Chris Grayling has not ruled Serco and G4S out of the running for new MoJ contracts, which include the £800m privatisation of most probation services.
But he has for the first time assured his Labour counterpart Sadiq Khan that no new contracts will be awarded to either company until a series of official "forensic audits" has given them a clean bill of health.
The official publication of invitations to bid for the privatisation of the bulk of the probation service is due soon. Both companies are leading contenders for the payment-by-results contracts under which 235,000 offenders are to be supervised each year. City analysts see few other large-scale players able or willing to bid for the work if Serco and G4S are excluded.
It's becoming ever more clear to the MoJ/Noms implementation team that there simply aren't going to be enough bidders for the probation contracts being advertised this week, and as a result peace is breaking out between the minister and naughty Serco and G4S. Grayling has finally realised what everyone else has known for ages, that he desperately needs these large companies in order to save his bacon and have any chance of making the Transforming Rehabilitation omnishambles work.
Such is the level of confusion, mistrust and disinterest amongst potential bidders that there is even talk of the big boys being allowed to sweep up more than three Contract Package Areas. But Grayling has boxed himself into a corner as the Guardian article goes on to explain:-
Grayling told Khan last week: "I am strongly of the view that we should not award new contracts for the two companies until we have established the facts about both their performance and their corporate behaviour. That is why I have requested an audit of every contract that MoJ holds with G4S and Serco.
"It is important to note that MoJ will not award new contracts to the companies unless this audit work is completed to our satisfaction. However, I do not intend to prejudge the outcome of this process at this stage by excluding the two companies from participating in the current competitions." Grayling said a decision will be taken only once the audits have been completed.
Now if you were of a cynical persuasion you could be forgiven for thinking what the outcome of these forensic audits and investigations might be. Both Serco and G4S are desperately important to the government and hold vital strategic contracts. When Grayling upset the apple cart by launching his House of Commons tirade a few weeks back alleging fraud by these huge companies, there must have been a sigh of disbelief at No10 and the Ministry of Defence.
As this Sunday Times article makes clear, there is a vast MOD procurement contract on offer and Grayling's ill-thought-out vendetta against Serco and G4S is not only in danger of scuppering his own TR plans, but also those of a major bidder for the MOD contract:-
SERCO faces being excluded from a huge defence outsourcing deal after becoming caught up in two fraud investigations.
The FTSE 100 company is embroiled in two government probes into claims that it overcharged the Ministry of Justice for tagging criminals and falsified prisoner transfer documents.
The allegations have infuriated ministers and, in effect, left the outsourcer frozen out of bids for government work until the investigations are completed.
Serco is part of a consortium, led by CH2M Hill, the American engineering consultancy, that wants to run Defence, Equipment & Support (DE&S). This is the agency responsible for buying fighter jets, tanks and warships for the Ministry of Defence. Postscript - Thanks to a reader for pointing out this story from the Irish Republic - because of the allegations against Serco, the Irish Government decided last week not to proceed with awarding a large contract to them.