Defence Estates, the Ministry of Defence’s property arm, has approved a new structure for its property management contracts, which are due to begin between 2011 and 2014.

The MOD’s five regional PRIME contracts, each worth hundreds of millions, will be replaced by four 10-year contracts, worth a total of £5bn.

Each contract is expected to run for seven years with a three-year extension option, as part of the Next Generation Estates Contract programme.

The plan includes UK-wide contracts for the Defence Training Estate and military housing.

Under the new regime, regional frameworks will be set up to create an established group of suppliers for major new builds.

Approval of this new structure follows an 18 month consultation with the private sector over how best to succeed the existing contracts.

Defence Estates will now start developing the detail of the individual contracts, and expressions of interest from contractors will be sought in autumn 2010.

The previous set of contracts includes the £427m PRIME contract for Scotland, won by Amec Taylor, the £700m contract for the south west awarded to Bovis Lend Lease and Babcock, and Interserve’s PriDE consortium’s £500m contract for the south-east.

The new contracts will cover:

• Scotland and Northern Ireland
• North of England, Wales, the Midlands and East Anglia
• Southwest England
• Southeast England

Defence Estates  is worth £15.3bn, spans 240,000 hectares and 45,000 buildings, and spends more than £1bn each year on property and maintanance services.

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