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Contract News Update

Date: 15 Nov 2010

Smaller and medium-sized contracts are fundamental to Serco's growth and value creation, and this release updates on a selection of our £2.3bn of awards so far in the second half of 2010. For completeness, at the end of this document are summaries of the larger contracts signed in the second half of 2010.

Integrated healthcare provision for Norfolk Prisons
A contract to provide integrated health services for the Norfolk Prison Cluster for NHS Norfolk which is valued at £24m over three years. The Cluster is made up of HMP Norwich, HMP Wayland and HMP Bure. The contract, which started on 1 October 2010, is the first integrated custodial healthcare contract let in England and further enhances Serco's status as the UK's leading provider of managed health services in secure accommodation.

Tyne and Wear Metro automated fare collection
A £4m contract has been signed with Scheidt & Bachman to deliver the necessary enabling works for the replacement of the Automatic Fare Collection (AFC) systems at stations on the Tyne & Wear Metro. Under the contract Serco will be responsible for the design and on-site delivery of upgraded CCTV systems, new fibre network and new concrete bases, ducting, floor tiling and building alterations necessary for the installation of the new machines. Work is due to start on-site at the first station in November 2010.

Integrated healthcare provision for HMP Leicester
Serco has successfully renewed its contract for provision of health services to HMP Leicester by NHS Leicester City. The new contract has been widened to include full integrated service provision of all healthcare services to the prison including pharmacy and mental health. The contract is valued at £12m over five years and went live in October 2010.

Pathology agreement with Manchester University Hospitals NHS Foundation Trust
Central Manchester University Hospitals NHS Foundation Trust has signed an agreement with GSTS, Serco's Pathology joint venture. The partnership launches a new collaboration to develop pathology and genetic services in the north west of England. For the Trust, the collaboration brings access to the service transformation skills and business development expertise of GSTS Pathology.

Serco wins contract to manage nuclear decommissioning programme in Italy
Serco's assurance business has won a framework contract with the European Commission to provide nuclear decommissioning implementation assistance at the Joint Research Centre site at Ispra in northern Italy. The contract is worth Euro14m and will run for a seven-year period.

Serco secures contract to support Scatsta Airport
Serco's aviation business has formally signed a contract with Bristow Helicopters Ltd for the management and operation of Scatsta Airport, Shetland, on behalf of the Integrated Aviation Consortium (IAC) - a consortium of oil companies operating in the Shetland Basin. This is a multi-million pound five-year contract, with a potential five-year extension.

Universities of the German Armed Forces (UniBw) in Hamburg and Munich
In a four-year contract starting in January 2011, valued at approximately Euro40m, Serco will plan and install communications and laboratory equipment for the German Federal Ministry of Defence at the Universities of the German Armed Forces (UniBw) in Hamburg and Munich.

Deployable Network Solutions for the German Armed Forces
Serco has been appointed by the Federal Office for Information Management and Information Technology of the German Armed Forces to deliver deployable network solutions including training equipment, accessories kit and spare parts packages. The contract value is Euro15m and delivery will be completed by the end of September 2012.

Mobile command post containers for the German Armed Forces
Serco has been appointed by the German Federal Office of Defence Technology and Procurement (BWB) for the delivery of mobile command post containers for the Regional Command North under an urgent operational requirement. The containers include those for vehicles, energy modules as well as for a mobile command post. The contract is valued at Euro4m.

Information communication support for Enfield Council
Serco has signed an initial five-year contract, with an option of a four-year extension, to deliver information communication technology (ICT) support services for Enfield Borough Council. The new contract, valued at £24m, will deliver guaranteed cost savings of 20% for the council, improve services for Council employees and improve the communications and interactions with the residents of Enfield.

Operation of leisure centres
Serco has been awarded three contracts with a combined value of £31m to continue operating leisure centres in Manchester, Basingstoke and Kent: a new five-year contract to continue operating the Sudgen Leisure Centre on behalf of the University of Manchester and Manchester Metropolitan University; an eight- year contract to manage the Aquadrome at Basingstoke, Tadley Swimming Pool and the Basingstoke Golf Centre; and an extended contract to manage the Meopham Sports and Tennis Centre in Kent for a further five years.

