By Richard Johnstone | 10 January 2014
G4S and Serco performed poorly in contracts to provide accommodation for asylum seekers in the UK, the National Audit Office has today in the latest criticism of the under-fire outsourcing firms.
Analysing the performance of the companies in delivering the Compass (Commercial and Operating Managers Procuring Asylum Support) contracts for the Home Office, the NAO said they had struggled to get accommodation in place. As a result of negotiating difficulties with housing suppliers, the Home Office had to deal with extra costs.
The report comes after the firms were criticised last year for overcharging the government for electronic tagging services.
The cost to the Home Office of providing accommodation for asylum seekers was £150m in 2011/12, the NAO said. The department signed six Compass contracts in March 2012 with three providers in a bid to save around £140m over seven years. Two were with G4S, two with Serco and two with Clearel, a joint venture between firms ClearSprings and Reliance. In 2012/13, the scheme achieved a saving of £8m.
However both G4S and Serco have failed to meet some of their key performance targets in the deals, which were intended to use fewer and bigger housing providers, the report stated.
They struggled to establish a robust and reliable supply chain of housing. In three regions ¬– North West, Midlands and East of England, and North East, Yorkshire and the Humber – the transition to the new contracts took as much as three months longer than originally planned. Only Clearel was able to meet the September 2012 deadline for the transfer to the new terms.
As a result, Clearel spent around £70,000 housing additional asylum seekers from September to December 2012 when G4S and Serco were unable to do so. The Home Office also spent £170,000 on a contract extension.
Auditor general Amyas Morse said the move to the Compass contracts happened during a demanding period for the Home Office.
‘However, many of the problems that arose remain and are continuing to affect the performance of G4S, Serco and Clearel,’ he added.
‘Until they are resolved, it will be difficult for the Home Office, providers and local authorities to develop the mature relationships needed to achieve the envisaged savings and an effective service.’
Commercial negotiations are currently underway over what rebates the Home Office can charge for poor performance, the NAO added. The providers believe the information supplied to them by the Home Office during procurement was inadequate in some areas, which resulted in some of the difficulties.
Responding to the report, a G4S spokeswoman said it recognised that services were improving and that savings have been generated for the taxpayer.
‘We agree with all recommendations made and many of these have already been implemented as part of our ongoing commitment to service improvement,’ she added.
Serco admitted the transition to the new contracts was ‘challenging’.
Managing director of the firm’s home affairs business James Thorburn said it had concentrated on minimising the disruption to service uses.
‘We accept that there remains scope for further improvement and we are committed to working with the Home Office and our partners in local government, the NHS and the voluntary sector to achieve that.’
A Home Office spokeswoman said: ‘We are pleased that this report recognises the recent improvement of Compass' contractors, as well as the £8m of savings over the last year. We will carefully consider the report's findings and will respond further in due course.’
