Ministry of Justice brings in auditors to investigate tagging contracts

http://www.guardian.co.uk/politics/2013/may/17/ministry-justice-auditors-tagging-contracts

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The government has hired auditors to investigate whether it was overcharged on contracts for electronic tagging and monitoring of offenders which have cost £107m over the past year.

The Ministry of Justice said on Friday that auditors from PricewaterhouseCoopers would examine contracts with Serco and G4S that were signed in 2005. "I take this issue very seriously and my priority is to ensure that taxpayers' money is spent appropriately and delivers value for money," said justice secretary Chris Grayling, adding that the auditors would report their findings within six weeks.

A ministry spokeswoman said the issue concerned the number of people tagged and the duration of the monitoring period. G4S and Serco had their original contracts extended and are bidding on the new electronic tagging deals with the justice department expected later this year.

The companies said they were co-operating with the government. G4S added that it had cut the cost of the service by 13% since it first won the contract in 2005.

The justice ministry is one of the most active departments in contracting out services to cut its running costs, asking private firms to bid to run prisoner escort, private prisons and more recently probation services.

Analysts at City broker Cantor Fitzgerald have estimated the value of new services contracts for the justice ministry has jumped tenfold over four years, to £79m in 2012, based on data from eight months of each year.

G4S chief executive Nick Buckles said in a call with City analysts this month that he had learned there would be "a couple" of private prisons built under the private finance initiative, which funds public infrastructure with private capital.

He added that G4S, which made a £70m loss on its security contract at the London Olympics after failing to provide enough guards, was getting a lower profit margin on the extension of its tagging deal.