Serco to repay government £68.5m for tagging scandal

Serco has agreed to repay the government £68.5m for overcharging for its tagging of criminals, Justice secretary Chris Grayling has confirmed.

Both Serco and rival G4S have been found to have overcharged on contracts dating back to 2005, in a review prompted by allegations surrounding the two firms.

The Serious Fraud Office (SFO) opened a criminal investigation after the outsourcing firms were accused of charging for recorded electronically tagged criminals who turned out to be dead, in jail or overseas.

The ministry has uncovered issues with two further contracts held by G4S for its management of facilities at court - it had already found that the firm was overcharging for tagging. It said:

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 had rejected a previous offer of £24m from G4S to settle the scandal, pledging to make sure as much taxpayers' money as possible was got back.

The review revealed enduring weakness in contract management, recommending "swift action be taken in order to secure necessary improvements and to narrow the gap between current and best practice".

A number of risk areas have also been identified, said the ministry, although haven't necessarily been realised.

In a separate review specific to its 15 major contracts (with a value totalling £3.9bn), the government said "any real change in outcome is only going to happen if Government makes substantial changes in its approach".

It said that it's found two areas that require attention when it comes to contract management:

First, the Department’s focus on contracts has lessened significantly after the initial procurement and, second, the Department has not fully recognised and understood the different risks attached to different types of contracts.

Francis Maude, minister for the Cabinet Office, said in an introduction to a separate but related "Cross Government Review of Major Contracts":

This report provides clear evidence that contract management in Government requires improvement. There were examples of good practice and skilled work by officials across Whitehall. But in the majority of contracts reviewed across Government there are weaknesses in the way contracts are managed, some of which are significant.

Last month the disgraced groups apologised for the failings whilst being grilled by a panel of MPs. G4S boss Ashley Almanza said:

It's not appropriate to bill before you've fitted the equipment and carry on billing after it’s been removed. It was flawed . . . I don't think we did correctly tell the difference between right and wrong.

Serco chairman Alistair Lyons told the Commons Public Accounts Committee the company's behaviour had been "ethically wrong".