Full review of Government G4S and Serco contracts

The Minister for the Cabinet Office, Francis Maude, today announced a government-wide review of contracts held by G4S and Serco. The review was prompted by the findings of an independent audit within the Ministry of Justice, as outlined by Justice Secretary Chris Grayling in the House of Commons today. The Cabinet Office, which has cross-Government responsibility for procurement, will therefore conduct a review into Government-held G4S and Serco contracts to ensure that contracts are well-managed and in good order. This will complement existing work on strengthening commercial capability across Government to determine how we can make further improvements.

Francis Maude said: "The public rightly expects government suppliers to meet the highest standards, and for taxpayers' money to be spent properly and transparently. As a result of what the Justice Secretary outlined earlier today, I am launching an immediate review into Government-held G4S and Serco contracts. The Cabinet Office has worked hard to drive up the standard of commercial capability, including contract management, across Government. We will redouble our efforts and strive to achieve the best value for taxpayers."

The review will be led by Bill Crothers, the Government's Chief Procurement Officer. A steering group will be drawn from Government Non-Executive Directors, members of the Commercial Relationships Board and senior officials from elsewhere in Government, as well as independent advisers. It will report in the autumn. It is expected to deliver initial findings to the Minister for the Cabinet Office within weeks.

This Government's work to improve commercial capability has helped secure £3.8 billion of commercial savings last year alone. The reforms include:

• Establishing a Chief Procurement Officer based in the Cabinet Office;
• Running a programme of supplier renegotiation;
• Introducing Crown Representatives and a Commercial Relationships Board;
• Publishing details of Government contracts online as part of our transparency agenda;
• Working to ensure that the whole of Government operates as a single customer;
• Collecting rigorous data and management information on suppliers;
• Improving commercial capability through the Civil Service Reform Programme.

Sadiq Khan MP, Labour’s Shadow Justice Secretary, commenting on the announcement of allegations of overcharging by G4S and Serco on electronic monitoring contracts, said: "Today’s revelations are truly shocking. Given the scale of the allegations, the Government must immediately call in the police and the Serious Fraud Office to investigate both companies as fraud has potentially taken place. There can be no cosy relationships with either company if we are to truly get to the bottom of these very serious allegations. If it was anyone else the Police would be asked to investigate potential criminality. Why isn't this happening now?

"Both these companies are recipients of hundreds of millions of pounds of contracts from across Government and local authorities and it is important that an immediate and independent audit takes place to make sure there are no wider irregularities involving taxpayers’ money by them or the other big players. The Government are proposing to privatise £800million worth of probation, with both these companies in the running to win very profitable contracts, without any testing or evaluating whether this will work or put the public’s safety at risk. Today’s announcements are even more reason why these plans should be piloted as we cannot afford any wrongdoing by the major players that might put at risk the safety of our communities."

Responding to Justice Secretary Chris Grayling’s announcement that G4S and Serco over-charged the taxpayer for tagging people who were not being monitored, Andrew Neilson, Director of Campaigns at the Howard League for Penal Reform, said: "Today we have seen what happens when justice is for sale. G4S, a major provider of services from prisons to probation, is now under investigation by the Serious Fraud Office at the behest of the Secretary of State for Justice. The other largest provider in the sector, Serco, has seen new prison contracts delayed and has volunteered to undergo a forensic audit of its tagging contracts.

"The shocking news of over-charging on electronic monitoring comes at a time when the Ministry of Justice is fixated on the privatisation of the vast majority of work currently done by the probation service. Serco and G4S would both be expected to be major bidders for contracts under current proposals, and whatever ministers claim about the depth of market interest, there is little doubt that without these two companies the aggressive timetable for reform is unlikely to be met. Given the scale and nature of the over-charging revealed today, the Secretary of State should rethink his plans to introduce yet more private sector involvement in the criminal justice system. In the face of such mounting evidence of failure, to do anything else would be blinkered in the extreme."