MoD Donnington defence deal could secure 800 jobs
More than 800 jobs could be secured by the sale of a military supplies operation at a Shropshire defence base, it was claimed today.
Global engineering giant Babcock International has been revealed as the preferred bidder for the Defence Support Group (DSG), which employs 867 people at MoD Donnington in Telford to maintain and repair vital equipment for the armed forces.
It is hoped Babcock will choose Donnington as its main centre for future DSG work and even run some of its other operations from there.
The contract, due to begin next spring, is for 13 years and could be extended beyond that.
Wrekin MP Mark Pritchard today hailed the Donnington contract as good news. He provides a Q&A on the issue:
What does the Defence Support Group do?
The Defence Support Group provides the Ministry of Defence with a wide range of specialist engineering support services, including the maintenance, repair, overhaul, upgrade and procurement support services for defence equipment. The Defence Support Group provides vital support for the UK's military global deployments, including the despatch of attached staff to Iraq, Afghanistan, Kuwait, BATUS, and Germany; along with sending mobile support teams to UK-based units across the country.
Why is MoD Donnington in the news?
The base is in the news because this week the MoD announced that Babcock will become the new owners of the Defence Support Group, which forms part of MoD Donnington. These changes will take place from spring 2015. This will guarantee Defence Support Group work for the next 13 years, although there is a high probability that the contract will be extended beyond that.
What is Babcock?
Babcock International Plc. Babcock is one of the UK's leading engineering support services organisation with revenue of more than £3.5 billion in 2014 and an order book of more than £12 billion. It provides critical support across a number of sectors, particularly defence, but also energy, telecommunications, transport and education. Babcock has worked closely with the MoD for many years and recently won a big contract to maintain British warships, submarines and naval bases for the following five years along with BAE Systems.
What makes MoD Donnington so special?
In a nutshell, the highly skilled, professional, and dedicated workforce; they are some of the best personnel for what they do from anywhere in the world. That is something I know will be recognised by the new owners. The DSG workforce are a credit to Shropshire and the UK.
Whose idea was it to move the ownership of some parts of MoD into new ownership and what benefits does it bring?
It was the last Labour government's idea. They initiated a major review of many MoD businesses. The Defence Support Group is just one of many defence businesses that the last Labour government put up for sale – and planned to put up for sale.
The benefits should be far more work for staff at the base. The level of work from the MoD given to the Defence Support Group has been reducing over many years, save for urgent operational requirements.
The good news is that the Defence Support Group will now be free to bid for other UK and international work from i) other government departments and ii) attract new work from the whole of the private sector. For example, Babcock can use MoD Donnington for work in its other sectors, such as energy, telecommunications and transport. MoD Donnington will, in the near future, be able to compete globally. This will secure a long-term future for base and employees.
What are the possible dis-benefits?
Change always brings uncertainty, especially for existing employees and those local suppliers. Babcock will invariably look at how the Defence Support Group is manned and operated. I hope there will be little change of personnel at the base. In fact, I believe the base will expand as new business comes in. Nonetheless, I will fight any plans to make any of the existing workforce redundant. To date, no suggestion of redundancies has been made.
Changes may be ahead, but without this change the scale of MoD business coming into the base was always reducing, not increasing. New capital investment will, hopefully, reverse that trend.
So what about the future?
With a new injection of private sector capital into the base, and with new warehousing being built, and with a MoDernised Defence Support Group being able to compete for future MoD and non-MoD business, there is a bright future for the base. There will some negatives, but the positives will outweigh the actual and perceived negatives. Eventually, I believe the base will grow even larger and expand, bring new jobs and prosperity to the borough and Shropshire.
The change in ownership would still go ahead whoever wins the general election. All the major parties agree that the Defence Support Group does have a bright future but only if it can bid more widely for existing business, new business, and compete in a global defence marketplace.
The news comes in the week members the Unite union at the DSG walked out in protest at an offer of a one per cent pay rise.
Babcock, which has a revenue of £3.5 billion and an order book of more than £12 billion, recently won the contract to maintain British warships, submarines and naval bases for the next five years with BAE Systems.
