On 18 November
2014 the then Coalition Justice Secretary, Chris Grayling MP, made a dry written statement to Parliament on ‘Prison Competition and Efficiency. It was barely noticed, and politics
moved on.
He told Parliament “In November 2012 the
Government announced the start of a new programme of work to drive down costs
across prisons in order to deliver value for money for the taxpayer, accelerate
cost reductions, maximise savings and to improve outcomes without compromising
public safety. The programme included applying a new public sector staffing
benchmark that had been developed by the Prison Service in competition with
private sector bidders during prison competition phase 2 and the competition of
ancillary and through-the-gate resettlement services in public sector prisons.
This approach allows HM Prison Service to
focus on core custodial functions, with private and third sector partners
adding their expertise and experience by delivering efficient and innovative ancillary
and resettlement services.
In June 2013 we announced a competition
for the management of a range of works, maintenance and facilities management
services in public sector prisons. The competition was formally launched in
January 2014, and included: maintenance; works and building projects;
management of prison stores; waste disposal and collection; energy and
environmental management; cleaning; and escorting of contractors and their
vehicles.”
He then stressed: “I can today announce
the outcome of the competition. After a
rigorous evaluation of bids, Amey and Carillion have been selected to run the
services across four geographical areas. (emphasis added)
These are:
Lot 1. Amey—North East, North West,
Yorkshire and Humberside
Lot 2. Amey—East Midlands, West Midlands,
Wales
Lot 3. Carillion—East of England, London
Lot 4. Carillion—South West, South
Central, Kent and Sussex
He concluded: “We intend to award five
year contracts, with expected savings from these contracts in the region of
£115 million over that period. This represents an impressive saving for the
taxpayer. We expect the new providers to start delivering these services on 1
June 2015, following a period of mobilisation. Robust arrangements will be in
place to manage the new contracts.” (Hansard,
Column 7WS)
Two years later the Carillion Annual
Report 2016 included the following paragraph
Our
risk management framework
The
Group’s policy is to ensure that all risks are identified, evaluated and an
appropriate response determined prior to any
commitment
being made to any other party.
This policy is supported
by clear guidance on process and procedures, risks that are unacceptable to the
Group and practical guidance for the management of risk at all levels
throughout the business. (emphasis added)
[…]
The
Board continues to be responsible for determining the Group’s risk appetite in
pursuit of its strategic objectives and for maintaining a robust system of risk
management (including regular reviews of principal risks)
to mitigate any potential impacts associated with these risks.
(((http://annualreport2016.carillionplc.com/downloads/Carillion_Principal_risks.pdf)
Our principal risks Group’s principal risks are analysed on a gross and net risk basis The occurrence of the above risks could have a significant impact on the ...
Operational risk management – Carillion
Our principal risks Group’s principal risks are analysed on a gross and net risk basis The occurrence of the above risks could have a significant impact on the ...
Operational risk management – Carillion
Our risk management process
The Group has a long-established process and
methodology for the identification, quantification, monitoring and management
of the principal
It
concluded: “During 2016, the Group has
maintained its comprehensive
approach to contract management and there has been no change in the nature of
contracts being delivered by the Group.” (emphasis added)
The Annual Report outlined the following glowing future for the
conglomerate:
Performance in
line with expectations
·
Total
revenue growth of 14 per cent, primarily organic
·
Performance
led by growth in support services
·
Support
services contributed over two thirds of total operating profit and more than
offset expected reductions in profit from Public Private Partnership projects
and Middle East construction services
·
Underlying
operating margin lower as expected at 4.9 per cent (2015: 5.3 per cent)
·
Underlying
profit from operations fully cash-backed – cash conversion 117 per cent
·
Net
borrowing of £218.9 million at 31 December 2016 (2015: £169.8 million) and
average net borrowing for 2016 of £586.5 million (2015: £538.9 million) with
the increases mainly reflecting adverse movements in foreign exchange rates
High quality
order book and strong pipeline of contract opportunities
·
£4.8
billion of new orders and probable orders in 2016 (2015: £3.7 billion)
·
High-quality
order book plus probable orders worth £16.0 billion at 31 December 2016 (2015:
£17.4 billion)
·
Revenue
visibility for 2017 of 74 per cent (2015: 84 per cent for 2016)
·
Expect
over £1.5 billion of revenue from framework agreements not yet included in
orders, probable orders or revenue visibility
·
Substantial
pipeline of contract opportunities worth £41.6 billion (2015: £41.4 billion)
Proposed
full-year dividend increased by one per cent to 18.45p (2015: 18.25p)
Strategic review
Chief
Executive’s strategic overview
Building trusted relationships with customers and
using all our resources and skills in an integrated way helps us to win
high-quality contracts and deliver services safely, sustainably and to
best-in-class standards.
