Introduction
What if I told you there exists a multinational corporation with 40+ subsidiary companies across the globe which services a vast array of governmental agencies? And what if I told you this very same corporation has been involved in scandal after scandal, ranging from overcharging governments for electronically tagged inmates, to falsifying billing documents, to mismanaging vital patient information, to drug smuggling enterprises found within their facilities, and finally sexual abuse and terrible living conditions in their immigration/refugee centers? What if I also told you that this same company is protected under “commercial confidentiality” and the details of its inner workings are not open to Freedom of Information requests?
You’d probably ask me, “What is this corporation you speak of?”
Well, this corporation’s name is Serco, and it’s the biggest company you’ve never heard of. And that’s no accident. Since 1987, Serco has quietly and clandestinely taken over many of the world’s public services, and has cleverly avoided too much media attention. That is until in 2013, a taxpayer scandal broke and collapsed its share price. Since then, Serco has been fighting a steady battle in the UK media, with little attention to it in other areas of the world.
So, what is Serco Group?
The Serco Group plc, is a FTSE 250 international service company with more than 50,000 people across four geographical areas: UK and Europe, North America, Asia Pacific, and the Middle East but the majority of its income comes from the UK. Serco’s 41 Companies in its corporate grouping manages people, processes, tech and assets for a variety of government agencies around the world. They also advise policy makers, designs solutions for law makers, and integrates systems that deliver services to the public. Serco Group is publicly traded on the London Stock Exchange.
Until 1987, The Serco Group was RCA Services Limited, the British arm of a fading American conglomerate the Radio Corporation of America. Following the takeover of RCA by General Electric in late 1985, RCA Services Limited was bought out by its local management. It changed its name to Serco in 1987 and has been listed on the FTSE 250 since 1988.
The company boasts over 5 billion in revenue yearly, in British Pounds.
Serco also has a formidable “win rate”, meaning it secures 70% of the contracts it bids for. While that sounds like a pretty impressive track record on the surface, a little more digging reveals Serco’s strong arm tactics of filing suit against the government clients it supposedly serves when things don’t go their way.
Take the case of Serco, Inc V. The United States ( PDF Download: United States Court of Federal Claims Case No. 1:07-cv-00691-FMA ). The lawsuit involved a government-wide acquisition contract (GWAC) awarded by the General Services Administration (GSA) to provide technology products and services to the entire Federal government.
Eight unsuccessful offerors – Serco, Inc. (Serco); CGI Federal Inc. (CGI); STG, Inc. (STG); Artel, Inc. (Artel); Advanced Technology Systems Inc. (ATS); Apptis, Inc. (Apptis); Nortel Government Solutions, Inc. (Nortel); and The Centech Group (Centech) – vigorously asserted that the process GSA used to make the contract awards was “arbitrary, capricious, and contrary to law”. They also asserted that these unlawful errors in the GSA’s award selection system caused prejudice against them, even though they were ranked LAST in terms of cost efficiency, by the GSA.
Francis M Allegra, the presiding judge, granted injunctive relief. What this means is that the GSA was ordered to change the processes by which they select contract awardees to be more favorable to Serco and other high-cost multinationals.
Look, I run a business. Actually, several businesses. If one of my companies was to lose a bid with a potential client, and if we were to raise a law suit against them because we lost, we’d never work in the industry again! This is madness. If we aren’t able to get away with the equivalent of strong-arming clients into contracts, why is Serco not held accountable for the same?
Ohhh yeah…that’s right… they don’t operate in the free market like we “common folk”. Theirs is a world of legal jargon and loopholes and connected players who “scratch one another’s backs”, all the while enjoying the abundance of loot swindled from the public.
Is that case not enough to convince you? How about this more recent lawsuit against Colorado Springs Fleet Maintenance? Serco was demanding a 22 percent price increase for 2017 despite a decrease in the quality of the services. And when the city tried to hold the group to the contract which stated that price increases would be tied to a yearly inflation factor of 2.6 percent, Serco took them to court and asked the judge to declare the agreement void.
This just tells me they don’t like to play fair. And who is going to make them play fair, really? When they can sue the US Government and WIN?
And a recent Guardian article titled, Serco, the company that is running Britain, highlights:
…it [Serco] stands accused of mismanagement, lying and even charging for non-existent work.
Three weeks ago, there came grimmer news. Thanks to its contracts for tagging offenders, the company was now the focus of panic at the Ministry of Justice, where it had been discovered that it was one of two contractors that had somehow overcharged the government for its services, possibly by as much as £50m; there were suggestions that one in six of the tags that the state had paid for did not actually exist.
And this little gem:
Amazingly, its contracts with government are subject to what's known as "commercial confidentiality" and as a private firm it's not open to Freedom of Information requests, so looking into the details of what it does is fraught with difficulty.
What? WHAT? If this isn’t a red flag, I don’t know what is! You realize that this company isn’t just in the UK and Australia and other places around the world. It’s also in the United States, running amok. More about that later.
