Serco will continue to run Australia’s immigration detention centres after being awarded a five-year contract from Canberra despite controversy over facilities, particularly on Christmas Island.

The outsourcing company – which has been dogged by a series of scandals and four profit warnings this year – estimates the contract to be worth £500m-£750m (AUD$950m-$1.4bn) , less than the potential £1bn (AUD$1.9bn) the Australian government had put on it. This reflects a sharp drop in the number of people in detention, which reached 10,000 in mid-2013 but has fallen back to 3,000. The government has clamped down on people without a valid visa entering the country by boat.

Serco, which has been running 12 migrant detention facilities across Australia since 2009 and employs 2,000 people to deliver the contract, has come under fire over the Christmas Island centre, which was condemned by the Canberra’s top human rights official for its filthy conditions and for the high levels of self-harm among detainees.

Levels of self-harm at the Serco-run centres rose six-fold in six months, after the government made it mandatory to process all asylum claims offshore. Gillian Triggs, president of the Australian Human Rights Commission, voiced “grave concerns” for the welfare of asylum seekers at Christmas Island centre when she visited in July. She found a sharp escalation in the number of mothers on suicide watch and babies confined to small metal containers, where they cannot learn to crawl or walk.

Serco has been heavily reliant on profits from running Australia’s immigration detention centres, as it faces increased losses from other contracts it holds. Excluding the immigration services contract, group profits were flat between 2009 and 2013, it revealed last month when it issued yet another profit warning. A strategic review started after Rupert Soames took over as chief executive in June uncovered a raft of loss-making contracts.

Serco expects to make £100m-£150m of revenues a year from the latest contract, which can be extended twice for up to two years each time. It relates to seven Australian states and territories, and includes accommodation, transport and escort, catering and facilities management.

The news comes as a UK committee of MPs warned that five government departments continued to award Serco and G4S work while they were under investigation by the Serious Fraud Office for overcharging tens of millions of pounds for electronic tagging contracts. The Commons public accounts committee said: “It was not acceptable for government to give the impression that all business with Serco and G4S was halted whilst investigations took place, when in fact contracts were extended, new contracts were awarded and negotiations for new business continued.”

Serco runs a huge range of government and other services around the world, from rail franchises including Merseyrail in Liverpool to parking-meter services in San Francisco and maintenance and repair services for CERN, the European laboratory for particle physics, near Geneva. In July it lost the high-profile contract to run the Docklands Light Railway in London after 17 years.