Carillion signs deal to 're-engineer' government contracts

Carillion has reached an agreement with the coalition on how it can find efficiencies on government support services contracts.

Under a Memorandum of Understanding, Carillion said it would work with the government to ’re-engineer procurement and service delivery” across a number of its existing contracts.

The contractor said the process could see a change in the ’scale and scope’ of contracts.

In November Building reported that paymaster general Francis Maude was talking to Carillion about cutting the price of outsourced contracts.

Maude has been running a programme at the Cabinet Office to cut the price of government contracts from the government 50 largest suppliers.

Carillion also revealed this morning it had won £350m of new contracts.

Support service contracts worth £190m included a £25m five-year FM contract with the Land Registry, and a £75m contract with BAA to provide M&E and fabric maintenance at Heathrow. A Carillion JV has won £80m contracts to provide facilities management services for Dow and property management services for Enexis.

Carillion’s construction business won a £45m contract for work on Whittington Barracks, which is expected to start in September 2011.

Argent has awarded Carillion a £21m contract to build an apartment scheme at King’s Cross.

In Canada Carillion has been awarded a £60m construction management contract to build Phase 2 of the Uptown Shopping Centre in Victoria, and a £51m contract to build the new Queensway Hospital in Ottawa.

John McDonough, group chief executive, said: “We have made a positive start to 2011, following our strong performance in 2010, for which we expect to report good profit and earnings growth, and year-end net cash of well over £100 million.”

“New order intake remains healthy and we have secured new orders plus probable orders worth some £350 million.”