Written 15th October 2013 by Olliers Solicitors

Serco Group, the Government outsourcing firm, has been given a six-week deadline to improve its performance and demonstrate “change and corporate renewal” or it will be at risk of losing three major contracts with the Government.

Serco currently holds numerous contracts relating to the criminal justice system including those for transportation of prisoners, electronic tagging of offenders on bail and management of various private prisons.

Whitehall Investigation

Whitehall has begun an investigation into Serco’s contracts after claims that the company altered records on the transport of prisoners. The outsourcing giant is also accused of overcharging for electronic tagging of offenders. Two months ago, the Ministry of Justice said Serco, and other firm G4S, had overcharged the Government by “tens of millions” for electronic tags for criminals.

At that time Justice Secretary Chris Grayling asked the Serious Fraud Office to consider a criminal case against G4S and fraud detectives have confirmed they are considering information provided by the Ministry of Justice on Serco. The Cabinet Office is currently halfway through a review of the firm’s practices and the report is expected to be published in November.

Three contracts are immediately at risk if Serco doesn’t improve its corporate governance culture, officials have said. The firm could lose its £285m prisoner escort contract, management of three jails in South Yorkshire and be excluded from bidding for a £800m contract for the privatisation of the probation service, according to a report in The Sunday Times.

Government Contracts

Losing Government contracts would be devastating for Serco, which generates about 25 percent of its £4.9 billion revenue from work for Whitehall.

Serco has appointed Lord Gold, a senior City lawyer, to carry out an independent review of its business practices. The company said in a statement:

“Serco is fully committed to its programme of change and renewal and is taking the matter extremely seriously. This is an on-going process, we have frequent meetings with Government to discuss progress and we will report fully when the process is finalised at the end of November.”

Earlier this week Serco and G4S faced fresh criticism from the Government, which accused them of providing “squalid” and “rundown” housing to asylum seekers.

Vanessa Shaw

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