Serco
Serco Group plc is a British multinational defence, health, space, justice, migration, customer services, and transport company. It is headquartered in Hook, Hampshire, England. The company operates in continental Europe, the Middle East, the Asia Pacific region, including Australia and Hong Kong, and North America. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.
The company was founded as RCA Services Limited in 1929, a UK-based division of the Radio Corporation of America. The company began providing technical and engineering services to the British War Office during the Second World War. During the Cold War era, it specialised in the provision of defense systems engineering and facilities management services, including the maintenance of sonar, early warning radar and satellite systems. Following a management buyout, the firm changed to the name Serco in 1987 and was listed on the London Stock Exchange one year later. The company was restructured during the 1980s, reorientated itself towards services beyond engineering, and expanded its presence globally.
Serco has encountered controversy, described by legal services firm Appleby as a "history of problems, failures, fatal errors and overcharging". During 2013, then-chairman Alastair Lyons resigned from the company after it was found that it had overcharged the UK Government for electronically monitoring criminals. Serco underwent a corporate renewal programme during the 2010s, created in collaboration with the United Kingdom government, which overhauled the management of contracts and commercial auditing.
History
RCA Services
Serco was founded in 1929 as RCA Services Limited, a British-based division of the Radio Corporation of America, and initially provided technical services to the cinema industry.RCA Services Limited began providing services to government departments during the Second World War. After the onset of the conflict, the company was contracted by the British War Office due to the company's engineering and technical background to supply the department with equipment which would simulate the sound of warfare to confuse the enemy. During 1952, RCA Services was contracted to produce submarine-detecting sonar equipment for the United States Navy. In 1960, it was awarded the contract to design, install, and maintain the UK Ministry of Defence Ballistic Missile Early Warning System, including ongoing facility management such as cleaning, transport, and logistical stores.
In the 1980s, the European Space Agency contracted RCA Services to support and maintain computer systems and satellites.
Reinvention as a management company
By the 1980s, RCA Services began to interpret their company product as the management, rather than being just an engineering and science company. For their MoD Radar contract at RAF Fylingdales, "the art, it turned out, was in running the people, not the radar." During 1984, RCA Services was awarded the Ministry of Defence's first outsourcing contract, under which it managed warehousing using the knowledge of staff who had completed similar work at RAF Fylingdales.Following the takeover of RCA by General Electric in late 1985, RCA Services Limited was bought out by its local management. During 1987, the firm changed its name to Serco and became a London Stock Exchange listed company one year later. By 1990s, Serco had expanded from the United Kingdom and Europe, developing a global presence with major activities in Hong Kong, Australia, New Zealand, and North America.
During December 2008, Serco acquired SI International, a provider of IT services to the United States government in exchange for $524 million.
Controversies and restructuring
During 2013, both Serco and its competitor G4S were found to have maintained inaccurate records and overcharged the UK Government for electronically monitoring criminals. In November 2014, its share price, which stood at 674p before the taxpayer scandal broke in 2013, collapsed to 218.7p, after four profit warnings. That same month, it was announced that Alastair Lyons, the chairman of Serco, was resigning from his position. Speaking at the time, Lyons referred to "operational mis-steps" for which he took "ultimate responsibility", but said he had not been forced out.In 2014, Serco incurred a loss of £991million, which was followed by a smaller loss of £69.4million in 2015. In response, Rupert Soames, Lyons's successor as chief executive, sold off "scores of divisions". Soames stated that Serco was suffering from ministers’ improved ability at driving a bargain, and claimed that "the Government has got much more adept at writing contracts and transferring risk to the private sector". Following an 8-year long investigation and trial, Serco's executives at the time were cleared of fraud charges in April 2021.
Corporate renewal
Following the events of 2013, Serco underwent a Corporate Renewal Programme designed by the company and the United Kingdom government which overhauled the company's contract management and auditing processes. By 2019, Cabinet Office publicised that "the remedial actions taken in 2013-14 were sufficient with regard to this incidence of wrongdoing".During September 2017, Serco announced that it was in the process of combining its UK and Europe operations.
