Babcock takes over MoD unit in £140m deal
THE MINISTRY of Defence (MoD) has sold its repair and maintenance unit Defence Support Group (DSG) to Babcock for £140m.
The deal includes a 10-year contract for Babcock, the firm in charge of decommissioning the UK’s aging nuclear power plants, to provide maintenance, repair, overhaul and storage of current military vehicles and light weapons.
The contract award follows the announcement of the preferred bidder last month, and will see Babcock continue the services DSG currently provides, with the new contract coming into force in April 2015.
Minister for defence equipment, support and technology Philip Dunne MP said: “Signing this deal with Babcock will put the Defence Support Group on a sustainable long-term footing and will transform the equipment maintenance and repair support that the Army relies on, both at home and overseas. Babcock will provide market-leading engineering and fleet management expertise to optimise vehicle availability to the Army at better value for the taxpayer.”
According to the MoD, the Army will also benefit from considerable savings over the next 10 years, seeing a transformation in the way its vehicles, such as Challengers and Warriors, are maintained.
Dunne added that the proceeds from the sale and the “significant savings over the life of the contract” represent outstanding value for money for the taxpayer and will allow the MoD to focus its resources on frontline services.
Babcock’s shares fell by 1.23 per cent yesterday.