Land Secs retreats from £1bn MoD defence academy PFI

Land Securities Trillium (LST) has pulled out of a PFI deal to deliver the MoD’s £1bn Defence Technical Academy, after raising concerns about rising costs on the scheme.

The scheme is part of the MoD’s £12bn Defence Training Programme. Land Securities Trillium was chosen as preferred bidder on the scheme in December 2007 as part of the Metrix consortium. The consortium is led by QinetiQ and includes Laing O’Rourke as construction partner.

LST cited rising costs on the scheme as the reason for its withdrawal. In a statement it said it was pulling out “in the light of the significantly increased bid costs, carried at risk by the bidders, required as the project moves into detailed design work”. LST had already spent £20m on bid costs on the project.

Metrix moved to allay concerns that the project is in trouble following Land Securities Trillium’s withdrawal.

Its chairman Charles Barrington said QinetiQ is in discussions with a number of firms interested in replacing LST as an equity partner in the consortium.

He added that the construction of the Academy was not expected to be delayed. Construction work is expected to start shortly after financial close which is due in the summer of 2010.

Land Securities remains in talks to sell Trillium to a rival outsourcing company, Tele-real, although the continuing discussions are not thought to have prompted its withdrawal from the training programme.

Trillium was providing land acquisition, management and development advice to the Metrix consortium.

Land Securities trillium is also shortlisted alongside Bovis Lend Lease for the £1.2bn Birmingham City Building Schools for the Future deal.

The award of preferred bidder was delayed at the 11th hour this week by the council after it asked for further clarification from both bidders.