The Ministry of Defence has confirmed that it will not exercise an option to extend a multimillion-pound corporate-services outsourcing contract with sector giant Serco.
Serco won the Defence Business Services (DBS) contract in 2012. It covers civilian human resources, finance, information and security vetting, and was projected to be worth around £36m over its initial four year-course.
The deal, which comes to an end in April, gave the MoD an option to extend Serco’s provision of corporate services for an additional year, but the ministry said this week that it would instead bring the services back in-house.
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The MoD’s decision was first reported by procurement industry blog Spend Matters. In a statement given to Civil Service World, the MoD said its decision reflected a need to reassess its corporate services requirements in the light of last year’s Strategic Defence and Security Review.
“The MoD’s contract with Serco for Defence Business Services ends in April 2016,” the statement said. “DBS operations will be hosted within MoD as we consider our future requirements.”
It suggested the move may be a temporary measure that would allow it to “fully consider options” for the next phase of DBS “whilst ensuring the needs of defence, as outlined in last year’s Strategic Defence and Security Review, are met”.
The review, unveiled last November, outlined plans for a 30% reduction in civilian staff at the MoD by 2020, taking numbers down to 41,000.
When Serco initially announced it had won the DBS contract, it said it planned to streamline back-office services and would bring in a new executive leadership team to work with existing staff, who would remain MoD employees on the same terms and conditions.
CSW asked Serco for its views on the decision but had not received a response at the time of publication.