire land mass.
The current military estate comprises three main areas: the Built Estate, which is made up of barracks, naval bases, depots and airfields; the Housing Estate, which requires management of over 48,000 Service families homes; and the Defence Training Estate, which comprises 16 major Armed Forces training areas and 104 other training areas and ranges in the UK alone.
The Strategic Defence and Security Review made a number of recommendations that require running costs savings across the Defence Estate of some £300m per year by 2014-15 through disposals and other efficiency measures.
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In this context, 'infrastructure' describes the acquisition, development, management and disposal of all fixed, permanent buildings and structures, land, utilities and facilities management services, with the exception of IT infrastructure.
Defence infrastructure staff are already working on rationalising 'soft' facilities management (FM) contracts, for support services such as cleaning and catering. This is a first step towards the DIO taking responsibility for 'Total FM'. Ultimately, single regional contracts will cover 'soft' and 'hard' FM, such as the physical maintenance of buildings and equipment, as well as providing energy and water to the estate.
The creation of a single Defence infrastructure organisation will be carried out in phases, although it will take a number of years to fully transform the business. Phase 1 involves merging all MOD infrastructure funding and posts into one organisation by 1 April 2011. Subsequent phases should start in the financial year 2011-12 to transform the organisation to its final structure.
Defence Secretary Liam Fox said: "Our Armed Forces and their families deserve the best possible facilities in which to live, work, and prepare for operations, within the current financial situation. A single infrastructure organisation will provide effective support to our military personnel and better strategic management of the Defence Estate.
"It should also deliver significant savings in running costs, increase opportunities for estate rationalisation, and promote private sector growth - ultimately delivering better value for money to the taxpayer while giving the Armed Forces what they need."
Civil Engineering Contractors Association voices concern
CECA director of external affairs Alasdair Reisner said: “Having long argued for a more co-ordinated approach to infrastructure from the Government, CECA welcomes the proposal to bring delivery of all defence infrastructure under one organisation. Such an approach opens up the opportunity for better management of the Ministry of Defence’s engagement with its suppliers.
“We are however concerned that any change may led to a logjam as the transition holds up procurement and delivery of vital upgrades and maintenance to the defence estate. It is essential that this is not allowed to happen.
“Given the significant backlog of work that must be delivered to ensure that the UK’s forces have the facilities that they require for training and operational purposes, we also feel that it is important that any savings made are reinvested in further works to the estate, ensuring that it is fit for purpose in the 21st century.”
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