Brilliant DIO manages large-scale change in defence infrastructure provision

12 Nov 13. Conceived in SDSR 2010 and formed in April 2011 from what had been Defence Estates it is good to see that under the excellent leadership of Andrew Manley as CEO and Mark Hutchinson as COO the new Defence Infrastructure Organisation (DIO) is already making its presence strongly felt.

The task of changing the way that defence infrastructure support is to be managed for the benefit of the military and that with the necessity of affordability in mind must also be combined with a process of driving through greater efficiency should not be underestimated. Progress has already been excellent and the next year will be hugely important for DIO as the organisation moves through a further large scale process of change in how it delivers better value for taxpayer money together with much improved support to the military.

A product of the Levene Defence Review, the DIO was charged to bring together all property and infrastructure management within a single organisation designed to optimise investment and strategic management of the vast defence estate. Bringing about a change in both attitude and approach as to how management of the defence estate would, in future, be approached whilst at the same time making the system efficient and affordable would be no easy task but it is one that in the relatively short period of just over two years has already made very good progress.

By any standards what the DIO manages on behalf of the MOD is enormous. Larger than either National Trust or Forestry Commission in terms of land, property and infrastructure managed, the DIO estate is worth an estimated £25bn and has an annual budget spend of £3.3bn.

Responsibilities that the DIO is now mandated to undertake include the provision of an effective, coherent and affordable infrastructure solution that is able to meet all the needs of the military and defence establishment, providing sustainable, safe and legally compliant infrastructure and, as and when required, additional supporting of areas and theatre’s of war that the UK military is engaged such as in Afghanistan currently and that is designed around fast infrastructure provision, management and support that has been designed for the establishment of in-country stability.

While it has unfortunately become rather easy to find fault in many aspects of SDSR 2010, it is a delight to find one aspect that is not only already perceived to be a great success but also one that has clearly saved money for taxpayers. Arguably the predecessor Defence Estates organisation lacked a coherent strategy just as it did skills.
The old Defence Estates could hardly be said to have been cost efficient and neither was it perceived to have adequate systems or process to deliver what was required. In short, Defence Estates failed to understand the ‘what’, knew too little about the ‘how’ and had little idea about ‘good and efficient means of execution’. What was needed, and what Levene demanded, was transformation of what was clearly a poorly managed, costly and inefficient legacy organisation to one that could hopefully in a very short period of time be the leading public sector infrastructure provider. DIO is already well on the way to achieving that mantle.

Managing some 230,000 ha. including Royal Navy dockyards, Royal Air Force bases, Army barracks, camps and vast training areas such as those on Salisbury Plain the DIO is the largest landowner in Britain. Overseas the DIO is responsible for MOD estates in Germany, Cyprus and the Falkland Islands together with individual sites in Norway, Poland, Kenya, Canada, Oman, Belize and Nepal. In terms of property, DIO has a portfolio of 45,000 military buildings, 50,000 houses plus 35,000 flats and other types of living accommodation. With no less than 841 listed buildings, 170 sites of special scientific interest plus another 130 external UK sites that are designated as areas for nature conservation and some 750 scheduled monuments. Efficient management of these assets is absolutely essential.

A vital part of the original plan was that DIO would seek a Strategic Business Partner (SBP) that would be entrusted to continue building upon the already established transformation programme. To be embedded within the DIO at its headquarters in Sutton Coldfield which is just to the north of Birmingham the SBP role is envisaged as managing DIO operations and staff (currently numbering 3,000), undertaking to review the ongoing organisational structure, advising what further efficiencies could be driven from the new DIO structure, required skills plus other strategic objectives that would be required to better optimise the strategy of improved asset management of the estate. The overall aim had transformation at its heart and this would include rationalization and where possible the opening of commercialisation opportunities. Management of existing and new suppliers (currently DIO has 407 contracts with 200 different suppliers) together with other third party arrangements and contracting strategy would also come under the SBP mandate with the aim of driving further efficiencies, cost savings and achieving better value for money for the taxpayer.

Although this might on the surface appear to be a complicated structure to ensure transparency and best practice it is envisaged that following the contract award of SBP and as part of the overall transformation of DIO the delivery organisation would then be formed as (“DIDO”) and the governing authority (“DIGA”). DIDO Ltd would be a GovCo and thus would act as the managing agent of the MOD. My understanding is that the aim is that DIGA, which it is hoped would be established in mid 2014, would be responsible for overseeing and approving the activities of DIDO (the latter incorporating the SBP team) as well as exercising governance over the SBP performance as well.

Final bids for the strategic partner were received in June and contract award is envisaged during Q2 2014 with full effect in Q3 2014. Press reports earlier this year suggested that partnership bidders could include Mace partnering with Telereal Trillium and KPMG; Serco partnering DTZ and Bechtel and finally, Capita partnering URS and PA Consulting. I cannot confirm whether any or all of these potential partnerships is still extant, that they have submitted bids or that others have also joined in the bidding.

It was intended that as part of the overall transformation of DIO the delivery organisation would then be formed as (“DIDO”) and the governing authority (“DIGA”). DIDO Ltd would be a GovCo and thus would act as the managing agent of the MOD. My understanding is that the aim is that DIGA which it is hoped would be established in mid 2014 would be responsible for overseeing and approving the activities of DIDO (the latter incorporating the SBP team) as well as exercising governance over the SBP performance as well.

In organisational terms it is clear that the DIO is well advanced in having decided the organisational layout, future business model, processes, skills and technology required. This in itself has been a formidable achievement and all credit is due to the excellent team that have put the strategic plan together. In the wider defence arena the combination of DIO working with other vitally important defence structures such as DSTL in terms of research and technology development and whatever is decided for defence procurement between the notional ideas of DE&S PLUS (the more likely future procurement option in my view) or the Government Owned, Contractor Operated GOCO option idea it seems to me that at long last there is now an organisation working for the betterment of the defence estate and all the responsibility that goes with that in terms of providing infrastructure, buildings and homes for the military we do now have a very fit for purpose operation and one that is now very well managed. With the Army, Royal Navy and Royal Air Force chiefs managing their own ‘Force’ budgets it is imperative that they receive all the support that require in terms of an efficient infrastructure and support operation. In DIO I believe that they can look forward to receiving a very much better level of support that they did through the legacy organisation.

In terms of ‘what’, ‘how’ and ‘execution’ of change DIO has in two short years come a very long way forward to meeting the requirements of change. Identification and priorities have been determined and so too has policy and required transparency of operation. Strategic planning done, it is now time to commission the final recommended changes and policy. Delivery is of course an ongoing beast and so is the ability to always be flexible to requirement change. Engagement is also about communication not just to the final users or main stakeholder but also to employees and staff. To all these things, DIO would appear to be succeeding where the current DE&S has because of the trauma of delayed change so far failed. Any company, any operation – be it private or government owned – is only ever as good as the people that are employed to operate it. To achieve best practice motivation and incentivisation is always required. DIO is well along the road to achieving that.

Howard Wheeldon, FRAeS,
Wheeldon Strategic Advisory Ltd.
M: 07710 779785


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