Competition investigators raided the offices of outsourcer Mitie and are examining the emails of senior staff, after the Home Office raised concerns about suspected anti-competitive behaviour, the Guardian understands.
The Competition and Markets Authority (CMA) is examining the relationship between Mitie and US firm PAE, who operate a joint venture for the Ministry of Defence but were also competing to run Home Office immigration removal centres, at Derwentside, in County Durham, and Heathrow.
Mitie’s shares fell more than 10% earlier this month after it informed investors that the CMA was investigating the competition process, despite the company saying it expected to be “fully exonerated”.
The firm appeared to focus on the Derwentside contract in its statement, blaming Home Office bidding rules for its withdrawal from the bidding.
But a source said investigators were focusing more on a separate competition between Mitie and PAE for the Heathrow centre.
Both companies were bidding on the immigration contract until PAE pulled out last year. The Home Office subsequently referred both companies to the CMA, the Guardian understands.
The CMA, which is investigating whether breaches of competition law took place, is now thought to be looking into the wider working relationship between the companies.
Mitie and PAE are partners on a separate joint venture called Landmarc, managing firing ranges, training and explosives handling facilities for the Ministry of Defence.
Landmarc is one of five companies providing the services to the MoD, as part of a £1.5bn framework agreement, which will be up for renewal in March 2024.
CMA officials are understood to have raided Mitie’s offices, on the 12th floor of the Shard skyscraper in London, earlier this month. They seized documents and are understood to be reviewing emails, including those sent by senior staff.
The Guardian understands that the CMA has not so far made a request to interview the Mitie chief executive, Phil Bentley.
The Mitie CEO earned £2.7m in 2021, up from £2m the year before, thanks to a £1.1m cash bonus and a £622,000 share award.
A spokesperson for Mitie referred the Guardian to its statement to the stock market, in which the company said it had “no case to answer” and expected to be “fully exonerated”.
“Mitie strongly condemns anti-competitive practices and is co-operating fully with the CMA and the investigation,” the company said in its statement.
PAE said on Tuesday that it believed the CMA’s investigation was “unfounded” but said it was fully complying with the regulator. “Not all of what you propose to say is factually accurate,” it added.
A Home Office spokesperson declined to comment on whether the department had itself referred the two companies to the CMA.
“The Home Office is aware the CMA has launched an investigation into two suppliers involved in the procurement of contracts for Heathrow and Derwentside immigration removal centres,” a spokesperson said.
“The investigation does not have any impact on Mitie’s current Home Office contractual obligations. We are co-operating with the CMA and it would be inappropriate to comment further at this stage.”
London-headquartered Mitie is a major contractor to both the government and the private sector, running facilities such as cleaning, security and waste management.
Its latest annual report for 2021 shows that it derived £1.1bn, about 42% of its revenue, from its work for local and central governments.
Its contracts include helping run Covid-19 testing centres for the department of health, accommodation and airfield maintenance for the Ministry of Defence and security at Home Office buildings.
PAE is based in Virginia and manages a host of US government contracts, including providing power at Nasa’s mission control at the Johnson Space Centre in Houston, Texas.
The Guardian has approached the CMA for comment.
• This article was amended on 31 March 2022. An earlier version said PAE withdrew from bidding for the Heathrow contract, “leaving the way clear for Mitie”. While PAE’s withdrawal meant Mitie did not face this significant competitor, we did not intend to imply there were no other companies potentially bidding for the contract.
