* G4S wins two jail contracts, Serco wins one
* G4S contracts worth total of around 750 mln stg
* Serco contract worth around 250 mln stg
* Union angry at first handover of state-run jail
* UK has military contingency plans for jail officer strike
(Adds quotes, details, value)
By Tim Castle and Neil Maidment
LONDON, March 31 The government handed the
running of an existing state-run jail to private managers for
the first time on Thursday and said it was ready to use troops
to keep order if prison officers strike over the deal with G4S
Justice Secretary Ken Clarke said the government had
appointed G4S to manage Birmingham prison in central England as
well as a new jail, Featherstone 2, being built in nearby
G4S said both contracts were for 15 years each, with an
estimated total value of around 750 million pounds for the life
of the deals.
Outsourcing group Serco (SRP.L) was also awarded a fresh
contract to run Doncaster prison in north east England, where
its contract was due to expire. Serco said the deal was worth
around 250 million pounds over 15 years.
Birmingham will be the first ever transfer in Britain of the
management of a state-run prison to the private sector. Other
existing privately run prisons such as Doncaster are recently
built institutions always run by private companies.
The union representing 550 prison officers at Birmingham
said it was considering taking industrial action over the deal.
"We are currently assessing our position with our membership
and we are ruling nothing in and nothing out," said Colin Moses,
national chairman of the Prison Officers Association.
Clarke said the government was ready to use troops to keep
order in jails should prison officers go on strike.
"No one is contemplating a military takeover of a prison,
the governor will still be in charge and so will the prison
service, but it is only prudent to make sure that we do have the
military prepared should it be required."
Prison officers are barred from taking industrial action but
Moses said his union was prepared to ignore the law if their
members decided to take action.
Analysts at JP Morgan said Clarke's determined stance could
be good news for outsourcers.
"Clarke's determination to use the military to push through
privatisation is perhaps evidence of the government's
determination to take on public sector unions, which may be a
positive sign for the outsourcing trend," analysts wrote in a
The Ministry of Justice said the outsourcing of the
management of the three prisons would save 216 million pounds
($348 million) over the lifetime of the contracts.
Featherstone will be operated by G4S but will remain under
prison service control.
Serco's Doncaster deal will include a trial of the
government's Payment by Results (PBR) initiative, which means
that 10 per cent of the contract price will only be payable if
the company reduces reoffending rates.
Shares in G4S on the London Stock Exchange were down 0.23
percent at 1559 GMT. Serco was down 1.33 percent.
(Editing by David Cowell)