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Serco, Mitie win contract extensions for UK COVID-19 test centres

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·2-min read
FILE PHOTO: A drive-through testing centre following the outbreak of the coronavirus disease (COVID-19) in Bolton, Britain
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By Yadarisa Shabong

(Reuters) -Serco and Mitie have won new testing contracts collectively worth up to 687 million pounds ($956.1 million) to continue supporting Britain's much-criticised COVID-19 test-and-trace programme, the groups said separately on Monday.

The scheme, which Prime Minister Boris Johnson pledged would be world-beating when he launched it with a 22 billion pound budget in May 2020, has repeatedly missed targets, with the opposition Labour Party criticising the government's use of private firms.

Serco's contract, which is worth up to 322 million pounds, covers services such as site operations, cleaning and security at around 20% of test sites in England and Northern Ireland, down from the roughly 25% of sites covered by its previous deal.

Mitie's deal, worth up to 365 million pounds, covers the management of around 28% of testing sites across England, Scotland and Wales, up from about 23% of sites in its former contract.

The two agreements are focussed on testing only but form part of the test-and-trace scheme, which oversees testing of people who think they have COVID-19, and then tracing contacts of those who test positive to require them to isolate.

While Serco also holds contracts for contact tracing, Mitie only looks after testing sites.

Parliament's spending watchdog said on Friday the scheme had improved but was still missing targets, and the results of millions of tests to find asymptomatic cases had not been reported.

Britain has the highest COVID-19 death toll in Europe and is seeing a surge in cases driven by the new Delta variant of the virus, although an advanced vaccination campaign has kept hospitalisations and deaths far below previous infection waves.

Serco earlier this month raised its 2021 profit forecast in part thanks to its work on COVID-19 services. It did not change its forecast on Monday following the contract win.

"We expect that the margin is slightly below group average, but in line with expectations," Liberum analysts said on Serco.

Shares in Serco were up 0.7%, while Mitie was down 2.5%.

($1 = 0.7185 pounds)

(Reporting by Yadarisa Shabong in Bengaluru; Editing by Louise Heavens, Mark Potter and Jan Harvey)

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