Mitie has clinched a 10-year contract with the Home Office worth more than half a billion pounds in what the business has said is a “game-changer” for its care and custody division.
The outsourcing firm said it will start supplying immigration services to the Home Office starting in May 2018, after winning a “competitive” tender process that resulted in a contract worth £525 million.
It is the largest contract for Mitie’s care and custody business to date.
Colin Dobell, managing director of the care and custody arm, said: “This is a game-changing new contract for Mitie Care and Custody and reflects our proven expertise in delivering these services.”
Mitie will take responsibility for escorting immigrants who have been detained both at home and overseas onto “removal flights” destined for their home countries as part of its new remit.
The firm will also be charged with managing a number of facilities throughout the UK including two short-term holding sites, airport holding rooms and reporting centres.
The Home Office said it believed Mitie was fit for the task.
“We take the welfare of our detainees very seriously and it is vital that our escorting operations are carried out with dignity and respect.
“We are satisfied – following a competitive and rigorous tender process – that Mitie will provide a high quality and good value service,” the Home Office added.
Mitie already manages two immigration removal centres for the Home Office, namely the Campsfield House and Heathrow Immigration Removal Centres, which together can house around 1,200 detainees.
The company said it will develop “technology systems” in partnership with the ministry to “transform” the way its services are delivered, focusing on improving efficiency and managing risk around removal processes.
Mr Dobell added: “Since the award of Campsfield House in 2010, we have worked closely with the Home Office to provide a safe and secure approach to immigration services.
“We are delighted to expand this partnership and look forward to implementing this new contract, with embedded new technology.
“We believe this will transform immigration escorting services for the Home Office, the people in our care, and also those that work for us.”
Investors were less optimistic regarding the news, sending shares down nearly 3% in morning trading at 198.3p.
The announcement comes as the struggling outsourcer pushes ahead with a turnaround plan that aims to trim costs by £40 million a year by 2020, with moves to simplify its corporate structure, outsource and automate some back office functions, merge its London offices into one and also overhaul its group-wide IT.
The group recently moved to shut its defined benefit pension scheme to future accruals from mid-November – which will save around £850,000 a year – and confirmed in September that it was axing around 480 jobs from its 53,000-strong workforce by the end of its financial year in March.
Having been under pressure amid a string of profit warnings, Mitie last month reported a narrowing of bottom-line losses to £5.5 million for the six months to September 30, compared to a loss of £86.8 million a year earlier.
The company recently came under the spotlight around its accounts, after Financial Conduct Authority said it was launching an investigation into the preparation and content of Mitie’s financial statements for its last financial year, as well as the “timeliness” of a profit warning announced in September 2016.