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National Audit Office (NAO) investigators yesterday exposed more failings by G4S and Serco during an inquiry into the firms' use of private accommodation for asylum-seekers.
They found the scandal-hit companies had failed to meet contractual standards in some areas such as property conditions.
The government is now attempting to recover rebates worth £7 million due to poor performance.
Yet G4S, Serco and fellow multinational Clearel are pushing for the government to allow them to expand into new areas outside the agreed postcodes.
At the end of 2012, the now-defunct UK Border Agency (UKBA) replaced 22 separate contracts provided by 13 different suppliers with six regional contracts divided between the three firms.
G4S and Serco "struggled" throughout preparations for and during the transition, the NAO found, which caused contining uncertainty for asylum-
Both firms took on housing stock without inspecting it and subsequently found that many of the properties did not meet the contractual quality standards, said the auditors.
The pair continued to fail to meet contractual standards in some areas, the investigators added, such as finding properties for asylum-seekers within a set timescale and on property conditions.
Refugee Council chief executive Maurice Wren said: "Asylum-seekers are often people who have fled horrifying experiences in their
own countries and have lost everything.
"Failure to provide adequate accommodation is always unacceptable. It's essential the Home Office sets clear standards, provides the resources required to deliver them and is tough on contractors who fail to meet them."
Labour shadow immigration minister David Hanson said: "It is now vital that the Home Office come clean on how much extra cost is being incurred, what they are doing to renegotiate contracts and if G4S and Serco and Clearel will be paying any money back to the taxpayer for the under-performance."
Both Serco and G4S admitted the faults and said improvements were being made.
A Home Office spokesman said: "We are committed to providing safe and secure accommodation while applications are considered."
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