Ministry of Justice
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MoJ audit of SERCO contracts - prison escort services

The Ministry of Justice (MoJ) and the Directors of Serco have yesterday asked the police to investigate alleged fraudulent behaviour by members of Serco’s staff in their management of their Prisoner Escorting and Custodial Services (PECS) contract.

The PECS contract covers a range of services including transporting prisoners between court and prison. Serco are responsible for delivering this in London and East Anglia. An apparent disparity between Serco’s records of contract performance, and the actual situation on the ground, has been subject to investigation by MoJ for some months. Evidence of potentially fraudulent behaviour has now emerged as part of the detailed audit work announced by the Secretary of State for Justice in the House of Commons in July. It has shown some staff recording prisoners as having been delivered ready for court when in fact they were not – a key performance measure for the contract.

MoJ has informed Serco that in the light of the new evidence, it is putting the contract under administrative supervision with immediate effect. Serco have agreed to repay all past profits made on the PECS contract and to forgo any future profits. Serco has confirmed to the MoJ that no member of the Board had knowledge of this practice. If any evidence of corporate as opposed to individual wrongdoing emerges, MoJ will terminate this contract.

MoJ and the Cabinet Office have also put Serco on notice that the company will have to undergo a process of corporate renewal, which would include an overhaul of the Serco management responsible, a strengthening of internal audit procedures and opening up all their management and accounting information on Government contracts to much more intense scrutiny by Government.

After a three month period, the changes they have put in place will be assessed by a specially convened committee of Government non-executive directors. This committee will advise Government, and unless it is satisfied the changes made by the company are sufficient to guarantee the future integrity of Government contracts, Serco will face exclusion from all new and future work with Government.

Secretary of State for Justice Chris Grayling said:

‘It’s become very clear there has been a culture within parts of Serco that has been totally unacceptable, and actions which need to be investigated by the police.

‘We have not seen evidence of systemic malpractice up to board level, but we have been clear with the company - unless it undertakes a rapid process of major change, and becomes completely open with Government about the work it is doing for us, then it will not win public contracts in future.

‘The taxpayer must know that their money is being properly used.’

Notes to Editor

  1. The MoJ audit of Serco and G4S contracts was announced to Parliament on 11 July 2013. At the same time the Cabinet Office launched a government-wide review of major contracts held by G4S and Serco in other departments. Both will report in the autumn.
  2. The PECS (Prisoner Escorting and Custodial Services) contract covers a range of services including the collection of prisoners from prison and their delivery at court. Serco deliver the contract for the London and East Anglia regions. The contracts are split across four regions in England and Wales, with three contracts run by GEOAmey and the fourth to Serco.
  3. Serco were awarded the current contract in March 2011 (with service commencement in August 2011). Before that Serco had held a PECS contract since 2004. The company had also been involved prior to 2004, having bought Premier Prisons, one of the previous PECS providers.
  4. The annual contract value is £40.7m excluding VAT. The current projected contract value, over seven years, is approximately £285m excluding VAT.
  5. The time at which prisoners are made available for legal visits, prior to being delivered to the courtroom dock, is a key measure of Serco’s performance on this contract. The process of getting a prisoner from the prison van to the point where they are ready for legal visits can be lengthy, as they have to go through comprehensive security checks and processing. Interim audit findings suggest that some Serco staff have been manipulating their performance figures to show enhanced performance against this measure.
  6. The matter is being referred to the City of London Police.
  7. For more information please contact the Ministry of Justice press office on 020 3334 3536.

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