Frequently Asked Questions (FAQs)

Affordability and Risk

How will the MOD ensure it gets value for money? This project equates to a quarter of the Defence budget

It should be noted that expenditure is spread over a 35-year period and needs to be considered in that context. The annual cost of this project is less that 1% of the Defence budget.

A Public Sector Comparator (PSC) was prepared which represented what the MoD would do if a PFI were not an option. The PSC has been used as a benchmark against which the bids from the private sector have been compared to ensure that best value for money is being achieved. Also the contract has been negotiated such that services are periodically benchmarked throughout the life of the contract, thus ensuring continuous value for money.

Why did you conclude that the PFI option was the most appropriate option?

Aside from the financial benefits, the PFI solution offered a number of qualitative benefits compared to the PSC, including:

• A single partner providing assured standards over 35 years, underwritten by a taut incentivised payment mechanism
• Transfer of key risks, such as planning permission, design maintenance and construction, etc, to the commercial sector
• Faster build programme
• Enhanced residual value and condition of accommodation at end of contract

Why is this Project so important?

Together, the Salisbury Plain Training Area and the Aldershot Garrison accommodate nearly 18,000 military personnel. This is nearly 20% of the Army’s overall strength, which underlines the importance of this project to the Army.

How will Aspire Defence Limited provide value for money?

Aspire Defence Limited is a Special Purpose Vehicle set up specifically for the project and brings together Carillion and Kellogg Brown and Root in a consortium. They bring a wealth of experience in managing large scale and long term PFI projects. We are working closely with Aspire and are confident that the contractual obligations placed on both parties will deliver a value for money product.

Under the PFI, Aspire will be responsible for the key construction and support related risks, such as maintenance and through life costs. Performance will be incentivised by a payment mechanism linked to performance and availability.

Services will be subject to benchmarking and/or market testing 10 years after Financial Close and every 7 years thereafter.

How can you be sure that value for money is being achieved when only 2 bidders were considered?

A number of responses were received as a result of Official Journal of the European Community advertisement. Following a Pre-Qualification exercise three bidders were issued with an Invitation to Negotiate. One bidder withdrew in October 2002 leaving two remaining bidders in the competition, Abraxis and Aspire Defence Limited. Both companies submitted comprehensive bids, which were subject to a full Technical, Financial and Commercial Evaluation, compared at all the stages with the PSC. We are satisfied that this rigorous process has identified a value for money option.

Is this project affordable?

Yes. The project remains within affordability levels agreed by Ministers.

Given the prolonged negotiations has the affordability position worsened?

No. Negotiations have been complex and lengthy but this has been necessary to ensure that the Project remains affordable and will deliver value for money.

Is the plan to invest considerable sums in Aldershot and Salisbury Plain safe?

One of the strategic aims set out in Defence Estate Strategy 2006 is to have an estate of the right size to meet the military need. This will be an estate of fewer, larger sites in the UK and overseas, appropriately located and making the best use of available resources while remaining fully capable of meeting military needs. Sites identified as having the potential for future development include Aldershot and Salisbury Plain.

The Strategy for the Army Estate contains a concept of “super garrisons” of which Salisbury Plain and Aldershot are two, into which under any future organisational changes the Army will seek to concentrate. Therefore whilst some units might relocate, or be disbanded, they will be back-filled by units from other locations. The requirement for significant investment in the garrisons included within the project footprint is therefore robust.

What happens if there are delay’s in the construction programme? Will Aspire be held, financially, to account?

The Design Build and Transition Plan is very taut, with delay damages imposed if key delivery dates (both construction and land release) are not met and the programmes slips as a result.

What is the estimated value of the contract?

The current estimated value of the potential PFI contract is approximately £1.4 Bn in capital expenditure and a total through life value of circa £8 Bn in today’s money.

How is the money being spent?

Approximately half the construction costs will be on new builds, the other half on refurbishment and demolition. The major construction sites will be in Aldershot, Tidworth and Bulford garrisons.

