Britain to scrap plans to outsource military buying-source

LONDON Mon Dec 9, 2013 6:05am EST

LONDON Dec 9 (Reuters) - Britain is set to shelve plans to outsource its 159 billion pound ($260 billion) military equipment buying programme to a private firm, a Ministry of Defence source said, after one of the two consortiums left in the running pulled out.

US engineering firm CH2M Hill, which was leading a team with Serco Group and WS Atkins, said on Nov. 19 that its group had withdrawn from bidding to run Britain's Defence Equipment and Support (DE&S) unit.

Its withdrawal left only one team, led by U.S. engineering group Bechtel and with PA Consulting and PricewaterhouseCoopers , in the competition.

The source said it was likely that Defence Secretary Philip Hammond would end the commercial competition and announce alternative plans for reforming defence buying.

A Ministry of Defence spokesman said that no decision had been made and Hammond would provide an update shortly. A spokeswoman for Bechtel declined to comment.

The government had initially intended to study the remaining team's proposal and to compare it against an alternative known as "DE&S" plus, an option which would keep the unit under government management.

The DE&S unit accounted for almost half of the MoD's 34.4 billion pound budget last year. Britain expects to spend 159 billion pounds on military equipment between 2012 and 2022.

Its plan, which would have made Britain the first country to outsource its negotiations with weapon suppliers such as BAE Systems, had been criticised by defence executives as lacking clarity over issues such as the protection of commercial confidentiality.

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