A consortium comprising AMEY, McQuarie Infrastructure, Hyder and Innisfree has won the PFI project to modernise The Ministry of Defence (MoD) headquarters in Whitehall.

Under the 30-year deal, Modus Services plc will redevelop the Grade 1 listed Main Building, and manage and maintain it and the Old War Office. Kvaerner will be responsible for the design and redevelopment and AMEY for the facilities management. The MoD will pay £55m each year for the provision of accommodation.

Defence Secretary Geoffrey Hoon commented: "This redevelopment is a long overdue modernisation of the MoD's London headquarters. The building dates from the 1950s, its infrastructure is inefficient, the offices fall well short of modern standards and are close to becoming a health hazard. I am determined that the redeveloped building will be functional and fit-for-purpose, without frills. And the long-term PFI deal will deliver clear savings for the taxpayer, which can be ploughed back into the front line."

The MoD currently occupies seven buildings in central London. The £40m annual operating costs for these buildings was set to increase dramatically over coming years, with the need for work necessary to meet health and safety and fire regulations and the need to renew leases.

However, the new deal will create a modern and flexible working environment, taking advantage of up-to-date business practices and technology and making more effective use of available space.

The project is also expected to create or sustain some 1,500 jobs in the construction and service industries.

Anna Lagerkvist