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The creation of a new organisation to manage Defence property has been announced by Defence Secretary Dr Liam Fox.

The Defence Infrastructure Organisation (DIO), (subject to Trade Union consultation), will bring together all those working on estate and infrastructure activity across the Ministry of Defence. It will deliver better strategic management of the military estate as well as savings of £1.2bn over the first four years alone.

This is the first such change delivered by the Defence Reform Unit under Lord Levene, designed to radically overhaul the structure of the Department without reducing the effectiveness or reliability of the services delivered.

Dr Fox said:

"Our Armed Forces and their families deserve the best possible facilities in which to live, work, and prepare for operations, within the current financial situation. A single infrastructure organisation will provide effective support to our military personnel and better strategic management of the Defence Estate.

"It should also deliver significant savings in running costs, increase opportunities for estate rationalisation, and promote private sector growth - ultimately delivering better value for money to the taxpayer while giving the Armed Forces what they need."

The new organisation will be a 'one-stop shop', managing the majority of infrastructure services across Defence and delivering an essential part of the defence reform agenda. The DIO will take on the estate management responsibilities of its predecessor, Defence Estates, overseeing the physical maintenance of buildings and equipment, including support services such as cleaning and catering, as well as energy and water for the estate.

It will also take on the challenge of supporting military tasks on an overseas estate that spans Germany, Cyprus, the Falkland Islands, Gibraltar and operational theatres such as Iraq and Afghanistan, as well as the management of infrastructure Private Finance Initiative (PFI) contracts.

From 1 April 2011, the DIO will bring together roughly 7,000 staff, the vast majority of whom are civilian, working on construction, maintenance and disposal of land and buildings across the Department. Most staff currently work for Defence Estates, the rest work in infrastructure within the three Services and other smaller organisations.

By making these changes, the Ministry of Defence expects there to be a reduction of about 2,500 posts by 2014, and to save some £1.2bn over the first four years through estate rationalisation and other efficiency measures.

DE's Chief Executive, Andrew Manley, who is leading the team responsible for the programme to create the new organisation, said:

"This new organisation is being designed to ensure we have an affordable and sustainable military estate that gives our Armed Forces the best possible facilities in which to live, work and train.

"A single infrastructure organisation will provide better strategic management of the Defence Estate whilst also delivering significant savings in running costs and offering increased opportunities for estate rationalisation."

The DIO will take on the responsibilities of Defence Estates, which currently spends some £2bn each year, managing around 240,000 hectares of land and property on behalf of the MOD, making the Department one of the country's largest landowners, responsible for an estate equivalent to one per cent of the country's land mass.

The current military estate comprises three main areas: the Built Estate, which is made up of barracks, naval bases, depots and airfields; the Housing Estate, which requires management of over 48,000 Service families homes; and the Defence Training Estate, which comprises 16 major Armed Forces training areas and 104 other training areas and ranges in the UK alone.

The Strategic Defence and Security Review made a number of recommendations that require running costs savings across the Defence Estate of some £300m per year by 2014-15 through disposals and other efficiency measures.

In this context, 'infrastructure' describes the acquisition, development, management and disposal of all fixed, permanent buildings and structures, land, utilities and facilities management services, with the exception of IT infrastructure.

Defence infrastructure staff are already working on rationalising 'soft' facilities management (FM) contracts, for support services such as cleaning and catering. This is a first step towards the DIO taking responsibility for 'Total FM'. Ultimately, single regional contracts will cover 'soft' and 'hard' FM, such as the physical maintenance of buildings and equipment, as well as providing energy and water to the estate.

The creation of a single Defence infrastructure organisation will be carried out in phases, although it will take a number of years to fully transform the business. Phase 1 involves merging all MOD infrastructure funding and posts into one organisation by 1 April 2011. Subsequent phases should start in the financial year 2011-12 to transform the organisation to its final structure.

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