Generally speaking now is as good a time as any to get some bad news out, and we learn that G4S and Serco have decided to 'withdraw' from the bidding process for probation work under the TR omnishambles proposals. Basically they had no option because we also learn that G4S is going to be the subject of a second referral to the Serious Fraud Office, and Serco have agreed to repay a staggering £68.4 million plus VAT for overcharging on tagging, all as reported here in the Financial Times:-
The crisis at outsourcer G4S deepened on Thursday after the government said it planned to refer the FTSE 100 company to the Serious Fraud Office a second time.
A Ministry of Justice audit of 15 big contracts worth £3.9bn held by suppliers to the government found there were “serious issues” on contracts held by G4S running facilities management for the British courts. The concerns included “invoicing, delivery and performance reporting”, the government said. It has asked G4S to undertake further steps to demonstrate “corporate renewal”.
“While at this stage the department does not have evidence to confirm that dishonesty has taken place, they have today, following legal advice, referred both matters to the Serious Fraud Office in order to establish whether this is the case,” the government said.
The Ministry of Justice said Serco had agreed to refund £68.5m plus VAT on its tagging contract. The amount is higher than expected.
Serco has also agreed to repay £2m in past profits on a prisoner escort contract after it was found that their staff had been recording prisoners as having been delivered “ready for court” when they were not. G4S remains in discussions with the government over the size of its repayments on the electronic tagging contracts.
Basically this is really bad news for the TR omnishambles as Chris Grayling and the MoJ were banking on both companies being able to bid for the probation work. Of course they are putting a brave face on things and have attempted to hide the announcement amongst the list of 30 other successful bidders revealed today, but many feel TR cannot go ahead without these two 'big boys' as prime contractors. Investors and shareholders are getting jittery and quite a few of this lot might yet fall before the next hurdle:-