Guidance

Private Finance Initiative (PFI) Replacement Programme

Published 24 April 2024

The PFI Replacement Programme will consider the future commercial arrangements for service provision, following the expiry of each of the DIO 12 infrastructure and utility PFIs, to the single services and wider defence community to enable defence tasks.

It will consider the scope of future delivery arrangements both in terms of functions and customer base across the UK. It will ensure through the implementation of effective contract performance management systems that future services are delivered to the agreed customer specification in terms of both quality and quantity, subject to a value for money assessment.

The programme will be delivered in four phases:

Phase One - Tidworth Water and Wastewater, Lyneham Sewage and Fylingdales Power Generation (Completed in 2023 – 2024).

Phase Two - Future service re-provision of the three Aquatrine PFI contracts (Package A - Ancala Water Services), (Package B - Veolia Water Nevis), (Package C - Severn Trent Services)

Phase Three – Devonport Naval Base (Armada), Joint Services Command and Staff College (JSCSC) Shrivenham, Corsham, Northwood, and MOD Main Building

Phase Four - Project Allenby Connaught (PAC) and Colchester.

Private Finance Initiative (PFI) Replacement Programme Phase Two – Aquatrine Reprovisioning

The Defence Infrastructure Organisation (DIO) plays a vital role in supporting our armed forces by building, maintaining, and servicing the infrastructure needed to support defence; this includes providing Great Britain (GB)-wide water and wastewater services across the defence estate.

In the UK, DIO currently delivers water and wastewater services across circa 2,600 sites equating to 85% of the Ministry of Defence (MOD) GB-Estate. It covers all aspects of water and wastewater services from operation and maintenance (O&M), contingency planning, payment of statutory undertaker (SU) bills and charging of third-party customers.

Aquatrine manages the related environmental risks across the defence estate, and its aim is to improve the asset condition enabling MOD to continue to provide the services after the contracts end without significant additional investment.

The three 25-year PFIs are split into packages with a collective value of circa £2.6 billion:

• Package A – Ancala Water Services – 2003 to 2028
• Package B – Veolia Water Nevis – 2005 to 2030
• Package C – Severn Trent Services – 2005 to 2030

The current Aquatrine contracts provide the following services to MOD:

• Provide an uninterrupted supply of wholesome potable water, in accordance with the Water Supply (Quality) regulations 2000, to all points of water supply.
• Supply water for firefighting in accordance with the Crown Fire Standards, issued by the Property Advisers to the Civil Estate (PACE).
• Collect and dispose of sewage and surface water safely and hygienically from all points of sewage and surface water receipt.
• Operate a dedicated 24 hour helpful for MOD staff.
• Ensure that there is no flooding from surface water or combined surface water and sewage systems caused by a failure to provide the services.

The programme is currently in the pre-concept stage and the project team have been working closely with industry. Two options for future service provision have been down selected from a list of thirteen and endorsed to be taken forward for an in depth Combined Operational Effectiveness and Investment Appraisal (COEIA).

Private Finance Initiative (PFI) Replacement Programme Phase Three

Phase Three of the PFI Replacement Programme consists of several high-profile establishments integral to the Ministry of Defence’s (MOD) core outputs. The establishments currently in scope are Defence Academy Shrivenham, MOD Main Building, Northwood Headquarters, MOD Corsham, and Devonport Naval Base (Armada).

The respective PFIs are due to expire between the period August 2028 and March 2033.

The PFI Phase Three programme will consider how best to deliver Facilities Management (FM) successor arrangements to each of these establishments, ensuring minimal disruption to each of the sites during transition and enabling the delivery of high-quality FM services, to meet the business need.

The programme is currently in the pre-concept phase, engaging with key stakeholders, other major commissioners of FM services, industry suppliers and national trade forums, to identify potential delivery options. This strategic review will also take into consideration future FM delivery in a post Future Defence Infrastructure Services (FDIS) environment. 

The scope of the Phase Three project includes:

• Improving working environments by building further on the key principles of smarter working described in the MOD future workplace strategy.
• Providing an estate that is fit for purpose by ensuring the replacement contracts meet the needs of the Front-Line Command’s and wider MOD organisations.
• Develop a strategic approach that is value for money to replace five existing PFI contracts.
• Improving data quality enabling us to understand how the assets are used by creating, tracking, and utilising better-quality workplace and occupancy data.
• Managing portfolios strategically by enabling interoperability with other Government departments and programmes.