NAO attacks defence estate strategy

Government plans to sell off surplus Ministry of Defence sites have been slammed by the National Audit Office in a Defence Estate Strategy briefing paper published today. The National Audit Office has described the plans as “extremely challenging”, and has criticised the Defence Infrastructure Organisation partnership with Capita, saying its performance “has not made a notable difference in transforming the DIO to better meet the needs of the commands”. What the NAO said about the plan: The briefing paper is based on a National Audit Office report, Delivering the Defence Estate, which was released last year. Its key criticisms are: • Maintaining the estate will be a “huge challenge” because of years of underinvestment. • Successfully implementing the strategy will be “extremely challenging”. • Funding issues mean the MoD is making poor value long-term decisions. • There is significant risk the poor condition of the estate will affect defence capability. • There is an £8.5bn shortfall for the rest of the estate over the next 30 years. • MoD attempts to delegate management to individual services was tried before 2011 and led to significant underinvestment. • Some 40% of disposal proceeds will come from the disposal of five London sites. • The MoD “has not yet set out a strategy for achieving an optimised estate that can be sustained at acceptable risk within planned funding levels.” What the NAO said about the relationship with Capita: The NAO report was also critical of the partnership between a Capita led consortium and the DIO, which was meant to help the DIO in its departmental savings asset realisation targets, along with giving it a more commercial approach. It said: • The MoD failed to transform the Defence Infrastructure Organisation as planned prior to contracting with the strategic business partner. • There were “fundamental weaknesses” in the department’s contracting with Capita, with the MoD failing to set contractual safeguards ensuring savings would not just come from one off cost cutting. • Capita’s performance “has not met all expectations” and “has not made a notable difference in transforming the DIO to better meet the needs of the commands.” • Capita has not met all milestones or performed adequately against agreed key performance indicators. The Defence Infrastructure Organisation was created in 2011 to manage the defence estate. A Capita-led consortium was appointed in March 2014 as a strategic partner, in a contract worth £400m over 10 years. The MOD has so far paid Capita around £97.5m. The background: The MoD has around 1,300 sites, 300 of which represent 85% of spending. It has a 25-year plan to streamline its estate by 2040, reducing its size by 30%. This was laid out in the 2015 Strategic Defence and Security Review. Since then, it has identified 91 sites for disposal, which were drip fed in four announcements in 2016. Most were already known as available. The intention was to use the land to create 55,000 homes, as well as revenue. The sites are also some of the most expensive to run, and would save the MoD an estimated £3bn by 2040. The MoD said the estate will be better focused on new centres of specialism. The next step is that the MoD will submit an annual update to parliament on the implementation of the plan in the autumn. The training and reserve estates will be examined separately. • To send feedback, e-mail alex.peace@estatesgazette.com or tweet @egalexpeace or @estatesgazette