MOJ AUDIT OF SERCO CONTRACTS – PRISON ESCORT SERVICES

(The following is a reformatted version of a press release
issued by The Ministry of Justice and received via electronic
mail. The release was confirmed by the sender.) 
28 August 2013 
MOJ AUDIT OF SERCO CONTRACTS - PRISON ESCORT SERVICES 
The Ministry of Justice (MoJ) and the Directors of Serco have
today 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. 
The 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. 
(bjh) NY 
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