Serco and Damen: A Risky Gamble with the Royal Navy

The Ministry of Defence’s (MoD) decision to award a £200 million contract for 24 auxiliary vessels to Dutch shipbuilder Damen, under the wider £850 million Serco-managed support deal for Royal Navy bases, has drawn sharp criticism.

While concerns about outsourcing to a foreign company have been noted, the involvement of Serco — a private contractor with a checkered record in public services — adds an additional layer of risk and controversy.

Outsourcing Britain’s Security

The use of Serco to oversee this substantial contract raises questions about the UK’s approach to defence procurement. Serco, a private company long criticised for underperformance in health, transport, and defence services, and is best known in the UK for providing housing and support for asylum seekers, now finds itself managing a project that directly affects the Royal Navy’s operational readiness. Critics argue that outsourcing such a sensitive element of defence infrastructure to a contractor primarily motivated by profit risks delays, cost overruns, and accountability gaps.

By placing a foreign shipyard under the supervision of Serco, the MoD compounds these risks. Any failure in project management, cost control, or delivery timelines would ultimately fall back on the Royal Navy and taxpayers, while Serco’s corporate buffer can insulate it from full accountability.

Ethical and Legal Red Flags

Damen Shipyards is reportedly facing legal proceedings in the Netherlands for alleged breaches of EU sanctions and accusations of bribery and money laundering. While the MoD insists the contract was signed before these allegations came to light, it remains troubling that Serco is tasked with managing a deal involving a company under such scrutiny.

Critics argue that Serco’s profit-driven model may not incentivise the rigorous due diligence required in such cases. Unlike a government department bound by public accountability, a contractor’s focus can lean toward cost efficiency and contractual compliance, potentially at the expense of ethical or strategic considerations.

Impact on UK Shipbuilding

Beyond ethical concerns, the deal represents a blow to domestic shipbuilding. With the UK seeking to rebuild a capable maritime industrial base, outsourcing 24 vessels to the Netherlands under Serco’s management deprives British yards of valuable work and experience. The involvement of a private contractor here may prioritise speed and contractual simplicity over the long-term industrial benefits of keeping construction in the UK.

The optics are damaging. Politicians have repeatedly pledged to “buy British” and strengthen the domestic shipbuilding sector. Yet this deal, overseen by Serco, appears to flout that commitment.

Political and Public Backlash

The contract has already attracted criticism from MPs and defence commentators. Shadow Defence Secretary James Cartlidge has questioned the wisdom of outsourcing critical naval support through a private firm, while Lord Beamish has called for explanations about the potential loss of UK shipbuilding jobs.

Public confidence in Serco is not high. The company has faced scandals in multiple sectors, from failing to deliver healthcare and transport services to mismanaging government contracts abroad. That history feeds suspicion that its involvement in the Royal Navy project could compromise oversight and accountability.

Strategic Consequences

Beyond ethical and industrial concerns, there are operational risks. Auxiliary vessels are essential for the Navy’s ability to maintain fleet readiness. Mismanagement, delays, or cost overruns — all possible when outsourcing both oversight and construction — could weaken the Royal Navy at a time when maritime security demands are rising.

By placing Serco at the centre of this arrangement, the MoD effectively introduces a profit-driven intermediary between the Navy and its suppliers. Any issues with Damen, whether legal, logistical, or technical, must pass through Serco’s management structure before reaching the Ministry. This adds complexity, slows decision-making, and could dilute direct accountability.

The MoD’s decision to involve both Serco and Damen in this £200 million project represents a double misstep. Not only does it outsource critical naval infrastructure to a foreign shipyard, but it also places oversight in the hands of a private contractor with a history of operational failings.

For taxpayers, for the domestic shipbuilding sector, and for the operational readiness of the Royal Navy, the risks are clear. Serco’s involvement should be scrutinised rigorously, and lessons learned before future contracts allow private firms to act as gatekeepers for Britain’s national security assets.

Recognition of the need for efficiency and expertise should not come at the expense of accountability, ethics, or domestic industry. The Royal Navy deserves better than a system where profit, foreign interests, and corporate shields come between it and the UK government that relies on it to defend the nation.