Kier will build a new training centre, armoury and office extensions at the West Sussex site. Construction work will start in October 2016, the DIO said.
The works are part of a wider £27m upgrade of Baker Barracks with enabling works, a new perimeter fence and additional office space now complete and the delivery of new single living accommodation set to be completed in September 2016.
It is all part of the army basing programme (ABP), providing facilities for the return of troops stationed in Germany.
Baker Barracks are on the site of the former RAF Thorney Island airbase between Portsmouth and Chichester.
Kier Construction Southern operations director Trevor White said: “It’s an important project for DIO so they can provide improved facilities for our armed forces and we look forward to working with them to deliver this exciting opportunity.”