Unite called for bidding on a vital Ministry of Defence (MoD) contract to be halted today (January 31), after one of the outsourcing firms competing for the work had £1bn wiped of its share price.
This morning, privateer giant Capita issued a profit warning which saw its share value fall by more than 40 per cent. The firm said it needed to raise £700m to restore its finances to health.
The crash in Capita’s share price comes just two weeks after outsourcing behemoth Carillion collapsed, putting 30,000 livelihoods at risk.
Echoing the problem’s that afflicted Carillion, Capita’s new CEO, Jonathon Lewis, said the firm was “too complex”, spread too thinly and “driven by a short-term focus”.
Lewis said it would take at least two years to get the company back on track, with the firm now embarking on a cost cutting programme expected to result in redundancies among Capita’s 50,000 UK staff.
Unite said Capita’s profit warnings should prompt the government to rethink its tendering of an MoD contract for firefighters and defence workers – the result of which is expected to be announced next month.
The workers are employed in both civilian and military roles and are responsible for ensuring the safety of the UK’s military bases both in the UK and abroad, including in war zones.
Between 1,500 to 2,000 workers are expected to be transferred across to the winning bidder.
They provide a 24 hours, seven days a week service, monitoring and protecting all the MoD’s sites, which includes nuclear submarine bases, airfields and ammunition and munition facilities.
The buildings alone are worth in excess of £100bn.
The other bidder for the contract is Serco, who were previously barred from bidding for government contracts following a Serious Fraud Office investigation, which found the company had wrongly billed the government for the electronic monitoring of prisoners who were dead or behind bars.
Unite assistant general secretary Gail Cartmail called for a moratorium on the privatisation of the MoD firefighters’ contract.
“These workers undertake absolutely essential work in protecting MoD buildings, equipment and munitions and the prospect that these workers could swiftly find themselves in the same position as Carillion workers on outsourced public sector contracts, does not bear contemplating,” Cartmail said.
“This is a contract which should never ever have been considered, let alone tendered… Rather than outsourcing essential public services the government should be bringing all its outsourced contracts back in house.”
TUC general secretary Frances O’Grady said Capita’s profit warning was “really worrying” and called on the government to take action across the board.
She said, “We can’t afford another Carillion. The TUC is calling for an urgent risk assessment of all large outsourcing firms. It’s essential the government completes this quickly and is prepared to bring services and contracts in-house if they are at risk.”