The UK Ministry of Defence (MOD) business services management contract has been awarded to Serco subject to a 10-day standstill period.
The contract is part of a long-term program to radically transform the way corporate services are provided.
Defence Business Services (DBS) stood up on 4 July 2011 and provides a range of corporate services, including human resources, finance, information and vetting, from a single structure to all areas of the Department.
Serco will work with DBS to transform the organisation into an efficient shared services centre which builds on private sector best practice.
Over its four-year duration, the value of the contract is around £36 million, but there is an option for the Department to extend this for a further year.
The contract is based on a zero management fee, with all Serco's earnings being performance-related.
Serco will be strongly incentivised (love that word—Ed.) to drive down costs and deliver efficiencies, and savings in the order of around £71 million are expected to be achievable over the life of the contract.