1.21 In April 2000, a month before the contract was signed, MOD, following extensive reviews of staff numbers employed in London, identified that there were up to 1,000 non-Head Office staff who should remain in London. Some of those, however, would have had no accommodation after 2002 under the rationalisation plan as it then stood. In January 2001, MOD approved the refurbishment of St George's Court to accommodate these staff while proceeding with a review of total non-Head Office staff numbers. The Crown Estates Commissioners (CEC), the owner of St George's Court, will lease it to a developer who will redevelop and then sub-let it to MOD for 20 years, with a break option in year 15. If MOD does not require any or all of the accommodation within St George's Court, it can sub-let all or part of it to other government departments. MOD will let a separate facilities management contract for the building.
1.22 MOD did not consider it possible to combine the St George's Court arrangement with the PFI deal, not least because of CEC involvement. MOD has, however, obtained a financially attractive deal with CEC and London and Regional Properties. MOD's Investment Appraisal demonstrated that the St George's Court arrangement was the most cost-effective option for accommodating non-Head Office staff in London. MOD has gained considerable upfront benefits. It received £4.3 million for surrendering the old lease and guaranteeing to take up the accommodation, either with its own or other government departments' staff; its first 10 months of occupation will be free; and fitting out of the accommodation and some specialist fit, will be included in the developer's works. In addition, rent for the first five years will be at a below market rent. In respect of staff who may use this building, Defence Exports Services Organisation (DESO), in particular, which employs some 500 staff, has established a requirement to remain in London. DESO will be accommodated on a single site and MOD will have the opportunity to carry out further rationalisation of a number of non-Head Office functions, which will remain in London.