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Prisoner Escort and Custody Services (PECS) contract

Date: 28 Aug 2013

Serco Group plc (Serco) notes the statement released at 5.45pm today by the UK Ministry of Justice (MoJ) and confirms that we have today jointly referred a matter relating to the misreporting of data on the Prisoner Escort and Custody Services (PECS) contract to the City of London Police.

Under the contract Serco is required to deliver defendants to Court, and its performance is measured against the delivery of a defendant being 'Designated Ready and Available for Court Time' (DRACT). Serco has identified misreporting of DRACT data locally on the PECS contract. The data had been misreported such that the performance reported to the customer was overstated.

Serco has found no evidence that this misreporting was undertaken with the knowledge or approval of management outside the contract.

Serco has agreed with the MoJ a three-month programme to restore performance on the PECS contract. If at the end of this period, Serco meets the performance requirements of the contract the contract will be retained by Serco. The costs of this improvement programme will be borne by Serco and any profit earned since the contract was renewed in 2011, estimated to be around £2m, will be repaid. Serco will also forgo any future profits on the contract. The PECS contract was awarded in March 2011 and valued at approximately £285m over 7 years.

Serco has also today agreed with the MoJ to initiate a programme of change and corporate renewal designed to increase the voice of our customer in our organisation and strengthen Serco's systems. Specifically, Serco and the MoJ have agreed that the Government should have independent oversight of this programme and that training will be an important part of the change programme.

Serco continues to fully cooperate with the ongoing UK Central Government contract reviews.

Chris Hyman, Chief Executive of Serco Group plc, said,
"The Justice Secretary is right to expect the highest standards of performance from Serco. I am deeply saddened and appalled at the misreporting of data by a small number of employees on the contract. This is a very serious matter for the customer and for us. We will not tolerate any wrongdoing and that is why we have referred this matter to the Police. It is also why I have immediately initiated a programme of change and corporate renewal.

"The overwhelming majority of our people work hard every day to deliver important public services and will share my deep concern about this matter."

For further information please contact Serco:
Stuart Ford, Head of Investor Relations T +44 (0) 1256 386 227
Marcus De Ville, Head of Media Relations T +44 (0) 1256 386 226

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Last Updated: 28 Aug 2013