Wellington Scoop

Serco failure is a reminder: who’ll be chosen to run our trains?

The Wellington Regional Council, nearing the deadline for announcing its choice of a new operator for Wellington’s commuter trains, will no doubt be concerned by yesterday’s news that Serco has lost its contract to run Mt Eden prison.

We discovered a couple of months ago that Serco had been shortlisted last December as one of three companies being considered to run the trains, a job that’s currently being done by KiwiRail’s TranzMetro.

The Regional Council intended to choose one of the three around the middle of this year. But there was a delay in making the choice, according to an announcement in October:

The Council plans to award this contract in early 2016, with the new contract expected to take effect from 1 July 2016.

The delay may well have been connected with the fact that Serco’s reputation was continuing to decline after it made the shortlist. And now, Pattrick Smellie reported yesterday:

The Corrections Department is cancelling the 10-year $300 million contract for management of the Mt Eden Correctional Facility held by multi-national services provider Serco following a string of scandals earlier this year involving prisoners fighting, contraband and a death in the prison. Corrections took over management of the remand facility from Serco in July.

He tells more about the controversial company that’s on the regional council’s shortlist:

Hampshire-based Serco runs outsourced public services around the world in numerous sectors, employing 122,000 people in 30 countries, including Australia’s mainland and Christmas Island immigration detention centres to house asylum-seekers and illegal migrants arriving by boat and air. It reported 1.5 billion British pounds in writedowns on the value of its contracts last November and was forced to go to shareholders for an emergency 550 million pound recapitalisation through a rights issue. It announced profit downgrades at the same time. It announced at the time the company would narrow the focus of its outsourced contracting to defence, transport, health, justice and immigration services for the UK, Middle East, Australia and New Zealand. The New Zealand unit reported an annual loss of $2.6 million, including $1.5 million impairment charge on mobilisation and bid costs, in 2014.

The two other entities on the shortlist are KiwiRail in partnership with Australian company Keolis Downer, and Hyundai Rotem, the Korean company who built Wellington’s new Matangi trains, in a joint venture with Transdev Australasia Pty Ltd which operates Auckland’s train service and Sydney’s light rail.

The new Matangi units are delivering a new era for Wellington commuters. The choice of a new operator to run them and to maintain the new improved level of service is of concern to everyone who takes the trains.

Judith Collins and the prisons handover


  1. syrahnose, 13. December 2015, 8:02

    Be thankful at least there are 3 companies willing to bid on the project. Usually we face duopolies running much of what we have available have.

  2. Kb, 16. December 2015, 21:37

    Who won the train contract? [No announcement yet from the Regional Council.]