The investigation is due to report by the end of next month. The company has also been given until the end of November to transform its business practices or face being frozen out of further government outsourcing competitions.

Serco is one of Britain’s biggest support services group with total revenues of US $7.5 billion. In the defense sector here, the company is involved in outsourcing everything from the Royal Navy laundry service to aircraft maintenance and supporting early warning at the Fylingdales anti-ballistic missile warning system, along with the intelligence mission for the UK and US at Menwith Hill.

Its US operation employs around 10,000 people and has annual revenues of $1.2 billion.

As things stand, Serco can bid and be selected for defense deals with the MoD, but cannot actually sign a contract ahead of the issues it is facing being resolved.

Despite that, this week Serco secured a one-year extension on a training contract for the armed services due to expire at the end of this year.

A decision on a strategic business partner for the Defense Infrastructure Organization (DIO) is not expected until early next year.

Before that, though, Serco faces a decision by the MoD on whether it will retain its position as the service supplier at the Royal Air Force Fylingdales missile detection and early warning base.

Serco is in competition with Babcock as it tries to hold on to a contract it has held for decades providing 24-hour maintenance, operational, engineering and logistics support to the base, a key part of the UK and US ballistic missile defense screen.

Contract selection is expected by the end of the year.

The DIO, which manages everything from naval bases to troops accommodation and catering is looking for a private sector partner to improve the skills and efficiency of its US $5.2 billion a year operation.

The deal is set to run for 10 years and could be worth up to $400 million to the winning bidder.

Consortiums led by Serco, Telereal Trillium and Capita originally submitted proposals in June and the new submissions delivered this week are a further refining of the bid.

A spokesman for the DIO confirmed the revised bids have been submitted by the contenders

“DIO recently carried out a short exercise to revise and confirm aspects of the tenders. DIO must receive responses from the three consortia competing to become its strategic business partner by late October. Its business partnering team will now carry out further evaluation of the bids, backed by the continuing support of a wide group of subject matter experts from across the organization and wider government,” he said.

Serco leads a consortium that includes US contractor Bechtel.

Bechtel is also the lead on a consortium vying with a CHM2 Hill / Serco / Atkins team to secure a controversial deal to hand management of the MoD’s procurement and support operation to the private sector in a government-owned contractor-operated (GOCO) system.

A competition between the two US-led consortiums to secure the deal is underway, even though the government has yet to finally make up its mind whether it will proceed with the GOCO or opt for another plan based on a more effective version of the Defense Equipment & Support organization known as DE&S Plus.

A decision on how to proceed with reforming the $14 billion a year procurement and support effort is expected early next year.

The Financial Times on Oct. 17 said the GOCO scheme was starting to unravel because the CHM2 Hill team may have to withdraw due to Serco being embroiled in the controversy with the UK government.

Serco confirmed it had submitted a bid for the DIO competition but declined to comment on the media speculation over the GOCO.

Having a single bidder for such a controversial scheme would be untenable, said industry executives here.

A URS and KBR team has already pulled out of the competition.

“Defendants McGrade and Collinsworth- now convicted felons-defrauded and stole from the American people, plain and simple,” said U.S. Attorney Neil H. MacBride. “We, along with our law enforcement partners, are committed to ferreting out and prosecuting those that destroy the integrity of the government contracting process.”

“I commend our investigators on their excellent work in this case, and diligence in protecting taxpayer dollars,” said Harold W. Geisel, Acting Inspector General, U.S. Department of State and Broadcasting Board of Governors.

“The scope and breadth of this fraud is reprehensible, not just because of the dollars involved, but because of the position of trust that Ms. McGrady held,” said Special Agent In Charge Kelly. “Her actions denied small businesses the opportunity to compete for these government contracts and that is unacceptable. Today’s pleas put corrupt business owners like Ms. McGrade and Mr. Collinsworth on notice, that the government will get to the truth no matter how they try to disguise their business transactions. IRS-CI will continue to work with the United States Attorney and our other law enforcement partners to root out these corrupt business owners.”

McGrade and Collinsworth were indicted on April 25, 2013, by a federal grand jury on charges of conspiracy, major fraud against the government, wire fraud, false statements, and engaging in unlawful monetary transactions. Each defendant faces a maximum penalty of 30 years imprisonment when they are sentenced on November 8, 2013.

In a statement of facts filed with the plea agreement, the defendants admitted that McGrade was a contract employee for the Department of State and performed the role of a contract specialist for an office that awarded construction contracts for work done at U.S. embassies worldwide. Collinsworth worked at one of the companies that received contracts. In 2006, the defendants married, but did not tell others at the Department of State. The defendants started a company, the Sterling Royale Group, or SRG, with McGrade serving as the president and Collinsworth the vice-president and project manager.

In late 2007, McGrade caused a State Department contracting officer to sign a contract between the Department of State and SRG, and McGrade failed to disclose her role in SRG, her marriage, or that proper contracting competitive procedures had not been followed. The contract made SRG eligible to receive task orders for work to be done at embassies and McGrade began steering work to the company.

She acted as the contract negotiator between the Department of State engineers responsible for getting the jobs done, on the one hand, and Collinsworth, who was acting on behalf of SRG and the subcontractors, on the other. Between 2008 and 2011, McGrade caused Department of State contracting officers to sign 17 task orders awarding work worth almost $53 million. In 2010, the defendants also lied about their marriage to investigators conducting McGrade’s background investigation regarding renewal of her security clearance.

In the summer of 2011, a news article disclosed the defendants’ marriage and the Department of State terminated her employment. The Department of State, however, had paid SRG about $39 million, and after the defendants had paid their subcontractors, they still had millions of dollars. Among other things, they bought houses, a condominium, a yacht, a Lexus automobile, jewelry, and a Steinway piano with the fraudulently obtained money. The defendants have agreed to forfeit all of those items.

This case was investigated by the Department of State, Office of Inspector General, and the Global Illicit Financial Team, a task force led by the Criminal Investigation Section of the Internal Revenue Service. Assistant United States Attorneys Jack Hanly and Mark Lytle are prosecuting the case on behalf of the United States.