§ Mr. BayleyTo ask the Secretary of State for Defence what decisions his Department has made about contracting out the administration of service(a) pay, (b) personnel and training records and (c) pensions; on what dates these decisions were made; when they will come into operation; which companies have been awarded these contracts; and if he will make a statement about the (i) cost savings, (ii) future quality of administration and (iii) security implications of these decisions. [3138]
§ Mr. SpellarThe Armed Forces Personnel Administration Agency was launched on 1 April this year. Its tasks include record-keeping and the processing of pay and pensions for all Service personnel. The Agency's objectives and key targets are set out in its Corporate Plan, a copy of which was placed in the Library of the House. These require new IT systems to be developed to enable improvements in efficiency and performance.
92WPlans to appoint a commercial partner to provide most of the Agency's services, and to develop and operate the new systems, are continuing. This would be a private finance arrangement. Two companies remain on the short-list as a result of the competitive process. They are EDS (Defence) Ltd., and Siemens Business Services Ltd. Negotiations are nearing completion and final bids are expected to be invited by the end of this month. These will be evaluated against the cost of the Agency undertaking the work through normal in-house methods. A decision on the results of the evaluation is expected by the end of September. A partnering contract will be awarded only if one of the companies' bids offers the best value for money. Transfer of responsibility to the successful company, including most of the Agency's staff and capital assets, would then follow after 2 to 3 months.
The security implications of appointing a private sector partner have been a particular concern since the competitive process began in April 1996. It has been the subject of full consideration by the relevant security authorities and by the Services themselves. The two companies remaining in competition are the only ones to have demonstrated, amongst other fundamental matters, that they could meet and maintain the very rigorous standards required. The Agency's services will continue to be delivered from existing, secure MOD installations.