A direct service organisation or direct labour organisation (DSO or DLO) is a business unit of a United Kingdom local authority or social landlord (housing association)[1] which undertakes work specified by the Local Government Act 1988[2] and Local Government, Planning and Land Act 1980[3] and/or other work, including construction and building maintenance.
[2] Compulsory competitive tendering (CCT) and deregulation were encouraged in the UK in the early 1980s,[5] leading to the formal establishment of DSOs (and their forerunner, DLOs) within many local authorities.
[6] Where DLOs and DSOs were established for CCT purposes and the DLO or DSO "won" Council business via a competitive tender, their operation and performance would generally be monitored by the "client" side of the local authority, just as the performance of a private company operating under a contract would be monitored, although 1997 research undertaken on behalf of the UK government observed that client-side monitoring arrangements were "very variable in terms of methods and approaches".
About a quarter of local authorities monitored their DSOs using an output-based specification, meaning they focused on the service's result, such as the cleanliness achieved or the timeliness of refuse collection, rather than the organisation and resource planning of the DLO or DSO.
[10] 50% of UK social landlords in 2013 operated a direct labour organisation for property repairs and maintenance.