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Contract News Update

Date: 09 May 2011

Smaller and medium-sized contract wins are fundamental to Serco's growth and value creation, and this release updates on a selection of signed contracts and preferred bidder appointments so far in 2011. For completeness, summaries of the larger contract awards are also included at the end of this document.

Helping ex-offenders into work
Serco has been awarded two new contracts by the UK Ministry of Justice to help ex-offenders into work in the South East and East of England. The four-year contracts, valued in total at £15m, are the second phase of an initiative called 'Job Deal' which aims to support ex-offenders into work by improving their employment prospects and tackling barriers to employment. Serco already delivers the first phase of Job Deal in these two regions via a network of sub-contractors from the charitable, voluntary and private sectors. The contracts are co-financed by the European Social Fund (ESF) and National Offender Management Service (NOMS).

East London Traffic Control System
Serco has successfully re-bid its contract with Transport for London to provide the East London Traffic Control System (ELTRACS). Serco created this major traffic management system, which it has operated since 1992. ELTRACS monitors and controls traffic on all strategic roads and tunnels in the East London road network. The contract, which started in April, is valued at approximately £1m over two years.

Management of Braintree Community Hospital
Serco has acquired Braintree Clinical Services Limited and the contract with Mid-Essex Primary Care Trust to manage and operate Braintree Community Hospital in the UK. The recently built hospital provides a comprehensive range of clinical services to day-surgery patients under one roof. Services include general surgery, plastic surgery, orthopaedics, ophthalmology and ENT. It also provides outpatients, diagnostic services and has 24 community in-patient beds. Serco's aim is to make the best use of the state of the art facilities to improve local health care. The contract is likely to be valued at around £60m over four years.

Support for the Merlin helicopter maintenance facility at RNAS Culdrose
Continued provision of support services at the Depth Maintenance Facility for the Royal Navy's Merlin helicopter fleet at Royal Naval Air Station (RNAS) Culdrose in Cornwall. The contract, with AgustaWestland, has a total value of £33m to Serco over five years and began in March.

Installation and support of a new radar system for Germany's Ministry of Defence
Serco has been appointed to three sub-contracts by Thales Raytheon to assist in the replacement of six old radar systems with a new system called ARED, for Germany's Ministry of Defence. Under these contracts Serco will be installing the new equipment, providing technical documentation and delivering service maintenance and repair services. The three contracts range from one to five years in length and in total are valued at approximately £12m.

Air traffic control, engineering and operations services for Cranfield Airport
Serco has been awarded a five-year extension to its contract to provide air traffic control, air traffic engineering, flight briefing and operations support services at Cranfield Airport, Bedfordshire in the UK. Serco has provided similar services at Cranfield Airport, which is owned and operated by Cranfield University, continuously since the 1950s. This extension is valued at £3.5m over five years.

Safety assurance support for UK Ministry of Defence's nuclear propulsion programme
In support of the UK Ministry of Defence's nuclear propulsion programme, Serco has been awarded a new contract in addition to continuing consultancy support delivering safety assurance and technical services. The new contract involves the build of a series of five test rigs that will be used to study environmentally-accelerated corrosion of materials. This work is in total valued at approximately £15m over one year.

Extension of joint venture with Glasgow City Council to include ICT support for schools
Serco's joint venture with Glasgow City Council, known as Access, has been extended to include Information, Communications and Technology (ICT) support for the authority's Secondary schools. Under the seven-year £19m extension to the base contract, the joint venture will provide services to 29 schools starting in July this year.

Contact centre for West Sussex County Council
The Listening Company, which Serco acquired in March this year, has been confirmed as the new provider of West Sussex County Council's contact centre in the UK. A series of innovations and service improvements are planned for the contract which is valued at £5.4m, including broadening of the contact centre's existing scope to include back office transactions and the delivery of more complex services. The four-year contract commences in July.

Contracts with Enfield and Derby Councils to enhance communications technology capabilities
Serco has signed a new contract and an extension with London Borough of Enfield and Derby City Council respectively to enhance communications technology. In total valued at £2.7m this work will deliver improvements in each of the council's technology and communications capabilities.

Specialist technical engineering support services for CERN
Serco has been awarded a seven-year contract valued at ?42m to provide specialist technical engineering support services for CERN's accelerator complex, physics detectors, test bench facilities and technical infrastructure. Services for this European research facility include maintaining cryogenic pumps and compressors, installing power electronic cards and connecting magnet superconducting cables.

