December 12, 2013 / 11:36 AM / 4 years ago

UPDATE 1-Capita to take on G4S, Serco tagging contracts

LONDON, Dec 12 (Reuters) - British outsourcing group Capita will take over contracts to tag criminals from rivals G4S and Serco on an interim basis by April next year, the British government said on Thursday.

Both G4S and Serco are being investigated by the Serious Fraud Office after an audit showed they had charged for tagging criminals who were either dead, in prison or had never been tagged in the first place.

As a result, Britain is reviewing its biggest contracts with the two firms and has barred them from winning new central government work pending the outcome, expected in December.

G4S and Serco hold some of Britain’s largest outsourcing contracts, and generate 10 percent and 25 percent of their revenue, respectively, from the central government.

Justice Secretary Christopher Grayling said Capita, which has already been named a preferred bidder to take on the contract permanently, will now deliver the electronic monitoring service on an interim basis before any new deal begins.

G4S and Serco’s tagging deals expire on March 31, 2014, with a new contract to begin later in 2014. During the interim period Capita will use Serco and G4S’s systems and equipment.

Last month G4S offered to repay 24 million pounds ($40 million) to the government for overcharging on the tagging contract, while Serco has said it will repay any amount due.

Since Britain first raised concerns over the tagging contracts in May, both G4S and Serco have lost their chief executives, launched their own internal inquiries and begun top-down reorganisations to help persuade Britain to continue working with them.

Shares in G4S were down 1.5 percent to 256.4 pence at 1119 GMT, while Serco was down 2.2 percent to 434.8 pence.

Shares in Capita, which runs services such as evaluating whether disability claimants deserve benefits, the pension scheme for the Ministry of Defence, and radios for police forces, were down 1.4 percent to 981 pence.

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