Serco also had a think tank called The Serco Institute, and while it is now defunct, it put out a variety of reports about the advantages of outsourcing key public services to the private market (like themselves), and that “those responsible for the delivery of public services should be placed at the heart of decisions about the design and construction of the supporting infrastructure.”
I mean, it sounds reasonable enough, right? Well, it’s more corporatism on top of more corporatism. Laying the foundations of lawmaking in their own favor.
Let’s Get Into Serco’s Vast Array of Services
Serco has an icebreaker ship Design, Build, Operation and Maintenance (DBOM) contract with Australia for expeditions to Antarctica.
They provide electronic tagging of offenders and asylum seekers in UK’s Ministry of Justice.
It operates the National Border Targeting Center for UK Visas and Immigration. It runs four prisons, a Young Offenders Institution and a Secure Training Centre. It operates two Immigration Removal Centers, including Yarl’s Wood Immigration Removal Centre in Bedforshire. Remember that name for later.
The group also operates the Santander Cycles scheme in London, and the NorthLink Ferries Northern Isles lifeline ferry service in Scotland. Serco also has a joint venture in which it operates passenger trains in the UK and with the Dutch national rail operator Nederlandse Spoorwegen. Serco also has its fingers in the Caledonian Sleeper between London and Scotland, Merseyrail in Liverpool, the Northern Rail franchise, and also operates speed camera systems throughout the UK and until 2013 the group designed wrote and tested software that controls message signs, traffic signals and emergency roadside phones. They also participated in traffic monitoring on England’s motorway network and the National Traffic Control Centre.
Serco also holds contracts for the maintenance of the Ballistic Missile Early Warning System at RAF Fylingdales, and also for operation and maintenance of RAF Brize Norton, RAF Halton, RAF Northholt, and RNAS Culdrose. Serco also manages many aspects of the Defence College of Management and Technology in Shrivenham.
They maintain and operate air traffic towers in the United States, Canada, and United Arab Emirates. Serco managed airports in Iraq during the United States occupation.
Serco also provides facilities management services and housekeeping at several hospitals in the UK. They also held contracts for out-of-hours general practitioner services in Cornwall until 2013.
The group also held a ten-year contract with Bradford City Council from 2001-2011 to manage and operate the local education authority, providing education support services to the City’s schools.
Serco also handles Drivers’ licensing in Ontario, parking meter servicing for the City of Chicago, and parking enforcement for Inglewood, California.
In 2013 Serco was awarded a $1.25 billion contract to manage the implementation of the Patient Protection and Affordable Care Act.
Science - Serco managed the UK’s National Physical Laboratory until 2015. It also provides IT services and cryogenic maintenance at CERN.
Some other facts about Serco’s services:
They manage and can set Greenwich Mean Time/ZULU.
Serco has 47 staff in Antarctica. What are they doing? I don’t know!
Dog wardens
Department of Defense, Navy Space and
Naval Warfare Systems Command - http://www.serco-na.com/news/press-releases/detail/3064/serco-wins-64-million-spawar-contract-to-assist-navy-with
youth prison in Western Australia https://newmatilda.com/2011/12/15/serco-run-youth-prison/
Possible ICE connection https://www.theguardian.com/us-news/2015/jun/19/serco-immigration-detention-centers-united-states
More Serco stuff https://www.theguardian.com/business/sercogroup
Serco Scandals and Other News
Bradford City Schools
Suicide of 14-year old in Serco-run prison
Serco drug smuggling investigation
Serco instances of inhumane treatment of prisoners
Squalor in Serco’s political asylum housing while contract cost doubles
2017 UK hospital worker strike under Serco’s stewardship
Seven Day Hospital worker strike
https://www.theguardian.com/us-news/2015/jun/19/serco-immigration-detention-centers-united-states
Christmas Island migrant detention center that was condemned by Australia’s top human rights official” https://www.theguardian.com/world/2014/sep/04/ihms-and-serco-likely-to-retain-onshore-detention-centre-contracts
Overcharged taxpayers for tagging prisoners in GB (G4S, a rival company, was also implicated resulting in the two companies repaying nearly 180 BP) https://www.theguardian.com/business/2013/dec/19/offender-electronic-tagging-serco-repay-68m-overcharging in which they were charging the government for tracking dead prisoners
The Serious Fraud Office investigation into the tagging contract continues.
https://www.law360.com/articles/486026
Prisoner transport fraud: https://www.theguardian.com/business/2013/aug/28/police-serco-alleged-fraud
Serco giving NHS false data in a Healthcare contract: https://www.theguardian.com/society/2012/sep/20/serco-nhs-false-data-gps
Failure to provide decent accommodation for vulnerable asylum seekers
Yarl’s Wood Serco asylum seekers detained, staff accused of sexual abuse
Australia. Serco had to make the patrol boats available for a total of 3,600 operating days a year. If they broke down, it was Serco’s problem. In the early years, the Armidales made money for Serco, but from 2008 onwards, Australia faced a sudden increase in asylum seekers attempting to reach the country by sea. Between 2007 and 2012, the numbers leapt from 148 to more than 17,000, and the Armidales were the navy’s chosen means to intercept the migrants’ fragile boats as they approached the coast. The patrol boats were driven harder and faster than ever before. They developed corrosion and cracking in their hulls. Amazingly, for several years, Serco was able to offset any losses from the patrol boats because it also had the contracts to detain the asylum seekers in immigration camps once they landed in Australia. For this work, it was paid on a volume basis – per asylum seeker. The surge in refugees made these contracts the most profitable in Serco’s entire global portfolio, bringing in £450m in 2013.
