Serco group pulls out of military bid

City A.M. Reporter
THE UK government has said it will continue exploring plans to put its £159bn military equipment programme in the hands of a private firm, even after one of the two consortiums left in the running pulled out of the competition.

US engineering firm CH2M Hill, which was leading a team with Serco Group and WS Atkins, said yesterday its group had withdrawn from bidding to run the UK’s Defence Equipment and Support unit.

CH2M Hill said the team had decided to pull out after finding its participation was not as commercially viable as it had required, but gave no further details for a move which raises fresh questions about the contracting out of state activities.

However, a source close to the situation said the team’s decision was unrelated to the position of Serco, whose involvement had been criticised after it was accused of fraud by the government on separate contracts.

“This [drop-out] is regrettable and the reduction in competitive tension will make it more challenging for the department to conclude an acceptable deal with the remaining bidder,” defence secretary Philip Hammond said in a statement.