Is the DBS Serco contract unsound?

Defence Business Services Commercial Management Contract Awarded to Serco 1 March 2012

On the 29th February 2012 Serco announced through their advertisement to recruitment for a Service Delivery Manager within Defence Business Services (DBS) that they had been awarded the commercially sensitive contract to run the Ministry of Defences' Personnel, Pay, Finance, Security Vetting and Accounting organisation before any announcement had been made to Parliament, departmental trade unions or staff within DBS.

The Secretary of State for Defence announced that Serco had been awarded the DBS commercial contract after PCS had detailed that Serco were recruiting to a post that belonged to a government contract that had not been announced.

PCS has requested a number of meetings with the Secretary of State for Defence to represent our concerns; however, no meeting has been forthcoming to date.

As no meeting has been granted to address our concerns we have not has any assurance on following questions:

• Why award a contract to the value of £36M to undertake work that senior civil servants are competent to undertake when the current DBS civil service management have met every target that has been set. 
• Serco can now dictate MoD business output while the associated business risk remains with MoD. What assurance and governance is within the contract that will ensure this does not undermine defence needs?
• What assurance and governance arrangements are within the contract to enable a commercial management team to manage public funds when they are not accountable to the public purse, only to the contract they have been awarded and their shareholders?
• The contract award details that TUPE legislation does not apply. Under Regulation 3, there will be a TUPE transfer if an identifiable business or part of a business changes hands, or a particular service is contracted out, given to a different contractor, or brought in-house. What assurance do you have that this is correct when it is clear that the MoD is transferring the management of DBS to a private company?
• What assurance is there that the contract does not breach fair commercial contract practices as it enables Serco to outsource transactional work to themselves (as this is not precluded from the contract)?
• As Serco will have direct access to Defence Bills management information what assurance and governance is within the contract to stop Serco using sensitive defence contract cost information to undermine their competitors or the public purse value for money benchmark process in future contract awards?
• The contract award offers to save £71M at a cost of £36M with no hard change initiatives detailed by Serco. As DBS has already got hard wired savings over the life of the contract what assurance is there in the contract that MoD and the public purse will gain any Value for Money benefits?
• Bringing in Serco as the commercial management of DBS whose professional civil servants have achieved hard wired value for money savings year on year has undermined morale to such a point that business continuity is a significant risk. What assurances were given by the MoD in relation to business continuity? 
• Taking the above points into account, what assurance do you have that this contract will not bring the MoD into disrepute or see the MoD face a legal challenge from one of the other bidders in the tender process?