Strategy
As one of the UK’s leading support
services companies with a substantial portfolio of Public Private Partnership
projects, extensive construction capabilities and a sector-leading ability to
deliver sustainable solutions, Carillion offers a wide range of services across
markets in the UK, Canada and the Middle East.
This wide range of expertise enables
the Group to provide bespoke, integrated solutions for buildings and
infrastructure, from project finance through design and construction to
life-time asset management, together with business support services that add
value for our customers and the communities in which we operate.
In several key markets the Group
performed well, notably in a number of our support services sectors in each of
our geographies, while trading conditions in construction markets in the Middle
East and in Canada, continue to be challenging.
In order to continue building a
business that delivers sustainable, profitable growth, we have refined our
strategy to focus on
- winning high-quality
contracts in our chosen markets
- delivering contracts
safely, sustainably and to best-in-class standards
- developing and attracting
excellent people and capabilities
Priorities for
2017
Our priorities for 2017 are to
accelerate the rebalancing of our business into markets and sectors where we
can win high-quality contracts and achieve our objectives for margins and cash
flows, to manage the positions we have in challenging markets and to begin
reducing full-year average net borrowing.
To accelerate the rebalancing of our
business, we will become even more selective when choosing the contracts for
which we bid and continue adapting to trends in our geographies and markets in
order to focus on new and growing opportunities, such as those we expect in our
infrastructure markets in the UK and Canada. To reduce full-year average net borrowing
we will maintain strong cash generation, with an increased focus on managing
working capital, and review the allocation of capital and other resources
across the Group, which will also support the rebalancing of the business.
As always, there are risks and
uncertainties, details of which are set out on pages 32 to 37, that may affect
our ability to deliver these priorities. However, we have a strong and
committed management team whose personal objectives and performance related
remuneration have been specifically set to support the delivery of the Group’s
priorities for 2017.
And
here is how a tiny number of opposition MPs attempted to scrutinise Carillion
contracts in Parliament in the past year.
(Hemsworth)
Asked
on: 05 January 2018
Cabinet
Office
Carillion
Commons
121316
To
ask the Minister for the Cabinet Office, when the position of Crown
Representative to Carillion was vacant during the last 12 months.
A
Answered
on: 10 January 2018
This Government recognises the importance
of managing relationships with Strategic Suppliers and their performance on a
cross-Government basis, and has developed a range of strategies to do this,
including the use of Crown Representatives.
The role of Crown Representative for
Carillion was vacant for three months between August and November 2017. During
this period, the Crown representative responsibilities were covered by the
Government’s Chief Commercial officer and the Cabinet Office Director of
Markets and Suppliers
Q
(Hemsworth)
Asked
on: 23 November 2017
Cabinet
Office
Carillion
Commons
115303
To
ask the Minister for the Cabinet Office, what risk was identified during the
procurement process that identified Carillion as a service delivery contractor
to (a) the operation of public services and (b) value for money of the
potential effect of Carillion plc going into administration.
A
Answered
on: 28 November 2017
It is the responsibility of the
Contracting Authority to ensure it is compliant with EU procurement legislation
during any procurement process. Contracting Authorities will assess the risk of
appointing any given supplier, and this will be tailored to the requirements of
the specific procurement.
(Hemsworth)
Asked
on: 22 November 2017
Cabinet
Office
Carillion
Commons
115143
To
ask the Minister for the Cabinet Office, whether a Crown Representative has
been assigned to Carillion.
A
Answered
on: 28 November 2017
As Carillion is a strategic supplier to
Government, they have been assigned a Crown Representative.
Q
(Bradford East)
Asked on: 10 November 2017
Ministry of Justice
Prisons: Repairs and Maintenance
112210
To ask the Secretary of State for Justice, whether he has
plans to review the prison maintenance contracts with GEOAmey and Carillion.
A
Answered on: 23 November 2017
We are currently engaged in a joint review with providers
and key stakeholders, to consider what changes in the current FM contract
arrangements are required to deliver an improved service to HMPPS. Detailed
design solutions are being reviewed by a Steering Group, composed of senior
managers from the organisations involved, with a view to implementing changes
which should result in a more responsive reactive maintenance provision, as
well as improvements to the systems and processes required to manage the
contracts effectively.
In the interim we continue to manage and monitor
performance closely through the current contractual processes.
Carillion:Written question -
HL1335
Q
Asked
on: 05 September 2017
Department
for Transport
Carillion
Lords
HL1335
To
ask Her Majesty's Government what discussions they have had with
representatives of (1) HS2 Ltd, and (2) Carillion, about the use of
discrete project bank accounts in relation to Carillion's HS2
contract, with regards to the protection of SME sub-contractors
from late payments.
