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.