Prime contractors to replace tendering

The MoD's prime contracting regime, which comes into force next April, will place onerous responsibilities on the few players capable of winning work.

Instead of conventional tendering, which will be phased out in line with the Egan Task Force recommendations, the MoD will merely define new "business needs" for its operations. It will then be up to the prime contractor to conceptualise facilities to meet the need efficiently.

The prime contractor will take full responsibility for designing and constructing the facility, and will be financially liable for both the capital cost and cost in use.

Contractors will be allowed to run the facility for 18 months to two years to check the actual running costs against their estimates.

"If energy costs are markedly higher than they predicted, it means their design is wrong and we therefore expect them to redress matters." The MoD will expect prime contractors to develop long-term relationships with key suppliers, and to set yearly cost reduction targets with them.

The new regime will have implications for consultants: "Designers will either become subcontractors to prime contractors, or will become prime contractors in their own right. The likes of Ove Arup and WS Atkins are certainly capable of becoming prime contractors," said Cain.