John Rishton was appointed as Non-Executive Chairman in Spring 2021, succeeding Sir Roy Gardner who held the position from May 2015. Rishton had been on the Board since September 2016.
In August 2022, Serco announced that it would distribute £9million in one-off payments to about 45,000 non-management staff as the firm lifted its profit guidance and dividend; this amount equated to around £200 for each of its 45,000 workers.
In December 2023, Serco acquired European Homecare, a specialist provider of immigration services to public sector customers in Germany, for €40 million.
UK operations
Defence
By 2004, Serco held numerous defence contracts, including the UK Government's contract for the maintenance of the Ballistic Missile Early Warning System at RAF Fylingdales. The MoD extended Serco's contract in October 2022 for a further three years, under which the company provides maintenance, repair, and operational services for the radar in Yorkshire, England. Serco has contracts for the operation and maintenance of RAF Brize Norton, RAF Halton, RAF Northolt and RNAS Culdrose in the UK and RAF Ascension Island in the mid-Atlantic.Serco provides support services to garrisons in Australia. Serco manages many aspects of operations at the Defence Academy of the United Kingdom in Shrivenham. Prior to June 2021, Serco was one of three partners in the consortium who managed the Atomic Weapons Establishment until it was taken over by the MoD: in July 2015, the Office for Nuclear Regulation issued an improvement notice to the consortium demanding that it demonstrate that it has a long-term strategy for managing Higher Active radioactive Waste in order to reduce the risk to the public and its employees.
Serco is a major subcontractor to Airbus Defence and Space on the Skynet military communications satellites under a private finance initiative contract.
Serco Marine Services is responsible for fleet support at the three main UK naval bases, HMNB Portsmouth, HMNB Devonport and HMNB Clyde. In November 2022, the MoD awarded Serco a £200million follow-on contract, lasting 27months, to provide marine services for the Royal Navy.
Transport
In London, Serco has operated the London Cycle Hire Scheme for Transport for London since it was first introduced in 2010. During December 2022, Serco signed a three-year contract extension valued at £50million to continue maintaining and distributing the bikes, including the newly introduced e-Bikes.Serco has operated a number of train operating companies. It has a 50% shareholding in Serco-Abellio that has a concession to operate the Merseyrail franchise in Liverpool until 2028, and previously operated the Northern Rail franchise from December 2004 until March 2016. Between April 2015 and June 2023, Serco operated the Caledonian Sleeper between London and Scotland; the contract was terminated early after Serco's request to rebase the loss making contract was deemed by Transport Scotland to not offer value.
In 1997, Serco purchased the Railtest business as part of the privatisation of British Rail. Included in the sale was a management contract for the Old Dalby Test Track. Between 1997 and 2004, Serco operated the National Rail Enquiry Service under contract to the Association of Train Operating Companies. It maintains Network Rail's fleet of infrastructure and maintenance trains at the Railway Technical Centre.
In Scotland, Serco has operated the NorthLink Ferries ferry service since July 2012. In September 2018, the firm commenced operating a bicycle-sharing system under contract to Transport for Edinburgh; these scheme was closed during September 2021.
Serco's Home Affairs division operates speed camera systems throughout the UK and, until November 2013, designed, wrote and tested the software that controls the matrix message signs, signals, emergency roadside telephones and traffic monitoring on England's motorway network including, until 2011, the National Traffic Control Centre.
Starting in 1997, Serco operated the London's Docklands Light Railway under franchise. In November 2005, TfL announced that Serco had retained the DLR franchise for seven years from May 2006; this contract was extended until September 2014 in January 2013. However, in July 2014, the DLR franchise was awarded to KeolisAmey Docklands Limited, thus Serco handed over operations on 7 December 2014.
Serco operated Scatsta Airport in Shetland until its closure in 2020. During June 2010, Serco signed a £4million contract to operate all air traffic control services for Coventry Airport.