30th Oct 2019 10:51
(Alliance News) - Serco Group PLC on Wednesday announced the signing of a ten-year prisoner escort & custody services contract with the UK Ministry of Justice worth a total of approximately GBP800 million.
The service company will provide PECS in the south of England region, taking responsibility for "safe and secure transportation of prisoners between prisons and courts, and for the safe and secure custody of prisoners while at court".
In response to the new contract, FTSE 250-listed Serco will invest in a new vehicle fleet, as well as upgrading its IT.
The contract commences August 29, 2020 and is one of two tendered by the justice ministry for two regions in England and Wales. Serco will provide the service in the South of England region, covering "an area as far north as Gloucestershire, Northamptonshire, Cambridgeshire and Norfolk".
The new contract area is far larger than Serco's current PECS contract for just one region, London and the East of England. The current contract, awarded March 2011, was valued at around GBP285 million for the first seven year period, before being extended to August 2020.
In 2019, Serco's revenue from the existing contract is likely to be around GBP42 million. Losses on the contract, offset by an onerous contract provision, are likely to be about GBP6 million.
The present operations handle around 24,000 prisoner movements in a given month and serves 67 courts with 8 vehicle bases. Under the new contract, Serco will service 104 courts and use 16 vehicle bases.
Serco Chief Executive Rupert Soames said: "We are delighted to have been awarded this major contract to provide prisoner escort and custody services for the Ministry of Justice across the whole of the South of England region. Looking after prisoners as they are transported between secure locations and during their time in court is a sensitive and demanding role and their welfare and security is at the heart of our operations. In recent years our performance has steadily and significantly improved, and today our team provides an outstanding service in what are often very challenging conditions."
Serco hit the headlines in 2013 when it, along with rival G4S PLC, was found to have overcharged the UK government for the electronic tagging of offenders.
This past July, Serco's Geografix subsidiary in the UK reached an agreement with the UK Serious Fraud Office to take responsibility for fraud and false advertising. Under the deferred prosecution agreement, Serco Geografix paid a GBP19.2 million fine along with GBP3.7 million of the fraud office's investigation costs.
Serco Geografix took responsibility, under the proposed agreement, for three fraud offences and two false accounting offences between 2010 and 2013. These relate to the subsidiary's reporting to the UK Ministry of Justice concerning "the levels of profitability of Serco's electronic monitoring contract".
Shares in Serco were up 0.9% at 156.50 pence in London on Wednesday morning.
By Anna Farley; [email protected]
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