Serco Group plc (‘Serco’ or ‘the Group’), the international service company, in July 2018 launched a legal challenge to the award of the Defence Fire and Rescue Project (DFRP) tender, as previously noted.
We have now reached a commercial settlement with the UK Ministry of Defence (MOD) under which Serco will withdraw its legal challenge and the MOD will pay Serco £10m. This settlement will allow the MOD to move forward with modernising the UK Armed Forces’ safety-critical fire and rescue service and avoid further delays to the DFRP project while also minimising legal costs to both parties.
Kevin Craven, Serco CEO UK & Europe, said: “Serco is pleased that we have reached an amicable and constructive agreement with the UK Ministry of Defence. We also welcome the announcement that the MOD has commissioned an independent review into this procurement to be led by Tony Poulter, a non-executive director at the Department for Transport, and we look forward to contributing to this review.
“DFRP will bring service improvement and the critical safety of the UK’s Armed Forces has been uppermost in our minds. There is a pressing need for investment in new vehicles, training facilities and transformation to modernise the approach to fire prevention and response, and we support the MOD’s desire to make a start on this important project. We wish Capita and the MOD well in the roll-out of this vital work.
“We now look forward to continuing and developing our relationship with the UK Ministry of Defence, which is one of Serco’s key customers.”
This settlement, as a material one-time item, will be excluded from Underlying Trading Profit and therefore has no impact on previously stated guidance for 2019.