The strategic defence and security review 2010 set out this Government’s commitment to selling the Defence Support Group (DSG), currently a trading fund of the Ministry of Defence (MOD). This decision took account of the front line’s enduring requirement for DSG’s services, and concluded that, in principle, it was no longer necessary for Government to own and operate these capabilities. Contractor support to maintain equipment, including major platforms, has been recognised practice in the air and maritime domains for many years, so continued support to the land domain by DSG under new ownership is entirely analogous. There is significant potential for the land-focused elements of DSG in the private sector. We intend to structure the sale in such a way as to preserve continuing assured access to the services provided by DSG through a contract for service provision.
Over recent months, the MOD has conducted a pre-qualification process with industry and developed the prospectus on which DSG will be taken to market. As part of these preparations, including market testing and internal assessment, I have decided that the electronics and components business unit (ECBU) of DSG, and its sites at Sealand and Stafford, will be excluded from the sale and retained in the MOD. I have now taken the decision to launch the sale of the land-focused business of DSG.
An invitation to negotiate has now been issued to nine potential single bidders and consortia who passed the pre-qualification stage. The nine parties represent a very strong and credible field of interested parties, demonstrating the high degree of market interest from the private sector and confidence in the DSG sale.
The DSG work force and trade unions are being informed in parallel. The final sale decision will be taken later in the year after final bids have been received and evaluated.
Sustaining the capabilities provided by DSG remains of critical importance to the Ministry of Defence and the British Army. Selling the land business of DSG will be the best way to enable transformation into the long-term partner for the delivery of heavy vehicle repair services to the Army that we now require.