Defence PFI's

#1
With all the talk of being cash strapped and robbing Peter to Paul how is the great defence PFI experiment going?

The MoD is the biggest user of PFI's and is living on borrowed time, the money available for capital spending will decline sharply as the PFI payment profile bow wave starts eating into the budget.

The big ones like the aircrew training, tanker/transport aircraft and Skynet get all the headlines but what about the smaller ones like the C Vehicles, HET or FEPS

As things change, are we left with ongoing liabilities for things we don't need, an example might be the Tornado GR4 training one, if we withdraw the GR4 early as seems to be the current rumour, will we have to pay for training for an aircraft we don't actually have, until 2031 (see below)

How have operations affected the deals, C Vehicles, HET's and FEPS spring to mind

Can we expect the Coalition government to start cutting back or will they use them more as a way of getting capability on the short term cheap

Here is a list

Are PFI's universally bad news or are there gems in the shite

Off Balance Sheet

Training, Administration and Financial Management Information System: Provision of training administration and financial management information systems to the Army Recruiting and Training Division
£36m – Aug 1996 Nov 2009

Hazardous Stores Information System: Provision of an information management service for hazardous stores safety datasheets with 2,000 users.
£1m – Oct 1997 Oct 2008

Defence Fixed Telecommunications System: Integration of 50 fixed telecommunications networks used by the Armed Forces and MOD, including the delivery of voice, data, LAN interconnect and other WAN services
£200m – Jul 1997 Jul 2012

Medium Support Helicopter Aircrew Training Facility: Provision of 6 flight simulator training facilities, covering three different types of helicopter, at RAF Benson
£114m Oct 1997 Oct 2037

Hawk Synthetic Training Facility: Provision of replacement simulator training facilities at RAF Valley
£19m Dec 1997 Dec 2015

Joint Services Command and Staff College (JSCSC): Design and delivery of a new tri-Service Command and Staff Training College infrastructure and supporting services, including single residential accommodation and married quarters.
£29m – Jun 1998 Aug 2028

Attack Helicopter Training Service: Provision of full mission simulator, 3 field deployable simulators, ground crew, maintenance and armament training
£165m – Jul 1998 Sep 2017

Family Quarters Yeovilton: Provision of married quarters accommodation for 88 Service families at RNAS Yeovilton
£8.2m – Jul 1998 Jul 2028

RAF Lyneham Sewage Treatment: Refurbishment of existing sewage treatment facilities, serving a population of 7,000, to meet regulatory standards at RAF Lyneham
£3.8m – Aug 1998 Aug 2023

VIOLA PFI (formerly Thames Water and Tidworth Water and Sewage): Pathfinder project providing water, sewerage and surface water drainage, serving a population of 12,000 military and dependants at Tidworth
£5m – Feb 1998 Aug 2018

RAF Mail: Provision of informal messaging services for the RAF
£12m – Nov 1998 Nov 2011

Fire Fighting Training Units: Provision of fire fighting training for the Royal Navy
£22.5 – Apr 1999 Jan 2021

Light Aircraft Flying Training: Provision of flying training and support services for Air Experience Flying and University Air Squadron Flying Training
£20m – Apr 1999 Mar 2009

Tornado GR4 Synthetic Training Service: Provision of aircraft training service at RAF Marham and RAF Lossiemouth
£61.7m Jun 1999 Jun 2031

Army Foundation College: Provision of teaching and training facilities for the further vocational education and military training of high-quality school leavers
£73.4m – Feb 2000 Dec 2029

RAF Cosford/RAF Shawbury Family Quarters: Provision of married quarters accommodation for 145 Service families at RAF Cosford and RAF Shawbury
£15m – Mar 1999 Jun 2025

Central Scotland Family Quarters: Provision of married quarters accommodation for 164 Service families in Central Scotland
£24.7m Aug 1999 Jan 2021

Tri-Service Material Handling Equipment: Provision of Tri-Service materials handling capability
£35m – Jun 2000 Jun 2010

E3D Sentry Aircrew Training Service: E3D Sentry simulators instructors and maintainers at RAF Waddington
£6.9m Jul 2000 Dec 2030

Lynx MK 7 and 9 Aircrew Training Service: Provision for simulator training facility for Lynx MK 7 and 9 helicopter aircrew
£15.5m Jul 2000 Jul 2025

