Thursday, 21 July 2016

The proposal to take DBS to the market against the review of The Spending Review 2015 confirms the MOD has learned no lessons

Do the NAO reports on The Spending Review 2015 confirm our concerns that MoD, in relation to the proposals to outsource DBS, is simply cost cutting rather than developing strategic intelligent change that is in the best interest of defence and value for money? We think so!

The National Audit Office has today published its reports on The Spending Review 2015 and Government’s management of its performance: progress with single departmental plans. These cover two key elements of the way government plans and manages its business: the mechanism for HM Treasury and departments to agree the high-level financial plans for the parliament; and the latest approach to planning and reporting on departments’ objectives and performance.

A strong, enduring, integrated framework for planning into the medium-term and beyond would allow any government to: make achievable plans; know whether it is on track, adjust its approach where necessary; and provide clear accountability to Parliament. While government considers that it has in place effective arrangements, albeit with room for improvement, it is the NAO’s view that the set of current processes and guidance do not add up to such a framework, and the effects can be seen in examples of poor value for money and a lack of long-term, joined-up thinking.

"Time and again, we find that problems in the delivery of public services can be traced back to the way government goes about planning and managing business in pursuit of an administration’s policy objectives. Instead of an enduring framework that supports coherent strategic planning, effective business management and accountability, the current approach amounts to a collection of top-down, set-piece processes and guidance that fail to make the most of the understanding and expertise across government. We welcome the process improvements in the most recent Spending Review, and the signs of improvement in individual departments’ business planning, but government must make a deeper cultural change if it is to make a lasting difference to its performance, and narrow the gap in accountability and transparency. This is all the more important as a new administration, with redefined and urgent objectives, seeks to hit the ground running."

Amyas Morse, head of the National Audit Office, 21 July 2016

Wednesday, 13 July 2016

We input to the Public Account Committee Shared Service Centres Inquiry - If its not broken don't fix it

When questioned by the public accounts committee under the Shared Service Centres inquiry on the 27th June 2016 John Manzoni (Chief Executive of the Civil Service and Permanent Secretary Cabinet Office) responded, effectively agreeing with us - if it is not broken, don't fix it. 

Chair PAC: That is great, but the taxpayer has lost as well. Can I ask briefly about the MOD shared services approach, which I am sure we will look at at some point? I had not realised until we had a submission on this how massively complicated it is. It includes much more than what we are talking about today. What are you doing as a result of what has happened from this experience to learn about that? Have you done a detailed analysis of the sort I have just described of whether it is actually the best approach to outsource shared services?
John Manzoni: We haven’t done a detailed analysis of the MOD process. As you say, it is quite big and complex, and it is actually quite efficient. When you look at the benchmarks, the cost per user and so on say that it is a very efficient service, so there is no burning platform there.
The motivation of MoD looking to take DBS to the market needs to be seriously questioned.

Scope of the inquiry

Government’s programme to transfer back-office functions to two shared service centres has made savings but has not achieved value for money to date, according to the National Audit Office (NAO). The NAO reported on the Cabinet Office's Next Generation Shared Services strategy in 2014, which included the creation of two independent shared service centres to provide back-office functions for up to 14 departments and their arm's-length bodies. The NAO have found, found that while the two centres have led to some cost savings, the programme is not progressing as planned.
Most departments which planned to outsource functions to one of the two centres have successfully done so. The centres have delivered overall savings of £90 million to customers in the first two and a half years of operation with costs of £94 million. These savings are less than the £128 million a year originally forecast because some departments have not outsourced and transformed their back-office functions as planned. The Cabinet Office currently estimates that the two contracts will generate savings of £484 million in total by 2023–24 at a cost of £159 million.

Costs increased "as a direct result of delays"

Costs have also increased significantly for both the customer departments and the suppliers of the shared service centres as a direct result of the delays. The increased cost to customers owes mainly to maintaining and extending the life of existing and ageing systems. 
Our Submission
Record of Oral Evidence

http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/public-accounts-committee/shared-services-centres/oral/34852.pdf


Thursday, 7 July 2016

Case not made for outsourcing Defence Business Services


Our argument that the case for the unnecessary outsourcing of management of the Ministry of Defence body which looks after MOD HR and payroll has not been made was backed up by an admission from Cabinet Office permanent secretary John Manzoni.
We have warned against the risky and inappropriate outsourcing of the Ministry of Defence body which looks after armed forces pensions, MOD HR and payroll, veterans' welfare and notification of casualties which the department announced on 11 February would face the market under a new model called ‘corporate services integration and innovation provider’ (CSIIP), where the MoD would bring in a contractor they can transfer their responsibility to for running DBS as a whole. 
In April 2014, Defence Business Services became one of the largest shared services centres in Europe when it merged with the Service Personnel and Veterans Agency (SPVA) to create one organisation for shared services across the Ministry of Defence. It carries out a particularly complex and sensitive function, with a presence at nearly every MoD site.
The MoD is expected to issue a formal Defence Contract Notice in the Official Journal of the European Union this month, and subsequently an 'invitation to negotiate' in late summer, with the contract award anticipated for summer 2017.

