£900 Million UK Defence Infrastructure Contracts
VIVO Defence Services, a 50/50 Joint Venture between Serco and ENGIE, has been awarded contracts to provide asset and facilities management services for the UK defence built estate by the Defence Infrastructure Organisation (DIO).
VIVO has been awarded contracts for two of the four regions being tendered under Lot 3 of the Future Defence Infrastructure Services (FDIS) programme. The company will be responsible for providing services in the South West and Central regions of the UK, the largest two regions of the four that were competed, and which represent around two-thirds of the MOD’s estimated value of Lot 3 of the Future Defence Infrastructure Services contracts.
The total core contract value to VIVO for the two regions is estimated to be around £900m over the initial seven-year period, including indexation. There are a further three one-year extension options. In addition to the core fixed price contract for each region, there will be significant amounts of additional project work, which will be commissioned as required by the DIO and, while the future value of these projects is uncertain, the Ministry of Defence (MOD) estimates that they are likely to be worth a further £2.5bn over the initial seven year term. As it is a joint venture, half of VIVO’s profit after tax will accrue to Serco.
The services VIVO will deliver will support the UK’s defence capability, maintaining the MOD’s built estate across more than 200 sites and around 19,000 buildings. The core services include planned and reactive maintenance, as well as mandatory safety checks. The potential additional project work will range from small scale asset replacement and property refurbishments to large construction projects. Following a six-month mobilisation phase, the core work is scheduled to start in February 2022, and we expect the additional project work to ramp up during the course of 2022.
Commenting on the award, Rupert Soames, Group Chief Executive, said: “We are delighted that VIVO has been awarded these important contracts by the Defence Infrastructure Organisation to maintain nationally important assets and buildings across the MOD’s estate, and recognise the confidence and trust the MOD has placed in us and the responsibility that comes with it.
“Serco has a proud 50-year history of supporting the UK’s Armed Forces, with contracts supporting activities at many military bases, including Brize Norton, Fylingdales, Yeovilton and Northolt, as well as supporting the Royal Navy at Portsmouth, Plymouth, Faslane and Kyle of Lochalsh, and the UK Government’s Skynet secure satellite communications system.
“VIVO combines Serco’s expertise and understanding of the MOD with ENGIE’s deep expertise in facilities management and we look forward to working together to support the UK Armed Forces.”