Exclusive! Ministry of Justice and the fascinating story of the G4S & Serco tagging saga

“Welcome to our Ministry of Justice staff Commercial Awareness and Capability event,” said Vincent Godfrey, Procurement Director for that major government department.  He was in the Emmanuel Centre, Westminster, yesterday, addressing 400 or so people from across the finance, assurance and commercial function, plus a few other procurement stakeholders.

“I know it looks like there are some empty seats at the back, but they're not actually empty. They're occupied by staff from G4S and Serco. I know that's right, they've invoiced us for them”.

What a great joke to start the event! (But as we'll see, this wasn't a 'let's have a go at our contractors' event, despite this initial barb). He had some other good and funny lines too – a side of Godfrey I haven't really seen before, and he was a very engaging host.

But the day had a serious purpose. It was all about procurement and contract management issues, so  pretty remarkable in itself for a department – or indeed any organisation, public or private -  to focus on those issues across quite so many people. Even more remarkably, they invited me along too, with a brief to report on it, without constraints or approvals.

Ministry of Justice (MoJ) has gone through a difficult last year or so in terms of supplier issues, with much publicised issues around the electronic monitoring of offenders scheme  (‘tagging’ or EM as we’ll call it). Investigations into that threw up more issues around prisoner transport and facilities management contracts and billing. Both Serco and G4S are still being investigated by the Serious Fraud Office over the EM over-billing, and the firms have paid back huge sums to the department in recognition of over-charging on the EM contracts -  £109 million (G4S) and  £68 million (Serco).

Moving forward, there are major and sensitive contracts to be awarded in the field of prisons and rehabilitation services as well as EM itself. Some of these are likely to have innovative risk sharing and performance mechanisms within their design. So the event was held both to review the past and to position for the future. The speaking line up was impressive – Jeremy Wright, Minister for Prisons and Rehabilitation,  Ann Beasley, Director General of Finance (and Godfrey's boss), the Permanent Secretary, Ursula Brennan, Michael Spurr, the Head of the National Offender Management Service (NOMS), as well as the senior procurement leaders, with both Godfrey and his deputy, Jim Rawlings, performing during the day.

We also heard from PwC who conducted the 'forensic audit' on the G4S and Serco contracts. Ian Elliott gave a fascinating view of what forensic auditing is all about – almost made me wish that I’d become an auditor. Their work on these contracts was extraordinary. For a start, they analysed 46 million documents, mainly emails.

The feeling overall through the day was of a department that is genuinely trying to become top-class in procurement and (perhaps even more importantly) in contract management. A key message was that excellent contract management requires many, many people from around the organisation to play appropriate roles, which is absolutely right. So this was also something of a 'selling' event, with Godfrey  looking to get part of their wider stakeholder base on board with their plans.

Over 6 hours or so, there was much of interest, and we'll come back to it over the next few days. But the most interesting headlines included these.

  • We heard a detailed run through of the chronology of the EM saga. Despite other reports, it didn’t start with a whistle blower, or the NAO, or from a supplier – it was two people in MoJ spotting something odd, actually during the re-tendering for the EM contracts. (More on this next week – a great example of the power of effective data analysis).
  • The over-billing ‘wasn’t just poor administration’.  MoJ had to be careful what they said, as the case may still come to court, but ‘we thought 19500 people were in the EM scheme – the real number was 14500’. Draw your own conclusions. However, interestingly, the issues were not the same for each supplier, which further complicated the forensic work.
  • Whilst Cabinet Office obviously provided some useful support, it certainly appears that the hard work in recovering the £180 million was very much carried out by MoJ staff, led by Godfrey and Ann Beasley, and their advisers of course.
  • The plans the department are putting in place around contract management will, if implemented successfully, make the organisation as strong as anyone I’ve seen, public or private sector, in this field. More on that too to follow.
  • And one final snippet – in response to a question, the Minister talked about the scheme in the US where whistle blowers who expose bad behavior from contractors to government can get a share of any money recovered. “Cabinet Office are looking at whether we should do something like that here” he said. Interesting idea...

Much more on this next week. It really is a fascinating story, so we’re working on the screenplay for the Hollywood blockbuster as we speak. But who should play Vincent Godfrey? Or Ann Beasley? Answers on a postcard please.

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Voices (10)

  1. Bill Footer:

    I still find it hard to believe that both companies are still actively bidding for new Government contracts during a period when both are under investigation.

    1. Effwhitt:

      I understand the point but there is the pint of being inoocent until proven guilty…

      Thereafter, activities need to be enacted in a considered way. We all like to see firm consequences but we do find ourselves in a position of over dependence and oligopoly that needs to be handled carefully so as not to put out key services at risk.

  2. Trevor Black:

    Whatever the outcomes we should also consider the quality of public contracts that facilitate corrupt behaviour. Remember guys we are not talking about a few quid being overcharged and that it is our money. It might be constructive that when the money is recovered that they build half a dozen care homes with it!

  3. Bill Atthetill:

    Yes, but, Cabinet Office ‘colleagues’ attended a couple of “very important” meetings (right at the end), sending along some first-class second-raters to support the MOJ in taking detailed meeting notes, so it’s only right and proper that Bill Crothers claims all of the glory.

  4. Dave Orr:

    Imagine if a benefits claimant had claimed more than was due.

    Criminal proceedings would ensue with custodial or conditional prison sentences forthcoming.

    Or a construction company who billed for work not carried out.

    Time for the SFO & Plod to collar those responsible for these iffy over-charges and false claims!

  5. Effwhitt:

    What something sounds like is no substitute for knowing the facts, which “it sounds” to me like was the whole point of the day…

  6. Trevor Black:

    It sounded like a polished PR whiz for the gullible. Sorry but the G4S and Serco fiasco were the consequences of either incompetence or corruption or both. Spinning the disaster as just a bit of tweaking to contract management disciplines doesn’t do it for me. I would like the true costs of this fraud including legal fees to be added to the original tender price and then the procurement tsars within the commercial vacuum that is called Whitehall can decide if the contracts are value for money. Have they lost sight of the reasons why these contracts were outsourced in the first place?

    1. Peter Smith:

      Trevor – “were the consequences of either incompetence or corruption or both”. I don’t think anyone in MoJ senior management (or me) would disagree with that statement. Remember this may still come to court so they have to be a little careful what is said. I suspect this isn’t over yet.

      Effwhit, I agree but not totally sure what point you’re making – I’m sure it is a great one though! I think MoJ are fed up with some of the erroneous speculation and within constraints of what can be said (as above) are keen to get more facts into the public domain.

  7. Secret Squirrel:

    Ask Paul Frascella whether its a good idea…..

    He got $42m for a whistleblowing on Oracle for not honouring a most favoured nation clause

  8. Sam Unkim:

    Interesting idea…
    ….. It’s a fantastic idea.
    I could pay for my retirement & and have enough left to buy a yacht

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