In the 10-year deal, valued at £400m, the companies will oversee the management and transformation of the UK’s national and international defence infrastructure.
The government says the project has the potential to deliver substantial savings to the taxpayer, which could reach over £300m a year in the contract’s duration.
The MOD also says the new partnership will contribute to the transformation of all facilities available for the armed forces.
“Working with a strategic business partner will bring in private sector expertise to enhance the DIO,” claimed defence secretary Philip Hammond.
“We can [now] deliver the best possible infrastructure and services for our armed forces,” he added.
According to Capita, it will initially deliver an 18-month overhaul project designed to produce a blueprint for the future strategic asset management of the estate.
The aim is to use this to create a world-class infrastructure delivery organisation capable of supporting the long-term objective of the MOD.
“Capita brings a unique breadth of expertise to the MOD from business process transformation through to multi-disciplinary property and infrastructure services,” claimed Andy Parker, chief executive at the firm.
“The partnership will help to unlock the knowledge, skills and resources that already exist within the DIO, while adding capability to tackle the significant cost-saving targets currently facing the MOD,” he added.