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G4S, Serco Awarded Contracts to Run U.K. Prisons, Clarke Says

The U.K. government awarded contracts to run three prisons to G4S Plc (GFS) and Serco Group Plc (SRP), Justice Minister Kenneth Clarke said.

G4S will run Birmingham Prison and a new facility, Featherstone 2, near Wolverhampton in the West Midlands, Clarke told lawmakers in the House of Commons in London today. Serco will run Doncaster Prison in Yorkshire, while Buckley Hall, near Manchester, will be run by the government’s prison service after competitive bidding.

“This process shows that competition can deliver innovation, efficiency and better value for money for the taxpayer but also that it can do so without compromising standards,” Clarke said. “Over the spending review period, the new contracts will deliver savings of over 21 million pounds ($34 million) for the three existing prisons.”

Clarke said Featherstone 2 will cost 31 million pounds less than agreed on by the previous government and, over the lifetime of the contracts for the three existing prisons, the government will save 216 million pounds. Serco said in a statement that its contract was valued at about 250 million pounds over 15 years.

The contracts for Birmingham, Doncaster and Buckley Hall are effective from October 2011, Clarke said, while Featherstone 2 will start in April 2012. Wellingborough Prison in Northamptonshire was removed from the list during the bidding process, the department said in an e-mailed statement.

To contact the reporters on this story: Thomas Penny in London at tpenny@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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