Why PFI and Background to Project

Why is this PFI attractive to a private organisation?

Project Allenby/Connaught is a long term venture of 35 years with a scale and diversity that brings efficiencies and gives Aspire Defence Limited the chance to invest in facilities and staff. It also provides a high degree of stability.

How long will the contract last?

The term of the PFI contract will be for 35 years.

Why 35 years?

A range of contract durations were considered, taking into account risk transfer, flexibility, balance and value for money. This concluded that 35 years was the best option. 35 years allows the MOD to transfer life cycle risk.

What are the key milestones?

• Commercial Close – March 2006
• Contract Award – March 2006
• Financial Close – April 2006
• TUPE Transfer – July 2006
• Service Commencement – July 2006
• Return of 2 RTR – July 2007
• Completion of construction phase – early 2014
• End of Contract - 2041

Why has it taken so long?

It took longer than expected. This is a highly complex PFI contract and we had to ensure that the contractual details for were absolutely right for a contract lasting 35 years.

Can this project adapt to further in the requirement?

Yes. The accommodation design is flexible enough to accommodate changes. However, where this is not possible a change mechanism to meet new requirements in a timely and value for money fashion is in place.

Why was Project Allenby/Connaught set up?

More Army units, along with their associated personnel and equipment, needed to use and/or be accommodated in the garrisons adjacent to the Salisbury Plain Training Area and within Aldershot Garrison. A reorganisation of force structures also resulted in some unit moves. A Project Team, Allenby/Connaught, was established to examine the best way of meeting these requirements. The ultimate aim was to improve the living and working environment of all personnel, whilst achieving long term value for money and it is flexible enough to take into account any new additional initiatives.

Why did the MOD decide to run a PFI competition?

Project Allenby/Connaught undertook a detailed study into the Army’s accommodation requirements. This included reviewing opportunities for rationalising the Army estate and increasing efficiency in the provision of associated support services. The study found that a considerable amount of investment is required to meet these requirements and, it was decided to explore the potential for private sector investment through a Private Finance Initiative (PFI).

What is a PFI?

A Private Finance Initiative project is one in which the private sector partner invest in assets and facilities from which it then provides services over the long term to the public sector. In the case of Allenby/Connaught the private sector will provide serviced accommodation and other support services. PFIs are widely used both within the MoD and across the wider public sector. MoD has PFIs for housing, simulators, vehicles, office accommodation and training establishments. Other sectors use PFI for roads, schools, hospitals, rail and office accommodation.

A Private Finance Initiative is a mechanism where a contractor borrows money against a future income stream and uses the borrowings to fund the construction phase. The risk of delivering the new facilities and the services over the long term period passes to the contractor.

How was the Project advertised?

The Project sought Expressions of Interest from industry through an advertisement in the Official Journal of the European Community (OJEC). Details were also published in MoD Contract Bulletins, Government Opportunities, Works Services Opportunities and relevant trade press and journals.

What was the outcome of the advertisement?

A number of responses were received as a result of OJEC advertisement. Following a Pre-Qualification exercise three bidders were issued with an Invitation to Negotiate. One bidder withdrew in October 2002 leaving two remaining bidders in the competition, Abraxis and Aspire Defence Limited. An evaluation of these bids and internal approvals procedures concluded when Aspire Defence Limited were appointed as the Preferred Bidder.

Who is Aspire Defence Limited?

Aspire Defence Limited has been established specifically for the project and brings together Carillion and Kellogg Brown & Root (KBR) in a consortium committed to Allenby/Connaught.

Construction and Service Delivery

What will happen at the start of the contract?

During the first eight years of the contract there will be a significant capital works programme (new buildings/demolition/refurbishment). This started in the areas of greatest need (Aldershot, Perham Down and Tidworth) and will involve the construction of new buildings that would cover an area twice the size of Hyde Park.

Three months after contract award Aspire started to provide an extensive range of support services, these will be provided over the 35 year term of the contract.

What accommodation will the Project provide?

