Serco to pay $1m in penalties

Contractor Serco has had to pay about $1 million in penalties for failing to achieve certain performance targets at Fiona Stanley Hospital.

The penalties, which were outlined during a budget estimates hearing in parliament today, were incurred by Serco after it had been criticised for failing to meet certain expectations in its undertaking of several contracts at the hospital, including sterilisation of surgical tools.

The money has been deducted from Serco's $45.5 million contract.

Health Minister Kim Hames said the penalties showed the system of managing the standards of Serco was working effectively.

"When you contract out a service, the whole point of having KPI's is to make sure that you've got good controls over that," he said.

"This provides us with the opportunity to ensure that they are of a very high standard. And when they're not, there's a financial penalty for the company who doesn't meet those which is a great incentive to do it better in the future."