£60m renewal with the European Commission to provide information technology services
Serco has been awarded a contract re-bid to provide information technology support services to the European Commission primarily in Belgium, Luxembourg and Italy. The four year contract valued at £60m includes support for database, web and desktop applications as well as server operating systems. The contract with the Directorate-General for Informatics will help the Commission make effective and efficient use of information and communications technology to achieve its organisational objectives

Operation and analysis of European Meteorological Satellites
A six-year contract valued at ?15m to provide a team of controllers and analysts to operate the Polar System Programme Satellite (EPS) 24 hours a day, 365 day a year. EPS forms part of the European Organisation for the Exploitation of Meteorological Satellites (EUMETSAT), which obtains information from satellites for use in weather forecasting and climate applications.

Satellite Engineering services for the European Space Operations centre
A five-year contract valued at £4.2m to provide satellite engineering services for the European Space Operations Centre. The contract covers a wide range of activities such as engineering consultancy, administrative support, and spacecraft and ground station operations engineering.

Technology support services for Italian Space Agency
Serco has renewed its contract to provide information technology support services to the Italian Space Agency. The agency was established in 1988 to fund, regulate and coordinate space exploration activities in Italy. The contract, for a period of three years with an additional one year extension, has a total value of ?10m and is a significant increase on the previous contract which was valued at ?600k per annum.

Task orders under US Navy IDIQ for installation of command and control systems
Serco has been awarded $25m of task orders under the Indefinite-Delivery, Indefinite-Quantity (IDIQ) framework contract known as Sea Enterprise I for installing Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR) systems and equipment on US Navy surface ships, submarines, and shore stations on the US West coast. Serco is also one of four prime contractors who have been appointed to the successor IDIQ known as Sea Enterprise Global which expands opportunities to installing systems worldwide for the US Navy.

Mission-critical and emergency technology services for US Department of Defense and other Government Agencies
Under an IDIQ known as C4I2TSR, Serco has been awarded 32 task orders so far in 2011 valued at $33m. This IDIQ contract enables US Department of Defense and civilian government agencies to procure a full range of services for mission-critical and emergency information technology systems. These services and products include engineering, systems integration, hardware procurement, software development, technical support, installation testing, operations and maintenance. Serco is the sole provider under this IDIQ.

Human resources services for the US Army
Serco has won ten task orders valued at a total of $19m in 2011 to provide human resource services for the US Army under the HRsolutions IDIQ. These task orders fall into three mission areas: recruitment and retention; personnel services and support; and, studies and analysis.

Medical and housing logistics for the US Army worldwide
Serco has been awarded a single task order valued at $35m over one-year, as part of the US Army's Logistics Civil Augmentation Program (LOGCAP) IDIQ. Under the task order Serco delivers medical supplies and transports housing units and supplies around the world to US Army and allied forces during operations.

Fleet services to Louisville Gas & Electric
A successful re-compete to provide comprehensive vehicle fleet management and maintenance services for Louisville Gas & Electric, the utility company based in Kentucky. The Serco team has responsibility for a wide range of tasks from basic preventive maintenance to engine overhauls for nearly 1,600 vehicles. The re-compete is worth a total of $25m over five years.

Quality management program for the US Pension Benefit Guaranty Corporation
A contract to design, develop, and implement a quality management program, based on ISO 9001 standards for the Pension Benefit Guaranty Corporation, a US Government Agency which protects the retirement incomes of more than 44 million American workers in private-sector traditional defined benefit pensions. Serco will be conducting process audits with the goal of having the organisation ISO certified within three years. The contract is valued at $6m over five years.

Clinical and non-clinical services at medical centers for the US Armed Forces
Serco has been appointed to three contracts to provide a range of clinical and non-clinical services at both the Wilford Hall Medical Center at Lackland Air Force Base in San Antonio, Texas and the Walter Reed Army Medical Center in the Washington DC Metropolitan area. Under these contracts valued at approximately $15m in total, Serco will provide services including support to emergency, intensive care, neurology, orthopaedic, and urology units.

Provision of training and readiness data for US Navy
Serco has successfully won a recompete to continue providing Training and Operational Readiness Information Services (TORIS) for the US Navy. The award is valued at over $11m for five years. TORIS is a suite of Serco created IT applications that capture training and readiness data for all US Navy surface ships. It is used by the Navy's Afloat Training Groups and senior leadership to monitor the readiness of each ship. The data capture, analysis and reporting capabilities of TORIS have allowed Afloat Training Groups staffs to be reduced by 30%.

