As the Defence Secretary Philip Hammond announced last week, although subject to a ten-day standstill period, Serco may be on its way to saving MoD the sum of £71 million through the award of the Defence Business Services Management Contract. This is part of a long-term programme to radically transform the way corporate services are provided to the Department.
A source at the MoD told disclosed that Defence Business Services (DBS) stood up on 4 July 2011 and provides a range of corporate services, including human resources, finance, information and vetting, from a single structure to all areas of the Department, adding Serco will work with DBS to transform the organisation into an efficient shared services centre which builds on private sector best practice.
Vigilance learnt that over its four-year duration, the value of the contract is around £36m; there is an option for the Department to extend this for a further year. The contract is based on a zero management fee with all Serco’s earning being performance related. Serco will be strongly incentivised to drive down costs and deliver efficiencies and we expect savings in the order of around £71m to be achievable over the life of the contract.
Defence Secretary Philip Hammond said: “The contract marks a defining moment in our efforts to radically change the way we do business in the Ministry of Defence, by awarding a contract to Serco to lead, manage and transform the Defence Business Services (DBS) organisation.”
Secretary Hammond added: “This is an exciting and challenging time for the Department; the new Serco management team have firsthand experience of making similar changes in the wider public and private sector, improving performance through innovation. We are committed to working in partnership with Serco to make this transformation a success and to deliver efficiencies and savings which will allow more resources to be made available to the front line”