Regional skills competitiveness SWRDA
Our Enterprise Support business in the south west of England has been awarded an additional £1m from the South West Regional Development Agency (SWRDA) and the European Regional Development Fund to support high growth businesses in the region to maximise their growth through intensive skills support.

Private sector contracts
Our private sector business has secured a number of contract extensions with customers in the UK and Europe. The contracts, which run for periods of three to eight years, have a total value of £34m. They include a five-year extension of a contract valued at over £8m with RWE Npower to provide integrated facilities management services at Didcot Power Station and an expanded contract with Starwood Group to provide a range of support services to hotels in the Group. This expansion, which has a three-year term and is valued at £3.6m, includes the provision of buildings maintenance and security, engineering support and help desk services.

US$88m Hazardous Material Management Services for the US Navy
A new single award indefinite-delivery/indefinite-quantity (ID/IQ) contract has been signed with the US Navy's Fleet and Industrial Supply Centre Norfolk (FISCN) to perform hazardous material management services. The contract has a one-year base period with four one-year option periods and is valued at approximately US$88m, if all option years are exercised. Under the contract Serco will provide consolidated hazardous materials reutilization and inventory management program support to the FISCN Hazardous Material Program Office.

US$44m US Navy Contract to provide logistics planning
A new ID/IQ contract signed with the Naval Operational Logistics Support Centre (NOLSC). Under this contract, Serco will support the NOLSC with network systems support, systems integration, facilities planning, application/systems analysis and programming, and hardware assessment. The contract has a one-year base period and four one-year option periods, with a ceiling value of US$44m for Serco, if all option years are exercised.

US Navy Recruit Training Command Contract
Serco has renewed a contract with the Navy Personnel Support Detachment to provide support to the Navy's Recruit Training Command in Great Lakes, Illinois, where 40,000 sailors enter the Navy annually.  Serco has been providing pay, personnel, and passenger transportation support since the original contract was awarded in 2004. The contract has a one-year base period and four one-year option periods and is valued at US$14m, if all option years are exercised.

US Navy Reserve Psychological Health Contract
A contract renewal for the US Navy Reserve Psychological Health Outreach Program, which provides comprehensive psychological health services to Navy Reservists and their families. The contract has a one- year base period and three one-year option periods and is valued at US$10m, if all option years are exercised.

Contract to Install Local Area Network on USS Bonhomme Richard
A new delivery order agreed under the Sea Enterprise contract to install a high speed Local Area Network (LAN) on the USS Bonhomme Richard, which is an amphibious assault ship used to deploy a marine landing force. The contract is valued at approximately US$5m over a one-year period.
US Army Career and Alumni Program (ACAP) Renewal Serco has been appointed to the Army's Career and Alumni Program (ACAP) under the Army's HR Solutions ID/IQ. The contract renewal is for one year with a value of US$18m. Through ACAP, Serco provides the job search training, tools and counselling for soldiers who are leaving active service for private sector careers. Serco has been providing job preparation services for over 20 years.

Two US Army One Source renewals valued at US$30m
The US Army has awarded Serco two one-year contract renewals to continue supporting their One Source program. The contract is for on-site coordination and outreach for geographically dispersed soldiers and their families to keep in touch and for information technology and web upgrades to support the program.

Contract Extension for Personnel Support at US Army Medical Centre
Serco was awarded a six-month extension on its Non-Clinical Personnel Support contract at Walter Reed Army Medical Centre in Washington, DC. The contract extension is valued at US$10m.

Contracts Renewal for US Army Victim Advocate Programme
The US Army have awarded Serco a one-year renewal task order valued at US$10m to support the Victim Advocate Program and Sexual Harassment and Assault Response Program (SHARP) at 56 Army installations in the US and abroad. The SHARP program provides crisis intervention, emotional support and advocacy services to victims of domestic violence and sexual assault.

US$7m US Army Research Lab Contract
Serco has won a new US$7m contract to provide the Army Research Lab contract with survivability and vulnerability assessments of US military technology. Work will take place in Ft. Hood, Texas, and the contract is for one base year and four one-year options.

