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Contracting out

The Strategic Defence Review in 1998 identified the need for the Ministry of Defence (MoD) to privatise some of the functions it was undertaking that were secondary to its primary function as the country's defence organisation.

Management of water and wastewater services was one of these secondary functions.

Letting the contract as a public private partnership (PPP) would effectively transfer ownership of the existing assets and the business of supplying the water services to an external company.

In 1999 the MoD hired PriceWaterhouseCoopers Consulting (which has since been taken over by IBM) to manage the procurement process. Hyder also provided technical advice and in 2001 Partnerships UK (formerly the Treasury Taskforce) lent its support to the project, opening up new expertise and resources from within the government.

The team decided to split the country into three packages of work, with separate contracts for Wales and the South West (package A), Scotland (package B) and the north and east of England (package C). Scotland formed a separate package due to its different regulatory regime.

The contract for Package A was let in April 2003 and the BREY Utilities team 'went live' last December. Packages B and C are due to be let to NEVIS (Thames Water) and C2C (Severn Trent Water, Costain and Arup) respectively.

In February 2003 the MoD set up the Partnering Management Organisation (PMO) to manage the new contracts. Around 32 staff from the MoD and the three consortia will be on the team managing the contracts, managing the budget, auditing and providing office support to the service providers.

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