Serco:Engie joint venture wins UK defence infrastructure contracts

Writer,

Archived article

Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.

A Serco:Engie joint venture has been awarded UK Defence Infrastructure contracts with an estimated base value of £900 million and total potential value of £3.4 billion over an initial seven year term.

VIVO Defence Services, a 50/50 Joint Venture between Serco and ENGIE has been awarded contracts to provide asset and facilities management services for the UK defence built estate by the Defence Infrastructure Organisation (DIO).

VIVO has been awarded contracts for two of the four regions being tendered under Lot 3 of the Future Defence Infrastructure Services (FDIS) programme.

The joint venture will be responsible for providing services in the South West and Central regions of the UK, the largest two regions of the four that were competed, and which represent around two-thirds of the MOD's estimated value of Lot 3 of the Future Defence Infrastructure Services contracts.

The total core contract value to VIVO for the two regions is estimated to be around £900 million over the initial seven-year period, including indexation. There are a further three one-year extension options.

In addition to the core fixed price contract for each region, there will be significant amounts of additional project work, which will be commissioned as required by the DIO and, while the future value of these projects is uncertain, the Ministry of Defence (MOD) estimates that they are likely to be worth a further £2.5 billion over the initial seven year term.

As it is a joint venture, half of VIVO's profit after tax will accrue to Serco.

The services VIVO will deliver will support the UK's defence capability, maintaining the MOD's built estate across more than 200 sites and around 19,000 buildings. The core services include planned and reactive maintenance, as well as mandatory safety checks. The potential additional project work will range from small scale asset replacement and property refurbishments to large construction projects.

Following a six-month mobilisation phase, the core work is scheduled to start in February 2022, and it is expected that the additional project work will ramp up during the course of 2022.