The Docklands Light Railway is one public sector scheme that Serco operates Outsourcing group Serco has abandoned plans to pass on the impact of government spending cuts to its suppliers.
Serco, which carries out a host of government contracts, had asked it largest suppliers to pay a 2.5% rebate.
The company said it now wished to “apologise unreservedly” to its suppliers, and had retracted letters asking for the rebate.
The government is reported to have been angered by Serco seeking rebates from its suppliers, but has yet to comment.
The government is reported to have been angered by Serco seeking rebates from its suppliers, but has yet to comment.
Serco operates a number of public sector contracts on behalf of the government and local authorities.
These include running four prisons including Doncaster, the maintenance of a number of RAF bases including Brize Norton, and the operation of London’s Docklands Light Railway.
Shares in the firm were down 6% in morning trading on the London Stock Exchange, making it the biggest faller on the FTSE 100 index.
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Serco said in its statement that it had been working with the Cabinet Office as part of the government’s efficiency programme, which “has involved discussions with our leading suppliers”.
It added: “As a result our plans evolved and we decided not to seek or accept any contributions from our suppliers, who had recently received letters asking for rebates.
“As a company that values our relationships with all our supply chain partners, large and small, we deeply regret this action and apologise unreservedly to them for the concern that this has caused.”
A number of Serco’s suppliers had complained about the plans for rebate payments.
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