Serco, the troubled supplier of services to governments, has just seen its CEO for the past 10 years [and employee for 19], Christopher Hyman, resign – with the future of the company’s status as trusty to the public sector under very real threat.
At the moment , the UK Government is working on the final stages of an examination of Serco’s entire portfolio of multi-million pound government contracts, due to be concluded in November.
This was precipitated by allegations of fraud in some of the contracts the company has with the Ministry of Justice, including prison-related responsibilities.
The troubled contracts include:
- Escorting prisoners: a £285 million contract covering London and East Anglia, ws put into ‘administrative supervision’ this summer  following allegations of the falsification of records on the delivery of prisoners.
- Tagging prisoners: Serco is alleged to have charged the government for tagging offenders who had either left the country or were actually dead. The Serious Fraud Office is investigating this.
- Boris Bikes: Serco is facing fines from Transport for London on matters related to it management of of London’s bicycle hire scheme.
Serco’s business empire also has contracts to run schools inspections, the training of military helicopter pilots. It runs the Docklands Light railway in London and the Atomic Weapons Establishment where, amongst other operations, the nuclear warheads from Coulport in Argyll [for the submarines operating out of Faslane] are serviced. It is worth noting that Serco was fined a paltry £200k earlier this year – for an explosion at the Atomic Weapons Establishment.
The Guardian earlier revealed fraud too in Serco’s delivery of an out-of-hours medical cover for an NHS contract in the south west of England, on which we have reported.
With the concerns over its work for the Ministry of Justice, the UK Government has determined to award no further contracts to Serco until the review is completed and its findings assimilated.
Hyman walked the plank to leave the company free to try to convince the government that Serco is moving towards the ‘corporate renewal’ for which the UK Justice Secretary has called in both Serco and in the equally discredited G4S security company of London 2012 infamy. Like the banks, these two companies are now regarded as too big to be allowed to fail – a dangerous status which can only encourage complacency and malpractice.
The substantial worry for Serco – 25% of whose sales come from UK government department contracts – is that the government is currently examining the legal aspects of a possible move to blacklist firms from future contracts.
The Scottish Government also uses Serco, in one instance [which is unlikely to be proof against serious independent scrutiny] awarding it the contract for the Northern Isles Ferry Services and in the process apparently disqualifying its own wholly owned company, Northlink Ferries.
It is widely understood that Northlink was determined to take the Scottish Government to legal challenge on the matter but was forbidden to do so by its sole shareholder – the Scottish Government.
This situation echoed an earlier one where CalMac lost the contract to run the Ballycastle to Rathlin Island ferry service in Northern Ireland. This was marked by highly questionable conduct in which CalMac found their rival bidder, whose bid did not meet the tender specification, assisted to a degree of compliance by another Scottish Government owned company, Caledonian Maritime Assets Limited [CMAL].
The Scottish Government’s links to the Northern Ireland Government in shipping matters, as in the efforts to restore a ferry link between Ballycastle and Campbeltown, as well as its control over CMAL, made it unlikely that the government was unconscious of CMAL’s action. In fact, it is inconceivable that CMAL would have done what it did without at least the tacit approval of its sole shareholder.
CalMac was furious about the Northern Ireland Government’s management of this tender – which, in the mistreatment of a whistleblower, became and remains a cause celebre – but one that damaged the careers and the livelihood of people who had done nothing to deserve it.
CalMac too wished to go to court and was also forbidden to do so by its sole shareholder.
The UK Government review of Serco’s swathe of contracts with its various departments, the allegations of fraud in the delivery of some of these contracts, the moratorium on the award of contracts to Serco and the possibility of blacklisting the company will not leave untroubled Serco’s further ambitions in Scotland.
These currently centre on taking all or chosen bundles of contracts for the Clyde and Hebridean Ferry Services which enter the early stages of the tendering process next year, 2014.
The Scottish Government had been understood to favour this possibility.
However, it has every reason now – in the discontent with the company’s delivery of the Northern Isles ferry services that has recently been openly expressed by, amongst others, the influential Shetland Isles Councillor, Allan Wishart; and in the nature of these allegations and developments in London – to ca’ canny.