Tri-Service White Fleet: Provision, management and maintenance of support vehicles in the UK
£40m – Jan 2001 Jan 2011

Family quarters at Wattisham: Provision of married quarters accommodation for 250 Service families
£34.2m – May 2001 Mar 2028

Family quarters at Bristol/Bath/Portsmouth: Provision of accommodation for 317 Service families
£78m Nov 2001 Sep 2028

Defence Housing Information Systems: Provision of a management information system for Defence Housing
£11.6m – Oct 2001 Sep 2010

Marine Support to Range and Aircrew Training: Provision of management, manning, operation and maintenance of Air Support and Range Safety Craft
£11.9m – Dec 2001 Mar 2012

Astute Class Training: Provision of a training environment for crewmen and maintainers to support Astute Class submarines for 30 years
£79.6m – Sep 2001 Jan 2037

Strategic Sealift (RoRo): Provision of strategic sealift services based on six RoRo ferries in support of Joint Rapid Reaction Force deployments
£167.9m – Jun 2002 Dec 2024

Material Handling Equipment: Provision of Tri-Service material handling equipment for Army, Navy and RAF storage depots
£5.9m – Aug 2002 Jul 2010

Aquatrine Project A: Provision of water and waste water services
£154m Apr 2003 Nov 2028

Aquatrine Project B: Provision of water and waste water services
£48.5m Sep 2004 Mar 2030

Aquatrine Project C: Provision of water and waste water services
£174m Oct 2004 Mar 2030

Hayes Records and Storage: Pan-Government Records Management and Archive Services
£11m – Sep 2003 Sep 2028

Defence Sixth Form College: Development of a sixth form college to help meet the future recruitment requirements in the Armed Forces and MOD Civil Service
£20m – Jun 2003 Aug 2033

Colchester Garrison: Redevelopment, rebuilding and refurbishment to provide accommodation and associated services (messing, education, storage, workshops)
£539m Feb 2004 Feb 2039

Skynet 5: Range of satellite services, including management of existing Skynet 4 satellites
£1,360m – Oct 2003 Feb 2020

C Vehicles: Provision of Earthmoving and Specialist plant, Engineer Construction Plant and Material Handling Equipment and support services
£703m 4 Jun 2005 Jun 2021

Portsmouth 2 Housing: Provision of 148 Family quarters in Portsmouth
£27,1m Oct 2005 Oct 2030

Future Strategic Tanker Aircraft (FSTA): FSTA is an innovative PFI programme that will provide modern air-to-air refuelling and passenger air transport capabilities
£2,688m – Mar 2008 Mar 2035

On Balance Sheet

Defence Helicopter Flying School: Provision of helicopter flying training services
£93m Apr 1997 Mar 2012

RAF Lossiemouth Family Quarters: Redevelopment and re-provision of 279 Service family quarters
£24.8m Jun 1998 Aug 2020

Joint Services Command and Staff College: Command and Staff College for military and civilian personnel (also see JSCSC – Off Balance Sheet)
£58.2m Jun 1998 Aug 2028

RAF Fylingdales: Provision of guaranteed power supply
£7.5m Dec 1998 Dec 2023

Main Building Refurbishment: Redevelopment and management services for MOD Main Building
£347.9m May 2000 May 2030

Defence Electronic Commerce Service: Strategic partnership to deliver e-business environment to share information between MOD and trading partners
£6.5m Jul 2000 Jul 2010

Defence Animal Centre: Redevelopment of new office and residential accommodation, animal husbandry and training support
£10m Aug 2000 Nov 2026

Heavy Equipment Transporters: Provision of vehicles to replace existing fleet and meet future requirements
£58m Dec 2001 Jul 2024

Field Electrical Power Supplies: Provision of generator sets to support operational electrical requirements in the field
£73m Jun 2002 Jun 2022

Naval Communications: Submarine fleet communications service
£58.5m Jun 2003 Dec 2030

Devonport Armada Single Living Accommodation: Provision of Support Services and Fleet Accommodation Centre services at Devonport Naval Base
£44.5m Jul 2004 Mar 2029

Project Allenby/Connaught: Rebuild, refurbishment, management and operation of facilities for Service accommodation at Aldershot, Tidworth, Bulford, Warminster, Larkhill and Perham Down
£1,300m Mar 2006 Apr 2041

Northwood: Rebuild, refurbishment, management and operation of facilities for the Permanent Joint Headquarters
£161m Jul 2006 Oct 2031

Provision of Marine Services: Provision of marine services at UK Dockyard Ports at Portsmouth, Devonport and Clyde and support to military exercises, training and deep water trials, worldwide
£90.5m Dec 2007 Dec 2022

Corsham Development Project: rebuild, refurbishment, management and operation of facilities of the Basil Hill site
£111m – Aug 2008 Jul 2033

UK Military Flying Training System: Advanced Jet Trainer, Ground Based Training Equipment Element
£59m – May 2008 May 2033
 
#2
New reality?

