Contractors call for clarity over Ministry of Defence cuts

Contractors have called for more clarity over where cuts to Ministry of Defence schemes will fall, as the client revealed plans to save £1.2bn.

The savings are to be accrued over a four-year period, and according to Defence Estates chief executive David Olney, will include cuts to existing contracts.

This follows government proposals to scrap Defence Estates and replace it with a single organisation to manage military estates called the Defence Infrastructure Organisation (DIO).

Olney said contract renegotiations would relate mainly to maintenance works. He said: “If we are going to reduce our organisation’s employment base, then we must also look to bring costs down through current contracts.

“We believe most of these reductions will be through indirect costs; especially maintenance costs.”

Olney said the £1.2bn savings will be made in four broad areas; staff numbers, property disposals, utilities and direct estate costs. 

Stephen Ratcliffe, director of the UK Contractors Group, said the government needed to be more specific on the contract cuts.

Olney confirmed the Next Generation Estates Contracts will remain in place, meaning a £1.5bn housing contract will go ahead.