Halt all plans 

In our evidence to the parliamentary public accounts committee, which considered the government's whole troubled shared service centre programme last week, we tore into the plans to outsource DBS management to a private company.
We also called for the National Audit Office's highly critical findings on the overall shared services strategy to be taken into account as the government considers outsourcing DBS.
We said: "In light of the National Audit Office’s damaging report and the MoD’s own experience of private sector involvement in DBS, PCS believes the MoD should urgently halt and review all plans to outsource or privatise any part of DBS."
MPs on the committee questioned civil service chief executive John Manzoni about shared services and when asked whether there had been any detailed analysis of whether outsourcing was the right option for DBS, given its complexity he admitted there hadn't been any and also said that MoD shared services was a very big, complex and quite efficient organisation.
When asked by PAC chair Meg Hillier whether there had done a detailed analysis of whether it was the best option to outsource MOD shared services he admitted the analysis hadn't been done because "it's big, quite complex and actually quite efficient".
Sign the PCS petition to call on defence secretary, Michael Fallon, to halt the plans to privatise any part of DBS.

Monday, 4 July 2016

Land Registry privatisation plans on the backburner?

The government's consultation on its plan to privatise the Land Registry closed in May – but not before some high-profile opposition to the move, including from former chief land registrar John Manthorpe, the Open Data Institute and more than 300,000 members of the public who put their names to a petition.
The Department for Business, Innovation and Skills wants to move the Land Registry – which keeps an up-to-date register of land ownership in England and Wales – to the private sector by 2017, as part of wider plans to raise £5bn from government asset sales.
But the plans came under fire in the Commons last week with MPs from all sides of the House questioning the case for selling off the Registry.
Conservative MP Will Quince – a former property solicitor said the government had "misunderstood what the Land Registry is fundamentally about".
We believe the Ministry of Defence has fundamentally ignored the issues and risks around the business Defence Business Services undertakes.
Who in their right mind would consider outsourcing the running of Defence Business Services which includes the United Kingdoms National Security and Vetting, Veterans Welfare Services and the Joint Casualty and Compassionate centre.

John Manzoni on shared services

MPs on parliament's public accounts committee chose the first day back after the referendum result to take a detailed look at the government's shared service centre programme, the subject of a fairly critical recent report by the National Audit Office.
The NAO's report found that the Next Generation Shared Services strategy, government's high-profile 2014 bid to transfer back-office functions to two shared service centres working across departments, had not "achieved the significant anticipated savings and benefits" originally promised.
While the spending watchdog found that the two centres had delivered £90m of overall savings, it pointed out that this was some way off the £128m a year originally forecast, and flagged "delays in designing, building and testing the systems", which meant only two of 26 planned departments and agencies had signed up to the single operating platform by the time of its report. Meanwhile, the watchdog found that four customers had quit their shared services contracts.

Thursday, 23 June 2016

Outsourcing Shared Services increases costs and operational risks

Efficiency pressures in the public sector intensified considerably after the global financial crisis bringing about a drive to reduce operating costs where delivery of services, future needs and change costs were relegated to the second devision and effectively dismissed because of short-termism.

Widely sold as the ultimate solution is delivering operating cost reductions, shared services have been blindly outsourced without strategic planning resulting in increased costs, reduction in quality outputs and users of outsourced shared services losing organisational operational control, yet retaining all the risk should the outsourced shared service deliver fail.

Delays, cost overruns and deteriorating service quality are commonplace and Whitehall needs to make up to the dangerous reality already created under ISSCL 1 and 2 and not blindly throw good after bad by outsourcing Defence Business Services.

Simply - it is too sensitive and better value for the public purse can be achieved by keeping it in house.

Peter Gershon, the British businessman and former government adviser who initially recommended shared services in 2004, agreed that difficulties in implementation meant reform ‘should only be undertaken on a very carefully selected and controlled basis.’

Escalating Start up Costs
A significant number of shared services projects run into delays and significant cost overruns from their inability to identify and control change costs especially where outsourcing includes the need to stand up new IT infrastructures and redesign or refresh organisational design to enable shared back-offices.

For example, shared services in Western Australia cost £185m more than planned. The project was eventually scrapped in 2011.