You've got a 30 year PFI deal have you?

Yes Minister

Well tragic, we don't need it none more

But your predecessor signed it!

Well, take it up with him, but we ain't paying none more.


What are they going to do? Sue MOD the ONLY market for their services?
Well they could, but it;s a bit like reporting a Copper for his attitude… sound in principle, but tends to work out badly for you in practice.
 
#3
I agree that a healthy dose of realism is needed and dare I say it, genuine partnership between industry and the MoD

The only problem comes when those industry partners have business elsewhere and the UK is just one part of their portfolio, these massive consortium pfi's always seem to have a complex makeup

The alternative to PFI though is more capital spend in the short to medium term, which means even more painful choices
 
#4
I agree that a healthy dose of realism is needed and dare I say it, genuine partnership between industry and the MoD

The only problem comes when those industry partners have business elsewhere and the UK is just one part of their portfolio, these massive consortium pfi's always seem to have a complex makeup

The alternative to PFI though is more capital spend in the short to medium term, which means even more painful choices
Fox has already fired a shot across their bows and told them he expects these gold plated and diamond tipped contract costs to be renegotiated downwards.
 
#5
Today's spanner in the works that the Trident replacement needs to come out of the standard defence budget is really going to upset things. I agree there is only so much money to go around but without defence there is nothing else left, or did I miss something?
 
#6
I'm always amazed at how these firms get away with charging stupid prices for relatively simple services.

Need new barracks? MOD agrees to some ludicrous price, and 20 years later the thing's fallen down and needs replacement. Those old Wehrmacht barracks many of us lived in were donkeys' years old in the 70's and still going strong.

An alternative may be easier: there are many hotels running under capacity that could, perhaps, be used as "billets";
how did "billeting" work in WW2? I'm assuming a law was made, so could be again, that said "we, the government, will send troops to live in your house, like it or not"?


Those nice motorway services with built-in POL points, accommodation and catering facilities, storage and parking areas = instant barracks for some unit? The M6/M1 alone could house a division doing that, at minimal disruption to civilians and no cost to MOD. A forward thinking government might even make it a statuary duty for each county to provide such a facility? And you get a possible runway right on your doorstep! Good, too, for MACP or whatever it's called this week: stick a MLRS regiment in South Mimms and your crowd- control- in- London problems disappear in a puff of smoke :)
 
#7
New reality?

You've got a 30 year PFI deal have you?

Yes Minister

Well tragic, we don't need it none more

But your predecessor signed it!

Well, take it up with him, but we ain't paying none more.


What are they going to do? Sue MOD the ONLY market for their services?
Well they could, but it;s a bit like reporting a Copper for his attitude… sound in principle, but tends to work out badly for you in practice.
Let's apply your 'logic' to the Colchester PFI (incidentally, the £539M quoted above is the capital outlay to build the barracks - there is still a small matter of £2Bn to service it over the next 30-odd years).

MoD states "We're not paying you any more". Contactor states "Fine, please vacate the barracks". MoD states "Why". Contractor states "Because you signed away the lease on the land for the next 135 (odd) years - see you for the handback in 2145. See you in court sooner that that to discuss loss of £2Bn".

MoD cannot pull out - it has no alternative.
 
#8
Let's apply your 'logic' to the Colchester PFI (incidentally, the £539M quoted above is the capital outlay to build the barracks - there is still a small matter of £2Bn to service it over the next 30-odd years).

MoD states "We're not paying you any more". Contactor states "Fine, please vacate the barracks". MoD states "Why". Contractor states "Because you signed away the lease on the land for the next 135 (odd) years - see you for the handback in 2145. See you in court sooner that that to discuss loss of £2Bn".

