G4S is off the naughty step

By Tony Collins

The BBC says that G4S is again being considered for government business after being barred from bidding for new contracts in a row about overcharging.

In 2012 the Cabinet Office issued a notice to all departments, agencies and other public organisations saying that they should take into account a bidder’s past performance when considering a new contract.

The notice said that officials should satisfy themselves:

– that the principal contracts of those who would provide the goods and/or services have been satisfactorily performed in accordance with their terms

– where there is evidence that this has not occurred in any case, that the reasons for any such failure will not recur if that bidder were to be awarded the relevant contract.

If the Departmental Body remains unsatisfied that the principal contracts of those who would provide the goods and/or services have been satisfactorily performed, it should “exclude that bidder on the grounds that it has failed to meet the minimum standards of reliability set”, said the notice.

It appears that G4S was excluded from bidding on these grounds.

But the company agreed to repay £109m after an audit found it charged too much for providing electronic prisoner tags. The Serious Fraud Office is examining G4S and Serco over the contracts.

The firm has not bid for any government work since the Ministry of Justice started an investigation a year ago into its supply of electronic monitoring tags for prisoners in England and Wales since 2005.

After an audit by accountancy firm PricewaterhouseCoopers, it emerged that G4S – which insisted it had asked for the review itself – and Serco had overcharged the government by “tens of millions of pounds”.

Now the Cabinet Office has nothing but good to say about G4S. The CO’s statement says that the payments made by G4S to reimburse the taxpayer are a “positive step”.

Cabinet Office minister Francis Maude says:

“Following the material concerns that emerged last year, relating to overcharging on Ministry of Justice electronic monitoring contracts, G4S has engaged constructively with the government…

“Throughout, the government has engaged closely with G4S to understand their plans for corporate renewal. These discussions have been constructive; and following scrutiny by officials, review by the Oversight Group and reports from our independent advisors (Grant Thornton), the government has now accepted that the corporate renewal plan represents the right direction of travel to meet our expectations as a customer.

“This does not affect any consideration by the Serious Fraud Office, which acts independently of government, in relation to the material concerns previously identified. However, we are reassured that G4S is committed to act swiftly should any new information emerge from ongoing investigations.

“The changes G4S has already made and its commitment to go further over coming months are positive steps that the government welcomes. However, corporate renewal is an ongoing process and the government places a strong emphasis on their full and timely implementation of the agreed corporate renewal plan.

“The Crown Representative together with Grant Thornton will continue to monitor progress as their plan is implemented, reporting to government on a regular basis. I hope this will enable our confidence to grow.”

Comment:

A company has to do something very serious to be excluded from bidding – and it may be thought that G4S has come off the naughty step too quickly. On the other hand the notice on barring poor suppliers from bidding has a requirement that bidders provide a list of their main customers in the previous three years.  Certificates of satisfaction should be obtained from the customers. If necessary suppliers should obtain the certificates.

This is a useful incentive to suppliers to keep their customers happy.  But will departments implement what would be, in essence, a blacklist?

Thank you to openness campaigner Dave Orr for alerting me to G4S developments.