A
Answered
on: 14 September 2017
I can advise that the Department for
Transport has not had any discussions with either HS2 Ltd or Carillion
regarding the use of discrete project bank accounts in relation to HS2
contracts.
Asked
on: 05 September 2017
Cabinet
Office
Carillion
Lords
HL1334
To
ask Her Majesty's Government what assessment they have made of the
current financial situation of Carillion; and what consideration they have
given to mandating the use of bank accounts in England for public
infrastructure projects in order to protect smaller sub-contractors on such
projects.
A
Answered
on: 14 September 2017
The Cabinet Office tracks the financial
status of all of HMG’s Strategic Suppliers and manages risks accordingly.
Carillion plc is a Strategic Supplier to Her Majesty’s Government, publicly
listed company and is required to comply with all rules and regulations of the
London Stock Exchange. We are expecting the company to be publishing its
half-year results on the 29th September.
The Government Construction Strategy, as
set out by the Infrastructure and Projects Authority (IPA), does not mandate
the use of Project Bank Accounts (PBAs) in England for public infrastructure
projects. However, the policy states they are recognised as an effective
mechanism for facilitating fair payment to the construction supply chain and
that departments have committed to use them unless there are compelling reasons
not to do so. The use of PBA’s can be found in the Government Construction
Strategy, which can be found here: https://www.gov.uk/government/publications/government-construction-strategy-2016-2020.
Government Construction Strategy (PDF Document, 518.42 KB)
(Delyn)
Asked
on: 10 July 2017
Ministry
of Justice
Prisons:
Repairs and Maintenance
Commons
3715
To
ask the Secretary of State for Justice, what the cost was of contracts tendered
out for prison maintenance by (a) prison and (b) private sector service
provider in each year since 2010.
A
Answered
on: 18 July 2017
It is right that prison repair work is
carried out in a timely and effective manner to ensure public protection. We
always work to ensure we achieve value for money for the taxpayer and keep our
costs under review.
The most recent applicable data available
for the period requested is from 2012, when Mitie Care and Custody Ltd took
over the provision of facilities management (FM) at HMP Brixton, later
expanding to cover three sites. Until June 2015, FM services at the rest of the
public-sector prison estate was delivered in-house by Her Majesty’s Prison and
Probation Service (HMPPS). Since then, it has been delivered by Amey Community
Ltd and Carillion Plc.
Below is a breakdown of the applicable
tendered fixed costs for each of the three private sector service providers
broken down by year as requested. These contracts were tendered on a ‘lot’
basis and as such costs are not broken down by establishment. The number of
establishments/sites within each package has been included below for
completeness:
|
Custodial
Facilities Management: Tendered Fixed Costs (Excludes Indexation and variable
works)
|
|||||||
|
Year
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
Total
|
|
Mitie
Care and Custody
|
|||||||
|
Lot
C: Various: 3 Sites
|
£2,189,000
|
£2,810,000
|
£2,843,000
|
£3,055,000
|
£3,500,000
|
£3,529,000
|
£10,084,000
|
|
Amey
Community Limited
|
From
June 2015
|
||||||
|
Lot
E: North East, North West, Yorkshire Humberside: 34 Sites
|
N/A
|
N/A
|
N/A
|
£11,780,000
|
£23,560,000
|
£23,560,000
|
£58,900,000
|
|
Lot
F: East Midlands, West Midlands and Wales: 27 Sites
|
N/A
|
N/A
|
N/A
|
£9,340,000
|
£18,680,000
|
£18,680,000
|
£46,700,000
|
|
Carillion PLC
|
From
June 2015
|
||||||
|
Lot
G: South West, South Central, Kent & Sussex: 32 Sites
|
N/A
|
N/A
|
N/A
|
£9,880,000
|
£19,760,000
|
£19,760,000
|
£49,400,000
|
|
Lot
H: Greater London and East of England: 22 Sites
|
N/A
|
N/A
|
N/A
|
£10,020,000
|
£20,040,000
|
£20,040,000
|
£50,100,000
|
|
Totals:
|
£2,189,000
|
£2,810,000
|
£2,843,000
|
£44,075,000
|
£85,540,000
|
£85,569,000
|
£215,184,000
|
(Cardiff
Central)
Named Day
'Named day' questions only occur in the
House of Commons. The MP tabling the question specifies the date on which they
should receive an answer. MPs may not table more than five named day questions
on a single day.
