Tag Archives: Electronic Monitoring Contracts

G4S issues update on electronic monitoring contracts

G4S plc has issued the following update in relation to billings made for electronic monitoring services provided by G4S Care & Justice Services (UK) Ltd in England and Wales between 2005 and 2013.

In June 2013, G4S plc engaged the international law firm Linklaters LLP to perform an independent review into the conduct of G4S employees in relation to billing under the electronic monitoring contract, and to assess whether there was any evidence of dishonesty or criminal conduct.

As part of its ongoing review, Linklaters has conducted an extensive search and review of e-mails and numerous interviews with relevant employees and has not identified any evidence of dishonesty or criminal conduct by any employee of G4S in relation to the billing arrangements under the electronic monitoring contracts.

The review has confirmed that, in certain circumstances, G4S Care & Justice Services (UK) Ltd wrongly considered itself to be contractually entitled to bill for monitoring services when equipment had not been fitted or after it had been removed.

Ashley Almanza: Group CEO at G4S

Ashley Almanza: Group CEO at G4S

This billing practice, which the company believes was confined to the electronic monitoring contract for England and Wales, was not consistent with the contract or G4S’ values. The company has apologised to the Ministry of Justice and issued credit notes totalling £23.3 million for amounts incorrectly billed between 2005 and May 2013.

A further credit note of £0.8 million will be issued for billings for the period from June 2013 to date.

These credit notes are issued against outstanding sums on these contracts and are covered by an impairment provision made in the Group’s half-year results. In addition, G4S has incurred external investigation costs of around £2 million.

Audit in relation to billings

The Ministry of Justice is conducting an audit in relation to electronic monitoring billings and the company’s assessment of these matters and the credit notes may not agree with the Ministry’s audit findings. Once those findings are available, G4S will work with the Ministry of Justice to resolve any outstanding matters.

G4S continues to provide close support for the reviews being conducted by the Cabinet Office and the Ministry into other G4S contracts with the UK Government. While these reviews are not yet complete, no evidence has been identified by the company (or brought to the company’s attention) which indicates that the billing procedures on the electronic monitoring contract have been applied to any other G4S contracts.

G4S has taken action to renew management, reinforce its corporate values and strengthen risk management and controls. Since 1 June, the company has made important changes to its senior management team, including the appointment of a new CEO, a new CFO and a new regional CEO for its UK businesses, and has also appointed an experienced Deloitte partner to the newly-created position of group head of risk and programme assureance.

The executive previously responsible for the UK businesses (including electronic monitoring) is no longer working at G4S.

Further organisational and process changes are being implemented to strengthen customer focus, governance and contract management and control. Taken together with the significant changes to its Board composition, G4S is well advanced in a programme of fundamental corporate renewal.

Comment from G4S on the Linklaters findings

Commenting on Linklaters’ findings, Ashley Almanza (G4S’s Group CEO) said: “Our announcement today follows months of intensive work by an independent law firm and external accountants. It’s an important step in setting this matter straight and restoring the trust which has been earned by our many thousands of committed and hard-working employees over many years.

“The way in which this contract was managed was not consistent with our values or our approach to dealing with customers. Simply put, it was unacceptable and we have apologised to the Ministry of Justice.

“As part of a wider programme of corporate renewal, we have changed the leadership of our UK business and we are putting in place enhanced risk management and contract controls. We remain committed to working with the Ministry of Justice and the UK Government to resolve this matter, and to providing enhanced oversight of service delivery and contract performance.”

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NAO publishes Memorandum for Parliament on electronic monitoring contracts

The National Audit Office has published a Memorandum for Parliament setting out the events surrounding the Ministry of Justice’s process in 2013 to retender its electronic monitoring contracts, currently with private contractors G4S and Serco, and its subsequent decision to commission a forensic audit of the contracts by PricewaterhouseCoopers (PwC). Today’s report also covers the main findings of that audit.

Following completion of the PwC forensic audit, the Department is in dispute with G4S and Serco over the amount of money by which the Department may have been overcharged for electronic monitoring services under the current contracts.

Both contractors are also now subject to a criminal investigation by the Serious Fraud Office.

The National Audit Office has published a memorandum for Parliament setting out the events surrounding the Ministry of Justice’s process in 2013 to retender its electronic monitoring contracts

The National Audit Office has published a Memorandum for Parliament setting out the events surrounding the Ministry of Justice’s process in 2013 to retender its electronic monitoring contracts

The Department believes that both providers charged for work that had not taken place in a way that was outside what was set out in the contracts for the electronic monitoring of offenders.

PwC’s estimate is that the potential overcharge by both providers in total may amount to tens of millions of pounds.

Examples of disputed billing practices

The NAO’s report includes examples of disputed billing practices which show that, in some instances, both contractors were charging the Department for monitoring fees for months or years after electronic monitoring activity had ceased, over similar timescales where electronic monitoring never occurred and multiple times for the same individual if that person was subject to more than one electronic monitoring order concurrently.

Both contractors have said that, in their view, such charging was in line with the terms of the contract.

G4S has since stated, however, that it now views that interpretation as inappropriate. The company has said that it intends to offer the Ministry £23.3 million in credit notes in respect of issues it has identified to date.

Serco has stated that it will refund any amounts that it agrees represents overcharging.

The Department has not currently agreed to any refund offers made by the providers.

The NAO does not draw any conclusions on contractual interpretation.

Read the full report issued by the National Audit Office

About the National Audit Office

The National Audit Office scrutinises public spending for Parliament and is independent of Government.

The Comptroller and Auditor General (C&AG), Amyas Morse, is an Officer of the House of Commons and leads the NAO, which employs some 860 staff.

The C&AG certifies the accounts of all Government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively and with economy.

Its studies evaluate the value for money of public spending, nationally and locally. The NAO’s recommendations and reports on good practice help Government improve public services, while its work led to audited savings of almost £1.2 billion in 2012.

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