Recruitment services for the US Navy
Under a contract valued at $5.8m over two years, Serco will provide a range of recruitment services to the US Navy Recruiting Command. These include: providing recruitment specialists at over 20 sites across the US; managing the recruitment materials logistics center in Millington Tennessee; and providing strategic communications, analytic and administrative support.

Civilian personnel support to Department of Defense in Washington DC
Serco has been selected to provide civilian personnel support to the US Department of Defense in Washington DC. Serco will provide HR functions including executive and political personnel, classification systems, labour management, and employee relations. The contract is valued at $5.4m over three years.

Air Traffic Control Services at international airports in Abu Dhabi
Serco has successfully secured a two-year extension to its Abu Dhabi ATC contract. Under this contract, Serco will continue to provide management and air navigation services at Abu Dhabi International Airport, Al Ain International Airport and Bateen International Airport. The contract, valued at £22m over two years, reaffirms Serco's partnership with Abu Dhabi Airport who we have been supporting since the 1950s and Serco's position as a leading aviation services provider in the Middle East region.

Supply, install and commission explosive detection systems at Dubai Airport
Under a contract with the Dubai Airports Company, Serco will supply, install and commission explosive detection systems at Dubai Airport. This contract valued at AED16m follows a similar contract to install this type of equipment at the airport which has 12 million passengers a year.

Makkah Metro operations and maintenance consultancy
Serco has been awarded the Phase 2 contract in Saudi Arabia with China Railway Construction Corporation (CRCC) for the provision of consultancy services for the operations and maintenance of the Al Mashaaer Al Mugaddassah Metro Line. Under the contract valued at £5.2m over a nine-month period, Serco will continue to be responsible for recruitment support, mobilisation planning, operations and maintenance training, Metro procedures, health and safety management, crowd control support and safety case development.

Summary of larger contracts
Below is a summary of larger value contract wins announced in 2011 to date.

£420m UK Prison Escort and Custody Services contract
The UK Government's Ministry of Justice awarded Serco with a contract to provide Prisoner Escort and Custody Services within the new National Offender Management Service region of London and the East of England with a potential value to Serco of £420m over 10 years. This new contract replaces Serco's current agreement to provide prisoner escorting services to the current NOMS regions of London and the South East, which has reached the end of its seven-year term.

£250m contract to continue operating HMP Doncaster
Serco has been awarded the contract to continue operating HM Prison and Young Offenders Institution Doncaster in the UK. The new contract will commence in October 2011 and is valued at around £250m over 15 years. As part of the contract, management and staff will be working with voluntary sector partners Turning Point and Catch 22 to pilot a rehabilitation programme, on a payment by results basis, to reduce reoffending.

Serco selected as a prime contractor for two areas for the new Work Programme
Serco has been announced by the UK Department for Work and Pensions as prime contractor for the Work Programme in the West Midlands and South Yorkshire. Serco will work with a strong network of public, private, and voluntary sector providers to support jobseekers into sustainable employment. Under the existing Flexible New Deal contract, Serco has already successfully supported the entry of over 20,000 people into sustainable employment.

Prison Contract in New Zealand valued at NZ$300m
Serco has signed a prison management contract with the New Zealand Department of Corrections to manage Mt Eden Corrections Facility in Auckland. Valued at around NZ$300m over ten years, the contract includes: prison custodial management; security; prisoner welfare, rehabilitation and reintegration programmes and activities; infrastructure management; and logistics.

15-year partnership with Sport England to support two National Sports Centres
Serco signed a 15-year partnership with Sport England to provide support services at two of Sport England's National Sports Centres, Bisham Abbey and Lilleshall. Under the contract, Serco will provide a number of services to these centres as well as playing a major part in the development of new accommodation and sporting facilities at both sites, and upgrading existing facilities and conference venues. This contract will focus upon delivering the best customer experience at each site with particular attention to youth development, as we lead up to the London 2012 Olympic Games and Paralympic Games.

Court Escorting in Western Australia
Serco has been selected as the preferred bidder for the provision of Court Security and Custodial Services (CSCS) to the Western Australian Department of Corrective Services. The five-year contract has two options to extend to a maximum 10 year term. Key aspects of the contract commencing on 31 July 2011 include inter-prison transfers, court security services, and the operation of court custody centres.

For further information please contact Serco:

Stuart Ford, Head of Investor Relations T +44 (0) 208 334 4122
Dominic Cheetham, Director of Corporate Communications T +44 (0) 208 334 4334
Marcus De Ville, Head of Media Relations T +44 (0) 208 334 4388

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Last Updated: 09 May 2011