A company which runs bail hostels has been put on probation after a resident was brutally murdered.
The Ministry of Justice said Clearsprings was issued with a demand to improve its performance earlier this month. Its contract, worth nearly £6 million last year, could be cancelled if it fails to act.
The company, which runs 204 hostels, was issued with a rectification notice after a judge criticised controls at a hostel in Stockton, Teesside.
Judge Peter Fox QC said Mark Bradshaw's life might have been saved if tighter controls had been in place.
Bradshaw, 24, was repeatedly stabbed by two other inmates, Kelvin Benson and Sean McGovern. Benson's girlfriend Leanne Steanson was staying with him at the time in breach of rules, and the court heard she egged the killers on.
According to Stockton's Evening Gazette, Judge Fox, the Recorder of Middlesbrough, said Bradshaw's life could have been saved if the failings had been identified.
Sentencing the killers he said: "What I've heard, if it's accurate, discloses some disturbing circumstances. In particular how a person or persons can be there, apparently living there for some days, when they shouldn't be.
"I would invite further inquiries as to who has the responsibility for running this hostel and why the matters I've heard, if they're right, were not picked up and acted upon. That would have saved a life."
A review of standards was ordered after details of the case became known.
Clearsprings was given 15 days from November 13 to come up with a plan to improve its performance.
An action plan was then put in place which will be monitored by officials. Ultimately the contract could be terminated. It expires next June.
A department spokesman said that outcome was "a long way off".
Shadow Justice Secretary Dominic Grieve said: "There have been previous criticisms of the way these hostels are functioning and how the Government set about facilitating their opening.
"The Government has to answer the question whether the contract terms under which Clearsprings operates are actually appropriate for the people who live there.
"That is the Government's responsibility as much as Clearsprings'."