By Vivienne Russell | 12 July 2013
The Cabinet Office has ordered a government-wide review of contracts held by G4S and Serco after an audit found that the Ministry of Justice had been billed for millions of pounds worth of electronic tagging services that had not been carried out.
The audit, carried out for the MoJ by PricewaterhouseCoopers, found that the companies had charged for monitoring electronic tags on people who had returned to prison, left the country or never been tagged in the first place. In some cases, charging continued after the tagged person had died.
Justice Secretary Chris Grayling told the House of Commons this morning that ‘this is a wholly indefensible and unacceptable state of affairs’.
He added: ‘The audit team is at present confirming its calculations but the current estimate is that the sums involved are significant and run into the low tens of millions in total, for both companies, since the contracts commenced in 2005.’
Grayling also criticised MoJ staff who realised in 2008 that some billing practices could be amiss but took no steps to address it.
The government would take all ‘necessary steps’ to recover the overpaid funds, the justice secretary said.
He also said he needed to rule out whether there had been any dishonesty in the administration of the contracts. While Serco had agreed to co-operate with the MoJ on a full forensic audit of its contracts with the departments, G4S has not agreed.
In light of G4S’s stance, Grayling said he had asked the Serious Fraud Office to consider whether it should investigate what happened at G4S and confirm whether any actions represented more than a contractual breach.
‘I am disappointed that G4S still feel it appropriate to participate in the tendering process for the next generation of electronic monitoring contracts, which we are currently in the process of renewing. I have therefore started a formal process to determine whether to exclude them,’ Grayling said.
Serco has withdrawn from the current electronic monitoring tendering round.
Announcing the government-wide review of G4S and Serco contracts, Cabinet Office minister Francis Maude said: ‘The public rightly expects government suppliers to meet the highest standards, and for taxpayers’ money to be spent properly and transparently.’
The review will be led by Bill Crothers, the government’s chief procurement officer, and will report in the autumn.
Responding to the audit, G4S said it was conducting its own review, assisted by external advisers, and is ‘not aware of any indications of dishonesty or misconduct’. The firm also said it had not received any claims for a refund.
Group chief executive Ashley Almanza added: ‘G4S is committed to having close and open relationships with our customers and we strive to work in partnership for the mutual benefit of our organisations.
‘We place the highest premium on customer service and integrity and therefore take very seriously the concerns expressed by the Ministry of Justice. We are determined to deal with these issues in a prompt and appropriate manner.’
Serco said that it was 'deeply concerned if we fall short of the standards expected'.
Chief executive Christopher Hyman added: ‘We are therefore taking this extremely seriously and will continue to work closely with our customer to resolve their concerns in this matter. We will not tolerate poor practice and behaviour and wherever it is found we will put it right.’