US Army ID Card Contract Renewal Supporting 72 Locations
Serco has renewed the contract to perform Military ID Card issuing support in 72 Army locations in the US, Korea, Germany and Italy. The contract value is US$5m for a six-month period.

US$20m US Department of Veterans Affairs Contract
A new contract has been signed to support the US Department of Veterans Affairs' Reintegration and Retention Program. The task order has a one-year base period valued at approximately US$20m and will be followed by four one-year option periods. Under the contract, Serco will provide program management; a knowledge management-based web portal with job hiring tools, e-Learning elements and simulations, videos and chat rooms; mobile web technologies; a call centre; and career coaching.

US$5m FAA subcontract
Serco has been awarded a subcontract to support the Federal Aviation Administration (FAA) Air Traffic Organization's Office of Safety. Serco will support safety performance improvements in the National Airspace System. The contract covers one base year and up to four one-year options with an estimated value of US$5m to Serco.
Additionally, Serco's Americas business received approximately US$135m in contracts valued at less than US$5m each during the second half of 2010.

Contract to operate and maintain the Palm Jumeirah Monorail
Serco has been appointed to operate and maintain the Palm Jumeirah Monorail in a contract valued at £15m over five years which commenced on 06 August 2010. The system is fully automatic and driverless and, at full capacity, can carry up to 2,400 passengers per hour. The contract provides Serco with the exclusive market position as the only rail operator in the UAE.

Transport solutions for Abu Dhabi Department of Transport
Serco awarded an 11-month contract which commenced in August 2010 valued at UAED9m to provide a schedule management system based solution for the Department of Transport in Abu Dhabi. The solution will enable the Department of Transport to perform a multitude of tasks for public transport such as vehicle and duty scheduling, personnel and vehicle deployment, and timetabling.

Contract to operate and maintain Cross-Harbour Tunnel in Hong Kong
Serco has secured a new six-year contract with the Department of Transport valued at £34m to manage, operate and maintain the Cross-Harbour Tunnel in Hong Kong. The addition of the Cross-Harbour Tunnel makes Serco the largest tunnel operator in Hong Kong, with more than 600 staff working across four tunnels.

Serco JV wins Australian defence contract
DMS Maritime has been chosen as preferred bidder to support and refit patrol boats supplied as aid to Pacific nations. The joint venture between Serco Australia and P&O Maritime Services has been selected for the contract valued at A$49m to Serco over five years. The contract will start early in 2011 and has options to extend for a further 12 years. Under the contract DMS Maritime will provide through-life technical support, advice, assistance and refit services to countries operating the patrol boats.

Summary of larger contracts:
Below is a summary of larger value contracts signed so far in the second half of 2010.

£650m contract to deliver environmental services for Sandwell
A new contract valued at £650m over 25 years has been signed with Sandwell Metropolitan Borough Council to deliver its new Waste Improvement Plan (WIP). Under the contract we will provide refuse collection, recycling, waste processing and disposal, and street cleaning services, including the construction of a new waste transfer station.

Joint venture renews A$500m contract with Royal Australian Navy
Serco's joint venture with P&O Maritime Services, DMS Maritime, renewed its contract to support the Royal Australian Navy with a broad range of harbour and offshore services. DMS Maritime is a 50/50 joint venture owned by Serco and P&O Maritime Services. The ten-year Fleet Marine Services contract is valued at more than A$500m and has a potential one-year extension. Operation commenced in October 2010 and includes: supplying and operating a wide range of fleet operations such as berthing and refuelling; conducting maritime training; commissioning and modifying vessels to suit local and international requirements; and undertaking integrated logistics management.

Joint venture to become UK's largest provider of pathology services
King's College Hospital NHS Foundation Trust (King's) has joined Serco's joint venture Serco Guys and St Thomas' Pathology (GSTS), as part of a ten-year contract valued at around £300m, starting October 2010, as the principal provider of pathology for King's. It is anticipated that the agreement will result in incremental revenue to Serco over the term of the King's contract of approximately £110m.

For further information, please contact Serco:
Dominic Cheetham, Director of Corporate Commmunications T +44 (0) 208 334 4334
Jill Sherratt, Interim Head of Investor Relations T +44 (0) 208 334 4122

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Last Updated: 15 Nov 2010