Colorado Springs Fleet Maintenance https://www.csindy.com/coloradosprings/colorado-springs-faces-lawsuit-over-out-sourced-fleet-maintenance-contract/Content?oid=5057564 The United Kingdom-based firm is demanding a 22 percent price increase for 2017, the fourth year of a five-year deal, saying it's lost money in the first three years. If granted, the hike would drive the price to nearly $8.2 million by adding $1.4 million over the city's 2016 cost — a move that would squeeze the city's already tight budget.
Darryn Kelly’s wrongful termination and the case of Serco’s fraudulent employee hours tracking
In January 2017, Darryn Kelly brought this qui tam action (a writ whereby a private individual who assists a prosecution can receive all or part of any penalty imposed) under the False Claims Act (FCA), 31 U.S.C. §§ 3729–3733, against his former employer, Serco, Inc., a technology and project management services provider, alleging that Serco submitted fraudulent claims for payment to the United States for work done under a government contract. Kelly also asserted claims for wrongful termination under California law.
What I’m understanding from Kelly v Serco is:
Darryn Kelly, an EVMS analyst employed by Serco, reported to DHS in April 2011 that Serco’s reports were inaccurate and falsified due to Serco employees manually tracking their hours in MS Excel Spreadsheets, a practice not compliant with Federal Acquisition Regulation (FAR). FAR required Serco to use EVMS (Earned Value Management System) since Serco’s contract was over 20 Million, which is in turn to be compliant with ANSI-748, a highly detailed report describing budgets and hours, and explaining significant records of direct and indirect costs.
In other words, the ANSI-748 is a highly detailed system of documentation, far more than a simple MS Excel Spreadsheet of manually tracked employee hours. Some of the requirements of ANSI-748 include:
- Define authorized work
- Company integration of EVMS subsystems with Work Breakdown Structure (WBS)
- Identify organization/function for overhead
- Sequential scheduling of work
- Identify interim measures of progress, i.e. milestones, products, etc.
- Establish time-phased budget
- Identify significant cost elements within authorized budgets (isn’t accurate labor cost one of these elements?)
- Identify discrete work packages
- Identify management reserve and undistributed budget
- Record indirect costs
- Explain significant variances
- Identify and explain indirect cost variances
- Implement management actions as result of EVM analysis (This is what Kelly was doing!!)
- Reconcile budgets with prior budgets
- Control retroactive changes
- Prevent all but authorized budget changes
Kelly informed DHS that Serco was falsifying its monthly reports to make its actual costs match the expected budget for the AWS Project. That same month, DHS and SPAWAR determined that EVM reports were no longer necessary or cost-justified for the AWS Project. SPAWAR directed Serco to reduce the number of EVM analysts working on the AWS Project. Kelly’s supervisors at Serco, unaware of his recent report to DHS, terminated Kelly in May 2011. Following his termination, Kelly’s position no longer existed at Serco. Kelly brought a wrongful termination suit against Serco soon after, in combination with the suit he filed under the False Claims Act.
SPARWAR was under contract with DHS to upgrade the wireless communications systems situated along the US-Mexican border. The project became known as the Advanced Wireless Systems Spectrum Relocation Project (AWS Project). SPAWAR, in turn, subcontracted with Serco to purchase
the necessary equipment, perform non-construction
upgrades, and provide project management services for the
AWS Project.
In short, SPARWAR was required to use the EVMS system, and SPARWAR used Serco as a subcontractor on the AWS Project, but as soon as Kelly reported Serco’s EVMS violation to DHS, it appears that SPARWAR and DHS changed the rules and got Kelly fired for reporting Serco’s fraudulent activity.
Why wasn’t this in the news???
Links:
Federal Acquisition Regulation
Earned Value Management System (EVMS)
Earned Value Management System 2
Influence Upon the Courts
I’m fairly sure that such a multinational, wide ranging corporation such as SERCO GROUP has far and wide reach when it comes to getting their fingers into the legal systems of the countries and municipalities it “serves”.
Serco has a vast array of lawsuits in which the company cries about their being treated “unfairly” in contractor selection processes and/or that the local governing agencies suffer from “conflicts of interest and the appearance of partiality”.
It’s a pattern of their rancid behavior.