The Recent NAO report into shared services published on the 20th May also came to the same conclusions.

Increased transaction costs

The blind drive to outsource shared services rarely takes account of transactional costs in their value for money assessment, leading to increased costs to the public purse after outsourcing has taken place.

Organisations incur both “production costs” and “transaction costs.” These reflect the activity involved turning inputs into outputs, and the activity of arranging, monitoring and assuring those processes. Contracting a service to a third party often brings higher transaction costs than if the work had continued to be done in-house.

Reduced service quality
Outsourcing your shared service organisation gives control of your organisations operational capability and resilience to a third party. 

Operational policies which may be critical to a customers outputs and in our case defence need, may not fit with the drive of a third party supplier to cuts costs to maximise profit from the public purse.

A third part supplier will drive generic, cheap shared service solutions that are poorer than the same service previously delivered in-house. 

Loss of opportunity cost savings
In the current financial climate the drive for savings in public services is not going to disappear. 

However the ability to deliver efficient and effective opportunity savings for the public purse disappear if you have outsourced your shared services and lost control of your organisational enabling processes.

Defence Business Services is the Ministry of Defence's enabling shared services organisation and if given a chance can become a transformational engine that deliver quality, cost effective and controlled shared services across defence and security and vetting - but only if it remains in the Ministry of Defence.

If it is outsourced - the private sector will exploit the reliance of defence on its corporate services and shared functions in delivering defence outputs to maximise profit at the expense of the public purse and defence funding.


Monday, 20 June 2016

MoD set to privatise repatriation and burial of war casualties

Gill Primmer of The Financial Times covered our campaign today.

Repatriation and burial of war casualties and notification of next of kin are to be run by the private sector with the Ministry of Defence set to invite bids next month for a contract to run the services.

Defence Business Services was established in 2011 to run human resources, payroll and vetting, and was merged with the Service Personnel and Veterans Agency in 2014.

The division also provides welfare services to 900,000 veterans and their dependants. It issues 130,000 medals a year and manages the payroll and pensions for the MoD’s 50,000 civilian staff and 200,000 military personnel.

A smaller contract to manage the organisation was held by Serco and Accenture until April. But the outsourcing deal is much larger and incorporates more MoD divisions, such as casualty services, which were not previously included, according to a pre-tender notice in the Official Journal of the EU.

The deal is expected to include MoD staff in the division for the first time, with some of its 2,500 personnel expected to be transferred to the winning private company. The £36m four-year contract is expected to be awarded next year.

It is the latest in a run of MoD outsourcing deals implemented as the UK’s defence budget has been cut by 8 per cent in real terms since 2010.

Although defence spending is due to rise by about 5 per cent by 2020-21, the money will be soaked up by higher costs for existing programmes and new investments, such as the construction of four Trident missile-carrying submarines.

Mark Serwotka, general secretary of the PCS union, said its members were opposed to the DBS privatisation because of the “incredibly sensitive and important” nature of its remit.
“We believe our armed forces and their families will be shocked and sickened to think this work — which is currently carried out compassionately and thoughtfully — could be handed to a private company to profit from.”

The MoD said no final decisions had been made “so any detail of any potential future contract is speculation”.
Other MoD services seeking private management for the first time include fire and rescue services for UK military at bases and airfields at home and overseas.

A contract to run the Defence Fire Risk Management Organisation, which employs 2,200 staff at 78 defence fire stations worldwide, is due to be awarded in September, with a private company such as Serco or Babcock taking over operations next year.

The MoD has become the biggest user of the private sector in central government, with £19.95bn of services out to tender, according to a 2013 National Audit Office report.

This is well ahead of the next two biggest outsourcers — the Department for Work and Pensions at £3.45bn and the Ministry of Justice at £2.85bn — and will have increased substantially since the report after large-scale transfers in the past three years.

Various models have been used to involve the private sector. In 2014 the department sold the Defence Support Group, which employs 2,800 engineers responsible for maintaining the army’s vehicles, to Babcock for an upfront sum of £140m.

In a more traditional outsourcing deal, 1,200-plus defence ministry employees were transferred to the US contractor Leidos last August, when the government handed responsibility for buying and distributing non-military essentials such as bandages and coffee in a 13-year deal.

Not all the MoD’s attempts to privatise services have been successful. In 2014 it pulled out of a deal to part-privatise military procurement after one of the two bidders withdrew and there were protests from the US government.

The MoD did not respond to a request for comment.

Gill Plimmer
©PA

Please sign our petition and then get all your friends and family to sign it. Please pass it on was far and wide as possible

https://you.38degrees.org.uk/petitions/stop-privatisation-of-defence-business-services