Defense contract company Serco secured a deal to provide maintenance, operational and other support services at the Royal Air Force missile detection and early warning base at Fylingdales, England. The announcement comes days after UK lifted a ban on the company following a scandal concerning overcharging on two contracts. (Wikimedia Commons)
LONDON — Serco is set to announce its first defense-contract win just days after the UK lifted a ban on the outsourcing giant following a scandal concerning overcharging on two Ministry of Justice contracts.
Serco beat rivals Babcock to a Ministry of Defence deal to provide maintenance, operational and other support services at one of the most sensitive military sites in the UK: the Royal Air Force missile detection and early warning base at Fylingdales in northern England.
A MoD spokesman confirmed the Serco bid trumped Babcock’s effort to secure the Fylingdales work.
“Serco has been awarded a six-year, £15 million contract for the operation and maintenance of the solid state phased array radar at RAF Fylingdales,” said the spokesman.
An official announcement could come as early as Monday that the embattled outsourcing company has been successful in retaining a contract it has held since its formation in 1988.
The size of the deal is small but it comes at a significant moment for Serco just days after the government lifted a contract embargo which has been in place for several months after the company was caught overcharging on two prisoner contracts here.
The company, which has a growing presence in the US outsourcing market, including in the defense sector, issued a profits warning Jan. 30 citing the near-term negative impact on it’s order pipeline and profitability caused by the investigation.
With the government contract freeze lifted, Serco is also awaiting an imminent decision from the MoD on whether it won a bid to be the private sector partner to help manage the Defence Infrastructure Organisation.
That deal, which could be worth up to £400 million, sees a Serco consortium involving Bechtel and DTZ take on Capita and Telereal Trillium teams.
The DIO contract will run for 10 years and see the winning strategic partner help manage barracks, storage facilities, naval bases and other assets.
Acting CEO Ed Casey said at the time of the profits warning, the government’s positive assessment of its corporate renewal plan meant that Serco “can now be considered on an equal basis to other suppliers for current bids ... such as the DIO opportunity.”
Serco has already paid back millions of pounds in overcharges and remains under investigation by the Serious Fraud Office over the allegations.
The company has been able to bid for government work during the freeze but has been blocked from actually being awarded work.
No MoD contracts were involved in the Serco fraud and a government investigation across all deals it has with the outsourcing contractor gave a clean bill of health in the defense sector.