In 2013 the Government announced that it had just discovered that G4S and SERCO has been billing excessively for their contracts for electronic monitoring of offenders. The companies were made to pay back some £200m. It has been established that amongst other things, the companies were billing for work they had not done.
The Government referrred them to the Serious Fraud Office. 6 years later, the SFO are still mulling over the case. Granted, it is one of the most complex in the entire history of the SFO, featuring as it does no fewer than one victim, no fewer than 2 companies, no fewer than 2 contracts and no fewer than one jurisdiction. Obviously, that must takes many years to unpick!
Meanwhile, here is an interesting graph. It is interesting because as a general rule, if volumes of work done under contract rise, in this case getting towards doubling, the unit cost - the cost per item - can be expected to fall. This is because fixed costs are spread over more items. This is a basic rule of intelligent contracting.
But in this case, the unit cost actually increased as volumes increased. That would be bizarre whether or not the companies billed for work not done. And suggests that there was something very wrong indeed with the contracts themselves.
Source: National Audit Office, 'The Ministry of Justice's electronic monitoring contracts', 2013
I was formerly Finance Director of the Prison Service and then Director of the National Offender Management Service responsible for competition. I also worked in the NHS and an IT company. I later worked for two outsourcing companies.
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