☛ Want the latest procurement and supply chain news delivered straight to your inbox? Sign up for the Supply Management Daily
12 July 2013 | Will Green
A government-wide review of contracts held by G4S and Serco has been announced in the wake of revelations concerning over-billing for the provision of electronic tagging services.
Chris Grayling, the lord chancellor and secretary of state for justice, told the House of Commons yesterday an audit had found instances where the firms were charging for tagging but none was taking place, leading to over-billing to the tune of tens of millions of pounds.
He said: “It included charges for people who were back in prison and had had their tags removed, people who had left the country, and those who had never been tagged in the first place but who had instead been returned to court.
“There are a small number of cases where charging continued for a period when the subject was known to have died. In some instances, charging continued for a period of many months and indeed years after active monitoring had ceased.”
The audit shows the situation stretched back to 2005, when the current contracts were awarded, and possibly even to 1999. Grayling also levelled criticism at the management of the contracts, which he described as “wholly inadequate”, and said disciplinary investigations had been launched.
“I have put in place an entirely new contract management team, led by my procurement director and validated by the independent auditors,” he said. “The permanent secretary is also instituting disciplinary investigations to consider whether failings on the part of individual members of staff constitute misconduct.”
Announcing an “urgent review of contract management”, Grayling said contract managers in the Ministry of Justice (MoJ) discovered “issues” around billing practices in 2008 but “nothing substantive was done”.
Grayling said the award of a contract to take over management of a prison in Yorkshire, which had been won by Serco, would now be delayed. Between them G4S and Serco held contracts with the government worth £1 billion in 2012/13.
The review, to be headed by the government’s chief procurement officer Bill Crothers, will report in the autumn.
In a statement Serco said it was pulling out of the re-tendering process for the tagging contract and it would “cooperate fully” with the review, paying back any money agreed. G4S said it was conducting its own review and if there was any evidence of over-billing it would repay the MoJ.