Babcock wins £900m MoD contract

Deal covers the Defence Support Group's fleet management and engineering support services

Engineering firm Babcock has bought the army's vehicle maintenance and repair business for £140 million and won a £900 million, 10-year contract from the Ministry of Defence.

Defence Minister Philip Dunne said the deal for the Defence Support Group (DSG) would save the army about £500 million over the course of a decade. The contract covers the DSG's fleet management and engineering support services.

All DSG staff will become Babcock employees on April 1 and a meeting with trade unions will take place tomorrow.

Dunne said: "This contract has the potential to grow to around £2 billion as a broader scope of services under the DSG sale contract are optimised, subject to value for money, as part of the planned programme.

"Babcock has more than 15 years' experience of working closely with the army in vehicle support work, standing it in good stead to partner successfully with the army and transform the DSG land business.

"The company will also use its expertise in engineering and fleet management to build on the work that the DSG's highly skilled workforce currently carry out and progressively to transform the business to provide end-to-end support and equipment availability to the army."

Mr Dunne said the deal would place DSG on a sustainable footing for the long term and guarantee Army access to the services it needed.

DSG property has not been sold as part of the deal but will be leased or licensed to Babcock by the Ministry of Defence.