More than two-thirds of Government contracts held by the controversial outsourcing giants Serco and G4S are open to fraud and error, ministers have admitted.
An official investigation into £5.9bn of outsourcing contracts held by the firms found evidence on Thursday of "inconsistent management" in 22 out of the 28 deals across eight Government departments and agencies. In the majority of the contracts, the review found that there were "key deficiencies" in invoice and payment processes that could lead to overcharging.
The review was ordered in the wake of the scandal involving Serco and G4S's tagging contracts.
Serco on Thursday agreed to repay the Government £68.5m. The scandal concerned the Ministry of Justice being charged for tagging people who were found to be dead, back in prison or overseas. Both Serco and G4S are currently being investigated by the Serious Fraud Office.
It was those disclosures earlier this year that sparked the review of all contracts held by both companies. It found that in 17 of the contracts, the civil servants in charge of them did not have the "knowledge and capacity required to ensure the contract is being delivered effectively".
It also ordered further investigation into several "Work Programme" contracts where "the possibility of errors or irregularities and their impact was potentially more significant".
Bill Crothers, chief procurement officer for the Government, who led the review, said it was clear the Civil Service needed more skills to ensure value for money in such contacts. "We need the very best commercial skills to be able to make the most of these opportunities, and we know that these skills are not yet strong enough across Government," he said.
In a separate report, the Justice Secretary, Chris Grayling, said that problems with two further contracts held by G4S, for facilities management in the courts, has been uncovered. These related to invoicing, delivery and performance reporting and have been referred to the SFO.
Serco also agreed to repay £2m to the MoJ following the discovery that members of Serco staff had been recording prisoners as having been delivered to court when they had not.
As a result, Mr Grayling said, both G4S and Serco have decided to withdraw from the MoJ competition for rehabilitation services.
Frances Crook, chief executive of the Howard League for Penal Reform, said this was a welcome development: "Given the abject failure of the ministry to look after taxpayers' money when managing contracts, this must surely be the death-knell for the Government's dangerous gamble with justice privatisation."