A major subcontractor engaged by an US private prison operator to help run Australia’s onshore immigration detention network is facing price-fixing allegations.
Last week Guardian Australia revealed that Australia’s onshore immigration detention network would now be operated by a subsidiary of Management & Training Corporation (MTC), taking over the troubled detention system from the British multinational Serco.
While the local MTC subsidiary Secure Journeys holds the $2.3bn contract, non-custodial facilities management will be run by Spotless Facilities Services, which is facing civil cartel proceedings.
The competition regulator announced on 12 December it was taking action in the federal court against Spotless Facility Services and Ventia Australia, as well as four executives for alleged price fixing.
The two companies are alleged to have colluded instead of competing while holding contracts for maintenance and facility services at more than 200 Australian defence force sites.
According to the Australian Competition and Consumer Commission, executives “communicated with each other on several occasions about seeking additional compensation from Defence beyond … mark-up”.
“The allegations in this case relate to alleged conduct by two large, sophisticated companies providing services which are critical to the operation of Australian Defence facilities under longstanding, publicly funded Defence procurement contracts,” said the ACCC chair, Gina Cass-Gottlieb.
“One of the programs of work that we allege was the subject of a price fixing agreement related to a program funded by the Australian government to stimulate work for small to medium enterprises during the Covid-19 pandemic.”
A spokesperson for MTC confirmed Spotless was part of the Secure Journeys bid to take over Australia’s onshore immigration detention system from Serco.
“Spotless Service Facilities is Secure Journeys’ facilities maintenance subcontractor,” a spokesperson said. “They were part of the Secure Journeys bid for the Immigration Detention Network contract.”
Secure Journeys will begin operating the centres from early 2025.
Business documents show that MTC and Spotless Facilities Services once had stakes in Secure Journeys. The company’s sole shareholder is now MTC.
In a statement to the ASX on 12 December, Spotless’ parent company, Downer EDI, said it “categorically denies” the ACCC’s allegations, and that in its view, neither the company nor its employees “engaged in unlawful conduct”.
Ventia Services Group, behind Ventia Australia, also told the ASX it was reviewing the allegations and did not intend to comment.
The appointment of MTC to run the detention network drew criticism last week.
The Asylum Seeker Resource Centre said Labor had previously promised the detention centres would be operated directly by government.
“Contracting a prison operator sends a clear message that detention is punitive,” said the ASRC’s deputy chief executive, Jana Favero. “The human cost of this decision cannot be overstated.”
“We call on the government to honour its commitment and end the use of private companies in detention, starting with the review of this contract and honouring their other platform promise – establishing a parliamentary inquiry into immigration detention.”
In a statement to Guardian Australia, a Home Affairs spokesperson said the department “undertook all necessary due diligence” when assessing the successful tender bid from Secure Journeys.
“The performance of the contract, quality of services delivered, including monitoring the treatment of detainees in the care of any detention service provider will be assured and managed by the Australian Border Force,” the spokesperson said.
The department said it was aware of the civil proceedings case. “As this is an ongoing legal matter, it would be inappropriate for the department to comment further.”
Secure Journeys has been contracted to provide a host of services, including facilities management, security, transport and welfare for detainees.