MoD cannot pull out - it has no alternative.
The MOD can pull out because it also has the PFI crooks over a barrel. What do you do with a spare garrison if the MOD throws a strop? Rent it out to the Russians? MOD is the only game in town and to date, has not been reminding the monkeys of that fact.

The Assorted crooks both PFI and direct cost have all been told their contracts are being looked at and an agreed downward revison of the contract costs is expected. Sucks to be their shareholders who were all expeing to be able to buy Bugatti Vyrons out of the huge profits they were expecting, but that's life.
 
#9
What do you do with a spare garrison if the MOD throws a strop?
Try:

Demolish it and build housing or other infrastructure.
Retain it and use it for mixed business, residential and recreational use.
 
#10
Try:

Demolish it and build housing or other infrastructure.
Retain it and use it for mixed business, residential and recreational use.
Try when I used to contract to Marconi back in the day…

"hello, is that accounts?"
"yes"
"You haven't paid my invoice yet and it's been more than 30 days"
"Our terms are 90 days"
"But my contract with you clearly stated 30 day from date of invoice"
"We know, but our terms are 90 days"
"I could take you to court over this"
"Do you you wish to work for us in future?"

Trying to enforce contracts on a big and unwilling only game in town outfit tends to be a rather one sided losing streak.
 
#12
Let's apply your 'logic' to the Colchester PFI (incidentally, the £539M quoted above is the capital outlay to build the barracks - there is still a small matter of £2Bn to service it over the next 30-odd years).

MoD states "We're not paying you any more". Contactor states "Fine, please vacate the barracks". MoD states "Why". Contractor states "Because you signed away the lease on the land for the next 135 (odd) years - see you for the handback in 2145. See you in court sooner that that to discuss loss of £2Bn".

MoD cannot pull out - it has no alternative.
Bull, the government will simply issue a CPO and get it back for the capital outlay.
 
#13
I'm always amazed at how these firms get away with charging stupid prices for relatively simple services.

Need new barracks? MOD agrees to some ludicrous price, and 20 years later the thing's fallen down and needs replacement. Those old Wehrmacht barracks many of us lived in were donkeys' years old in the 70's and still going strong.

An alternative may be easier: there are many hotels running under capacity that could, perhaps, be used as "billets";
how did "billeting" work in WW2? I'm assuming a law was made, so could be again, that said "we, the government, will send troops to live in your house, like it or not"?



Those nice motorway services with built-in POL points, accommodation and catering facilities, storage and parking areas = instant barracks for some unit? The M6/M1 alone could house a division doing that, at minimal disruption to civilians and no cost to MOD. A forward thinking government might even make it a statuary duty for each county to provide such a facility? And you get a possible runway right on your doorstep! Good, too, for MACP or whatever it's called this week: stick a MLRS regiment in South Mimms and your crowd- control- in- London problems disappear in a puff of smoke :)
Isn't that exactly what 2PARA did when they moved to Colchester and there was not enough accommodation ready? took over the local Travel Inn for six months?
 
#15
The Government cannot simply say to the providers, see this contract, shove it up your arse.

Credibility cuts both ways, if you want commercial organisations to bid for government work they have to have some assurance that contracts will be honoured, that expectations will be reasonable and requirements are well thought through. As soon as commercial organisations start thinking the government acts in bad faith, is too difficult to deal with or basically, not worth the effort, the government is well and truly****ed.

Most commercial organisations know full well that the land of milk and honey is rapidly dissapearing in the rear view mirror so know that the way forward is to thing of the long game, appear concilliatory and the very last thing to do is go to law.

Cool heads, long term views and above all else, maturity is needed
 
#16
What are they going to do? Sue MOD the ONLY market for their services?
IIRC, when PFI was introduced (by the Tories just before Bliar got in) if there was only one market (MoD), you didn't PFI. The whole point was to claw money back through sales to other parties, preferably overseas, thus sharing costs. This swiftly changed to PFI for the sake of PFI, as it shifted responsibility for actually paying to future generations.
 
#17
PFI was only ever a political ploy to enable lots of shiney new Schools & Hospitals to be built whilst in power and paid for by future generations. They are always more expensive as the PFI companies cannot borrow capital at interest rates as low as that available to governments. Our local PFI run Hereford hospital has just charged the users over £1k to fit a TV aerial for the Consultants rest room!
 

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