And it is also a big player in the energy, telecommunications, transport and education industries.
The announcement was hailed "good news" for the Donnington base, which awaits a separate decision expected next month on whether it is to become the location for the MoD's single logistics hub.
MoD Donnington is up against MoD Bicester in Oxfordshire in a bid to host the National Defence Gateway. Success would safeguard 1,200 jobs, including 700 at the base, and also create new posts.
Mark Pritchard MP for The Wrekin, whose constituency covers the base, said the potential arrival of Babcock was "good news".
He said: "This will inject new capital investment and funding into the base and will help secure jobs and training for the future.
"In recent years, the Defence Support Group has seen a slow decline in the amount of work given to it by the Ministry of Defence.
"Babcock's new investment at the base will help reverse that trend and safeguard the engineering, maintenance, and repair business jobs' for many years to come. I will be meeting with Babcock's senior management over the coming days to discuss these details.
"MoD Donnington will, in the near future, be able to compete in the global race. This is good news and will secure the base a long term future for the base and its employees."
The Government announced its intention to sell the DSG in 2010 to reduce MoD's running costs and focus resources on the front line.
But despite the 13-year contract, which is due to begin next spring, the future remains uncertain for employees at the base.
It is not known how staff at the base will be affected by the new contract.
Members of the Unite union at the DSG walked out this week in protest at an offer of a one per cent pay rise, saying they deserve more pay ahead of their move into the private sector.
Unite national officer Mike McCartney, who led a rally on Tuesday, said: "Feelings among our members is running high not just because of the insulting pay offer, but because of the uncertain future they face of being sold off to the private sector."
Mr Pritchard described the 867 DSG employees at MoD Donnington as "a highly skilled, professional, and dedicated workforce" and said he was hopeful there would be a positive future.
He said: "They are some of the best personnel for what they do from anywhere in the world. That is something I know will be recognised by the new owners. The DSG workforce are a credit to Shropshire and the UK.
"Change always brings uncertainty, especially for existing employees and those local suppliers. Babcock will invariably look at how the Defence Support Group (DSG) is manned and operated. I hope there will be little change of personnel at the base. In fact, I believe the base will expand as new business comes in. Nonetheless, I will fight any plans to make any of the existing workforce redundant. To date, no suggestion of redundancies has been made. Either way, I will fight for local staff and employees."
And he said the sale to Babcock would bring "far more work" to the site. He said: "The good news is that the DSG will now be free to bid for other UK and international work from other Government departments and attract new work from the whole of the private sector. For example, Babcock can use MOD Donnington for work in their other sectors."
Babcock, which has a revenue of £3.5bn and an order book of more than £12 billion, recently won the contract to maintain British warships, submarines and naval bases for the next five years with BAE Systems.
And it is also a big player in the energy, telecommunications, transport and education industries.
Minister for Defence Equipment, Science and Technology Philip Dunne, who is MP for Ludlow said: "Today's announcement is a key milestone in the sale process, and we remain on schedule to complete the sale of the Defence Support Group by the end of March next year.
"This has been a competitive process which is on track to deliver improved vehicle availability for the British Army at better value to the taxpayer over years to come. I expect to be in a position to release further details of the winning proposition in the New Year once contract negotiations have concluded."
The news comes as the newest brigade in the British Army had its formation ceremony at the Donnington base. The 11 Signal and West Midlands Brigade, based at Venning Barracks, was described by the military as the new face of the Army in the West Midlands.
It has been formed by a merger of the Telford-based 11 Signal Brigade and 143 (West Midlands) Brigade, which was based at Copthorne Barracks in Shrewsbury.
Peter Rogers, chief executive of Babcock International, said he was pleased the company had been selected as preferred bidder.
He said the agreement, which the firm hopes will be signed and sealed by April next year, will include a contract to provide services to the MoD for 10 years with the option to extend for a further five years.
"We are delighted that we are growing and strengthening our partnership with the Ministry of Defence through the acquisition of DSG," Mr Rogers said.
