G4S pulls out of tagging contracts to address overcharging allegations

6 August 2013

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7 August 2013 | Adam Leach

G4S has withdrawn from the bidding for electronic tagging (EM) contracts over allegations that it overcharged the government on previously won work.

The withdrawal follows allegations made last month by Justice Secretary Chris Grayling that both G4S and Serco had been overcharging as well as charging for work not carried out on tagging contracts held as early as 2005.

Following the disclosure, Serco immediately submitted to a call to withdraw from the running for other contracts with the department, but G4S has only now, weeks later, followed suit.

In a statement confirming its immediate withdrawal, G4S said: “We can confirm that we have formally withdrawn from the bidding process for the next generation of electronic monitoring contracts for the UK Ministry of Justice (MoJ).  We remain committed to resolving the contractual issues raised by the MoJ in connection with historical billing on the EM contracts.”

Both companies are now subject to multiple investigations into work they carry out for the government. Serco is subject to a full audit by accountancy firm PwC, which carried out the original review into the contracts, while the MOJ has called for the Serious Fraud Office to probe G4S, which refused the full audit.

Furthermore, government CPO Bill Crothers will lead an investigation into all contracts held by the two across government.

Government contracts make up a significant portion of both firms’ annual revenues, with Serco earning around £1 billion and G4S taking £500 million in 2012/13.

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