There was a certain air of understatement when Serco acting CEO Ed Casey alluded to “challenging” market conditions in his trading update for the reputation-tarnished business process services firm. Earlier this month Serco (with G4S) was put under investigation by the Serious Fraud Office over its offender tagging contract (see here), adding to the questions raised about its Prisoner Escort & Custody Services contract. Reparations are likely to be “low tens of millions of pounds” and will be charged as ‘exceptional’ items (perhaps for ‘exceptionally’ poor service?).
Anyway, this, along with other major contract ‘attrition’ will drag down revenues and margins in 2014, the extent of which should become clearer when Serco reports its 2014 results early in the new year. Meanwhile Ed Casey will be joining Ashley Almanza, new CEO at G4S, Capita CEO Paul Pindar, and Atos UK CEO Urusla Morgenstern for some friendly chit-chat with the Public Accounts Committee next Wednesday on the broader issue of the delivery of public services by private contractors (see NAO urges mature approach to supplier management). If you dance with the devil …