War Profiteer of the Month: Serco

In 1964 Serco was awarded the first ever private contract for managing a British military site - the maintenance of the UK Ballistic Missile Early Warning System at RAF Fylingdales. This was a radical move in 1960s Britain, where nationalised industries and state control of "vital" sectors such as defence was the expected norm. This pioneering approach to exploiting the market in public services was well ahead of its time.

Since then Serco Group plc has grown and grown, becoming an international “service company” with a portfolio that takes in everything from schools to nuclear weapons, via prisons and swimming pools. The percentage of revenue from defence contracts is typically between 25% and 29% and comes from supplying a wide range of services to militaries in the US, UK, Germany and Australia. Serco can be seen working as a joint venture with Sodexho in Australia (as Serco Sodexho Defence Services).

In 2004 the Group ventured into Iraq and won the contract to restore air traffic control services to Baghdad and Basra airports. Widely criticised in the US at the time, in 2007 Serco was hired to oversee the US military's largest contract – and contractors - in Iraq, a reportedly US$150bn ten-year contract with Fluor, DynCorp and KBR. The Group's role is to "analyze performance contractors' costs," "work with the Army to measure contractor performance" and "recommend process improvements." According to Truth Out the company “also serves as a liaison between the other three contractors, and between the contractors and the government”. The Group can be found pimping itself at http://www.iraqsupplier.com.

In Britain the Group has an additional angle in that it is also part of the joint venture company (AWE-ML) which holds a 25-year, £5.3bn contract to manage the UK's Atomic Weapons Establishment – the factory where Britain's nuclear weapons are built and maintained. Which really puts them in the “genocide profiteers” category.

Public Private Partnerships

As governments worldwide feel the squeeze on public borrowing to supply public services, companies like Serco have manoeuvred themselves into positions that enable them to profit massively from the resulting Public-Private-Partnership (PPP) schemes such as Private-Finance-Initiative (PFI).

These public-private funding arrangements essentially allow governments to hide collective debt by letting private companies raise the finance for projects that, traditionally - in countries like Britain - have been entirely state-funded.

Recent business

Serco's interim investor report for 2008 highlights their continued growth, with an 20% increase in pre-tax profits, £2bn of new contracts and an order book of £15.1bn. Significant recent “wins” for them include: defence support - UK Naval Air Command (£76m); US defence - Aviation Technical Maintenance and Support Services (US$167m); Australia Garrison Support (AUS$175m). Overall the group saw an increase of 11.3% in revenue from its defence contracts.

At the end of 2008 Serco acquired SI International for US$423m. SI International (SINT) is a US technology outsourcing company whose clients include intelligence community, Army, Air Force, Navy, State and Homeland Security departments, 46% of its contracts from the Department of Defense. Share prices rallied at the news, following a two-year low in November. The deal is perceived as a good “in” to the US government market and, from this launch pad, Serco hope to substantially increase their share of it.

Campaigning

In Britain – where Serco Group plc is listed on the London stock exchange – there has been a small “rogue shareholder” campaign against the Group. Initiated by Aldermaston Women's Peace Camp(aign) as a means of raising Serco's involvement in Britain's nuclear weapons programme, shareholder meetings have also seen participation from campaigners in other areas related to Serco's business, such as women working on immigration detention/removal centres (Serco manages two of these prisons for the government).

Women attend the annual AGM to ask difficult questions, present information to regular shareholders about the Group's “dirty business” and to disrupt the meeting. There have also been demonstrations outside the AGMs, a “do you want a share of weapons of mass destruction” postcard campaign and the production and dissemination of information about the Group's involvement in war, poverty and misery profiteering.

The bad news

Due to global trend in outsourcing – even outsourcing the oversight of the already outsourced in the US - year on year this company is increasing in every way: share value and dividend, turnover, even the number of people it employs. With a relatively rapid expansion across the globe, particularly in Asia, the pacific and North America, Serco confidently brag of operating “from Alaska to Antarctica.”

Worse still, despite the current economic gloom, as Serco are so embedded in public services – and particularly the military - they are likely to weather the storm. The Group has dirty fingers in enough dirty pies to spread and limit their risk. War, after all, is the health of the state and backdoor privatisation is not about to disappear.

Aldermaston Women's Peace Camp(aign) is keen to hear from other campaigners with an interest in Serco Group plc. If want to get involved in campaigning on Serco – whether on their war profiteering or because you are involved in prison, immigration, health or transport campaigns already – please email Aldermaston Women: info@aldermaston.net

http://www.serco.com/markets/defence/index.asp
http://aldermaston.net
Some background here: http://en.wikipedia.org/wiki/Serco_Group