LONDON Aug 4 Britain has selected Bechtel and
CH2M Hill, two U.S.-based companies, as preferred bidders to run
parts of its military equipment buying programme, an industry
The Ministry of Defence (MOD) is trying to change the way it
buys equipment for its armed forces to help rein in public
Its latest plan is to revamp its multi-billion pound Defence
Equipment & Support (DE&S) arm, which has been criticised for
cost overruns and delays, by splitting its operations into
Bechtel has been named preferred bidder for the Navy and
Royal Air Force equipment buying contracts with CH2M Hill named
for the army and joint command contracts, the industry source
told Reuters on Wednesday, adding that detailed negotiations
were under way.
The MOD said the contracts, under which the companies will
be known as "managed service providers", are due to be awarded
next month. In its contract notice, the MOD estimated the value
of each of the four contracts at between 50 million and 100
"Negotiations to bring in managed service providers are
still under way in order to secure the best value for the
taxpayer. It would be inappropriate to comment further at this
point," an MOD spokeswoman said.
Bechtel and CH2M Hill, both of which are working on London's
15 billion pound ($25 billion) rail project Crossrail, declined
Britain last year failed to outsource DE&S activities to one
company, after one of the two remaining bidders pulled out,
prompting it to try again with the current plan.
Industry sources told Reuters in April that firms such as
Atkins, Balfour Beatty, Fluor Corp and
KBR could be among those interested in the MOD
The MOD is also looking for bidders to run its finance and
I.T. services, for which a competition will start later this
year, and a separate human resources contract, for which bidding
is already under way.
DE&S has a 14 billion pound annual budget to buy and support
all equipment and services used by the navy, air force and army.
Britain expects to spend 164 billion pounds on military
equipment between 2013 and 2023.
Major defence equipment projects the MoD is planning to
finance include 35.8 billion pounds for seven BAE Systems-built
Astute-class submarines, a replacement for Britain's Trident
submarine nuclear deterrent, and 18.5 billion pounds on fighter
jets and drones including Lockheed Martin's F-35 stealth jet.
($1 dollar = 0.6007 British pound)
(Reporting by Sarah Young; additional reporting by Li-mei
Hoang; editing by David Clarke)