The Project will provide modern living and working accommodation, for some 18,700 military personnel in the Salisbury Plain and Aldershot garrisons. This includes the provision of some 11,500 single room en-suite bed spaces for service personnel, messes, cookhouses, junior ranks clubs, and storage.

How many buildings will be demolished?

Based on current plans in excess of 450 buildings will be demolished across the project footprint.

Why are so many being demolished? Does this make financial sense? Surely they are not all beyond economic repair and could be used for something else?

Many of the sites within the projects footprint have been in use since the early 1900’s and much of the built estate dates back to that time. Although there have been some new buildings on these sites, much of the accommodation is beyond its economic life, and is also unfit for today’s need, eg, shared rooms instead of single rooms.

Aspire has compiled a detailed programme of construction and where necessary demolition, in order to meet the Army’s requirements. Buildings for which future use remains unclear will be made “wind and weather proof” in order to reserve our position and reduce costs.

Why are you building so much new accommodation?

In many instances new construction is the only way of meeting the requirement, to the appropriate standard.

How could you let your servicemen and women live under such poor conditions for so long?

It is acknowledged that some accommodation is unsuitable for housing soldiers. A number of projects have been undertaken, eg, Project SLAM, to alleviate this problem, and Project Allenby/Connaught is a further example.

What sites are affected by the Project?

The following Army sites in Hampshire and Wiltshire are affected: Aldershot; Bulford; Larkhill; Netheravon; Ludgershall; Perham Down; Tidworth and Warminster.

How many buildings are affected by site?

What services will be provided by Aspire?

Aspire will provide a wide range of services including the management of nearly 1,000 green and white fleet vehicles, the management of garrison stores facilities, catering (some 430 military catering staff will assist them), domestic services, utilities and waste management.

Is this a further example of the government’s reluctance to invest in areas other than the South & South East?

The Strategic Defence Review (SDR) identified a requirement for more Army units, along with their associated personnel and equipment, to use and/or be accommodated in the garrisons adjacent to the Salisbury Plain Training Area and within Aldershot Garrison. This project is key to successful delivery of this requirement.

The Ministry of Defence is investing in the Army Estate across the UK and is not concentrating on the south and south east. Moreover, we are acting in accordance with Lyons principles in terms of overall MOD numbers in the South East.

Will this project only provide opportunities for companies in the south of England?

Project Allenby/Connaught will provide substantial benefits to the wider UK economy through the use of many sub-contractors involved in off-site construction. For example has guaranteed a large number of jobs at the Corus factory in Shotton, North Wales.

Will other jobs be created and if so how many?

Personnel Issues

What impact was there on MoD staff?

Approximately 380 MoD Civil Service posts were transferred to the Aspire Defence Limited consortium under TUPE rules. TUPE legislation protects the terms and conditions of transferring employees. Occupational pensions are outside the scope of TUPE legislation however the MoD requires that when it’s staff transfer to a private company they are offered a pension scheme by their new employer that is broadly comparable to their existing civil service scheme.

Did this result in any redundancies?

No.

What support services are affected by the Project?

The Project encompasses a wide range of support services including domestic services, estate management, document production and handling, stores, transport and waste disposal. Some of these services are currently provided within the public sector, whilst others are already provided through existing contracts.

What about those who were employed under existing contracts?

The 1800 personnel employed through existing contracts transferred to the Aspire Defence supply chain.

Will the PFI create any additional employment opportunities?

It is likely that opportunities will be created, particularly on the construction phase of the project. The urban regeneration programme planned in Aldershot will also create significant employment opportunities.

How many?

It is difficult, to quantify this.

What is the urban re-generation programme in Aldershot?

As a result of plans proposed by Aspire Defence, Project Allenby/Connaught will enable the release of a large area of land south of the Basingstoke Canal. Defence Estates, in conjunction with Rushmoor Borough Council, have developed a solution that will facilitate the redevelopment of the area. There are plans to provide a range of housing solutions including affordable homes for key workers in the area.

