LONDON — A key part of a cost-cutting drive at the British Ministry of Defence has fallen into place with support service group Serco being named preferred bidder to run a range of corporate services, Defence Secretary Philip Hammond announced March 1.
The four-year deal, with an option to extend a further 12 months, will see the British company take over the running of the Defence Business Services (DBS) operation covering human resources, finance, information, security vetting and other areas.
The 36 million pound ($57.4 million) contract is expected to deliver efficiency savings in the order of 71 million pounds over the life of the contract, according to an MoD statement.
Serco will lead and manage DBS, but the organization and its employees will remain part of the MoD. DBS was formed last July to run a range of corporate services.
Hammond said the contract “marks a defining moment in our efforts to radically change the way we do business in the MoD.”
The contract is one of a number of transformation initiatives underway at the MoD as it struggles to cut costs in line with budget reductions and other austerity measures.
The deal is subject to a 10-day standstill period to allow any challenges to the decision.
KPMG, teamed with CSC, and IBM, partnered by Deloitte, were the losing bidders.