LONDON The government said it would not be awarding outsourcing companies G4S and Serco any new contracts until they receive a clean bill of health from a government review into their public service provision.
On Thursday the government placed all contracts held by the two companies under review after an audit found they had charged for tagging criminals who were either dead, in prison or never tagged in the first place.
"In-flight procurements involving these two companies will continue but they will not be awarded any business until the review is complete -- and they have a clean bill of health," said a spokeswoman at the government's Cabinet Office.
This means the companies remain in the race for any existing government contracts they have tendered for, and are able to bid for new business, but will not be awarded contracts until the review is over.
The government said on Thursday the review would be led by the Government's Chief Procurement Officer who is expected to report in the coming months, with initial findings due to be put to the Cabinet office within weeks.
The companies are two of the government's biggest suppliers and run services from prisons and immigration centres to transport. Shares in both Serco and G4S, which makes around 10 percent of its 7.5 billion pounds turnover from British government work, have fallen since the review was announced.
(Reporting by William James; editing by Rhys Jones and Elaine Hardcastle)