MoD contractors drop standards and ‘squeeze’ workers to increase profits

The Ministry of Defence is being urged to review its practice of outsourcing services after MPs complained that contractors drop standards and “squeeze” workers to increase profits.

The Defence Committee said outsourcing appeared to be the default position, with little consideration given to providing services in-house.

The MoD was not always willing to step in and enforce expected standards, said the committee, adding it was “an absurd state of affairs” that the Ministry was not allowed to look at a contractor’s previous performance when assessing a bid, a state of affairs that needs to be “rectified immediately”.

Defence Fire and Rescue was given as an example of an outsourced service that would benefit from an MoD review, with a potential reduction of manning levels in the future and a high number of voluntary exits.

Capita, which runs the contract, is starting to drop its standards, said the report.

It added that contractors “drop standards and squeeze employees to raise their profit margin”.

Committee member Mark Francois said: “The performance of certain sub-contractors is well-known both within industry and the defence community.

“Given the MoD’s determination to press ahead with outsourcing ancillary services, it is an absurd state of affairs that it is not possible to take into account a bidder’s past performance.

“Ministers should use the Procurement Bill announced in the Queen’s speech to change the rules for awarding new contracts.”

The report expressed regret that sub-contracted staff often felt excluded from the “wider defence family” even though their roles are integral to the service.

The terms and conditions of outsourced employees are worse than those of their directly employed counterparts, with reduced wages and benefits, said the report.

The Committee recommended that the MoD ensure that contracted staff receive comparable employment contracts to directly employed staff.

A Capita spokesperson said: “We are proud to work with Defence Fire and Rescue to modernise and transform the MoD’s fire and rescue capability. The evidence shows our record of delivery on this contract is strong.

“We have delivered an £85 million investment in new firefighting vehicles, digital technology, personal protective equipment and enhanced training facilities which are improving firefighting capabilities, reducing risk to our firefighters, MoD personnel and critical military assets.

“Our joint recommendations over resourcing levels at any MoD site have to be endorsed by the MoD, and ultimately approved by the individual site’s military leadership team. Any such decision would follow on from a thorough review of fire risks.”

A Ministry of Defence spokesperson said: “We use a range of in-house and contractor staff to deliver defence outputs at maximum value for the taxpayer, but without compromising on services or safety.

“Our contracts ensure that staff are paid fairly – in accordance with Government regulations – and contracted ancillary staff often have training and career prospects superior to an in-house service.”