Asked
on: 22 February 2017
Ministry
of Justice
Carillion
Commons
65009
To
ask the Secretary of State for Justice, whether her Department carried out an
impact assessment in the effect outsourcing repairs and maintenance in prisons
to Carillion would have on the amount of work available to prisoners.
A
Answered
on: 27 February 2017
Owing to the variability of work available
to prisoners across over 100 individual prison establishments, it was not
possible to undertake an impact assessment on the effect on the amount of work
available to prisoners prior to the contracts being implemented.
However, we have ensured that the contract
with Carillion requires them to maximise the use of prisoner labour, subject to
local security strategies agreed with the Governors for individual
establishments. The specification for Prisoner Labour and Prison Industries in
the contract requires Carillion to utilise as much prisoner labour in the
delivery of services as was used prior to the contract coming into force.
Under the maintenance contract Carillion
are told how many prisoners are available for work on a daily basis and are
required to provide the necessary support and supervision resource to oversee
the work of the prisoners.
(Berwick-upon-Tweed)
Asked on: 07 December 2016
Ministry of Defence
CarillionAmey
56549
To ask the Secretary of State for Defence, whether the
Defence Infrastructure Organisation (DIO) has reimbursed CarillionAmey for the
purchase of 3,000 boilers approved by DIO to ensure winter boiler breakdown
requirements are met in accordance with key performance indicators; and if he
will make a statement.
A
Answered on: 12 December 2016
The Defence Infrastructure Organisation (DIO) has not
reimbursed CarillionAmey for the purchase of any boilers. The replacement of
3,000 boilers has been directly funded by DIO under a capital works life cycle
replacement programme and are scheduled for replacement in Service Family
Accommodation (SFA) by March 2017. Approximately 1,000 boilers have already
been replaced under this programme.
This is in addition to approximately 1,000 boilers being
replaced by CarillionAmey as part of the National Housing Prime contract.
Boiler replacement is a core service under this contract and thus will be paid
for under the normal contractual arrangements.
By the end of Financial Year 2016-2017 approximately
5,585 SFA boilers will have been replaced in total under the above works.
In line with previous years, DIO is monitoring closely
the heating situation within SFA during the winter months to ensure any
potential problems are identified and resolved quickly.
*The Cabinet
Office's top brass officials gave oral evidence
to the Public Administration and Constitutional Affairs Select Committee
on 15 January 2018 , and were grilled on
Carillion contract mismanagement. It was like a scene from Alice in Wonderland!
Witnesses:
Sir Jeremy Heywood, Cabinet Secretary, John Manzoni, Permanent Secretary, and
Rupert McNeil, Chief People Officer, Cabinet Office
You
can start from the beginning at:
|
And here are two construction sector
business press articles on Carillion, which were not being watched properly
by decision makers.
|
Tenders open for £12bn
government FM framework
Construction News, 9 January, 2018
The Crown Commercial Service (CCS) is
inviting tenders for its new £12bn facilities management framework.
The deal will replace the previous £4.1bn
FM framework that was set up in 2015 and is due to expire in July 2019.
It will run from May 2018 to May
2020, with an option for it to be extended up to 2022.
CCS expects government departments,
including the Ministry of Defence, the NHS and central and local government, to
procure as much as £12bn of work through the framework, with individual
contracts worth as much as £1.2bn.
The deadline for tenders
is 12 February and a spokesperson for the CCS said it
plans to announce the successful bidders in May, when the framework becomes
operational.
Unlike its predecessor, the
new framework is open to joint ventures and consortiums.
CCS said it has had a number of enquiries
from companies interested in delivering services through such arrangements.
However, the client added that any JV or
consortium will need to have a lead partner or be a new legal entity if it is
to deal with the CCS.
The previous framework featured a number
of major construction companies.
Carillion secured places on all three lots, while Amey, Bouygues, Galliford Try, Interserve, Kier and Mitie also
won places.
The new deal covers hard FM, encompassing
building and infrastructure works, as well as soft FM, comprising services for
personnel and organisations.
Carillion named on £4.1bn
government services framework
Construction News, 10 August 2015
Carillion has been selected for all three
lots on a new government services framework worth up to £4.1bn over the next
four years.
Carillion was selected alongside Emcor UK
and Sodexo for all three lots of the new facilities management service
agreement, designed to save the government more than £200m up to July 2019.
In total, 16 other suppliers secured one
or more lots on the new framework, which includes total facilities management,
hard facilities management such as mechanical and electrical maintenance, and
soft facilities management such as cleaning and security.
It is hoped that the new framework,
through which the government expects to spend between £1.3bn and £4.1bn, will
create a more efficient and simplified system for public sector customers
accessing facilities management.
They
do not have the management to run the MOD estate, how will they manage this
one?
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