February 22, 2018 / 12:43 PM / 7 months ago

Serco's Soames calls for end to "Wild West" in UK outsourcing

EDINBURGH, Feb 22 (Reuters) - Britain’s Serco has called for more transparency from the government over the award of public contracts to protect companies after rival Carillion went bust, saying the market should not be a “Wild West”.

Carillion, which took on large infrastructure projects as well as service contracts, collapsed in January largely because of problems with its public building works.

Critics accuse the government of encouraging a risk-taking culture in which companies bid aggressively for contracts with thin margins, leaving little leeway when projects hit predictable delays.

Serco Chief Executive Rupert Soames said both sides shared the blame for the current problems and called for the public contracting system to be overhauled.

“The market can’t be just be the Wild West in terms of providing government services,” said Soames, who is a grandson of British wartime Prime Minister Winston Churchill.

“What we have said to the government is that investors will accept that you don’t make a lot of money on government contracts,” Soames told financial analysts after annual results.

“What they will not accept is that your whole business will be blown up and go bankrupt because of the unlimited liability and risk transfer,” he added.

Much of Britain’s public sector, from running trains to maintaining nuclear warheads and operating prisons, is run by private companies.

“There should be a rational documented and formal process on make-and-buy decisions on every area of government policy delivery,” Soames added, saying the current system gave too much freedom to individual ministers or civil servants.

Serco said earlier on Thursday it expected to emerge as one of the winners from the turmoil hitting the outsourcing sector after it reported 2017 results in line with its expectations and predicted profit growth for the next two years.

Serco, which provides justice, transport, defence and welfare services for governments across the world, is in the latter stages of a five-year restructuring. (Reporting by Elisabeth O’Leary; Editing by Keith Weir)

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