Justice secretary Chris Grayling has asked the Serious Fraud Office (SFO) to investigate G4S for overcharging the government.
MPs in the House of Commons heard today (July 11th) that private security firms G4S and Serco made the authorities pay for the electronic tagging of a number of criminals who were either in prison, out of the country or dead.
These allegations represent a serious breach of contract and, if true, the scale of police outsourcing could be minimised.
However, Serco has voluntarily agreed to take part in an audit with the government as it looks to mitigate any impact its oversight may have had. This action has meant it will not be referred to the SFO.
Mr Grayling announced the government will now review all contracts held by both companies across the public sector.
"The House will share my astonishment that two of the government's biggest suppliers would seek to charge in this way. The House will also be surprised and disappointed to learn that staff in the Ministry of Justice were aware of a potential problem and yet did not take adequate steps to address it," the justice secretary added.
PwC will have access to the email systems and a number of key documents by Serco but G4S has not agreed to take part in the scheme.
Electronic tagging is an important cost-saving measure for the UK government as it allows criminals deemed to be at risk of breaching their bail conditions to avoid being kept in custody, which reduces the cost of the justice system to the taxpayer.
G4S received extensive negative publicity in the run-up to the 2012 Olympic Games after it failed to provide effective security measures as it was contracted by Whitehall to do.
This meant thousands of soldiers had to take on basic guarding and administration duties at short notice. It also caused the government substantial embarrassment at a time when the eyes of the world were watching the UK.
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Posted by Francesca Witney