Serco Group Plc is one of the private security contractors that is operating asylum seekers’ holding facilities in the UK. The FTSE 250-listed company has been struggling for the last few years with UK government contracts. It overcharged the government for a contract involving the tagging of prisoners, and has taken a financial hit while managing housing for asylum seekers.
However, while Serco has been dealing with declining profits and revenues, it hasn’t stopped the company from being named the preferred bidder to operate the largest correctional facility in Australia. The contract period will be for 20 years, and the value of the contract is estimated to be approximately A$2.6 billion. It comes at a time when the company is busy restructuring, following a decline of 11 per cent in its 2016 revenue.
The New Grafton Correctional Centre is located in New South Wales, Australia and is still under construction. Once the building is completed, it will be the largest facility in Australia to house prisoners. It is anticipated that the facility will become operational in 2020. However, before that, Serco will enter into final contract negotiations.
A Serco spokesperson said that the company is part of the NorthernPathways consortium, which has entered into a public-private partnership with the government of New South Wales. This consortium will be designing, building and operating the facility.
Jefferies Analyst Kean Marden stated that this is the biggest contract that Serco has won since 2012. Marden claims that the contract for the correctional facility in Australia is one of the six big contracts that Serco has in the pipeline.
In recent years, Serco, one of the biggest outsourcers in Europe, has suffered several setbacks due to issues with UK government contracts. It is also dealing with delays in contract decisions due to the uncertainty that the industry is facing on account of Brexit.