Miscellaneous

Will the setting up of a MoD PFI review body affect the signing of this contract?

No. The Public Finance Unit will ensure that the MoD receives the best value for money and that best practice/lesson learnt form previous PFIs are shared with the Allenby/Connaught Project Team. Likewise, Project Allenby/Connaught will share lessons learnt for the benefit of future PFI’s.

Does the Project cover family quarters?

The Project does not encompass family quarters.

Have the public been consulted?

Each of the garrisons affected by the project remains closely engaged with the local community. The normal processes for informing the public on planning proposals have been followed.

What impact will the Project have on the local communities? How will it benefit them?

Community interests have been considered and regular liaison with Local Authorities and community groups has taken place. It is envisaged that a particular benefit to arise from the Project will be the opportunities for closer integration between military and civilian communities. This could occur for example in areas such as further shared use of leisure, recreational and community centre facilities.

What community facilities are proposed?

New theatres and family centres, and additional, complementary sports facilities will be provided. For example new community centres at Larkhill and Warminster, and a new theatre at Tidworth, all of which will be available to the local residents as well as Army personnel and families.

Have all local councils and authorities been fully consulted? How have they been involved?

The scale of the proposed developments means that close co-ordination with Regional Government Offices, County and District Councils as well as Statutory Bodies and Non-Governmental Organisations has been essential. The Local Authorities have been consulted on traffic, schooling and primary health care. Planning authorities have been engaged at all stages, and their agreement to proceed has been essential.

What consideration has been given to environmental issues?

Full external scrutiny of the project has been undertaken, and the new and refurbished buildings will be BREEAM (Building Research Establishment Environmental Assessment Methodology) compliant. All new builds are required to achieve a BREEAM ‘Excellent’ rating and any refurbishment must achieve a BREEAM ‘Very Good’ rating. Also, as part of their contractual obligations, Aspire are required to implement key environmental efficiencies such as rainwater harvesting, solar thermal and combined heat and power solutions.

The Project Team and Aspire are working very closely with County and District Councils, the Environment Agency, English Heritage, English Nature and others to ensure that environmental and sustainability issues are taken into account. The assessment of potential environmental impacts has progressed jointly with Local Authorities and Statutory Bodies, and various reports have been submitted as part of the consultation process.

In addition, separate studies have been commissioned for Aldershot and Salisbury Plain Training Areas and have been used to support the Project's proposals. The Project will adhere to Sustainable Development principles and Environmental Management Systems. Aspire Defence has undertaken a full Environmental Impact Assessment to support their detailed plans.

Will the new constructions be energy efficient?

Yes. Buildings will have solar panels, rainwater harvesting and metering. Buildings will be regularly monitored to ensure that energy efficiencies are maximised. Buildings will also conform to the latest standards for insulation.

What will happen to listed buildings and monuments, or those designated as being of historic importance?

Any renovation or refurbishment will take full account of relevant regulations.

Are there any plans to demolish any of these buildings?

No. Retention of listed buildings has been the subject of negotiation with the planning authorities.

What will happen to the land no longer required by the Army?

This will be handed to MOD Defence Estates, who will manage its future use including, where appropriate, disposal..

Will any land be sold?

Yes, there are plans to alienate areas particularly in Aldershot, where some 160 hectares will be disposed of. This will be managed by Defence Estates. The MoD and Rushmoor Borough Council are working closely together on developing an overall plan for the redevelopment of Aldershot, which will include the provision of affordable housing.

How much revenue do you expect to realise from this disposal?

This information is commercial-in-confidence. Negotiations are ongoing regarding the disposal of surplus land.

Will Aldershot remain home to the British Army?

Yes. There is a commitment by the Army to Aldershot which can be demonstrated by the early construction programme included in the Project.

Are Salisbury Plain and Aldershot going to be made into “Super Garrisons”?

The Strategy for the Army Estate contains a concept of “super garrisons” of which Salisbury Plain and Aldershot are two.