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Group 4 won jail contract with surprise low bid

GROUP 4, the security company which won the right to manage Britain's first privately-run prison, surprised officials with an offer pounds 3.5m lower than their own benchmark for the five-year contract, writes Chris Blackhurst.

When the Home Office decided to invite bids for the Wolds remand centre in Humberside, they reckoned on a price of pounds 25.18m. In fact, Group 4 offered pounds 21.5m. The details are contained in a report published today by the National Audit Office, the public spending watchdog. Group 4's bid was not the lowest - that was pounds 19.5m from an undisclosed company.

The NAO said teething difficulties have arisen over payments for damage caused through vandalism by prisoners. In one three-month period, Group 4 submitted 119 claims for damage totalling pounds 15,000, excluding labour charges.