Serco backs down in bid to pass on government cuts

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Serco backs down in bid to pass on government cuts

Simon Quicke

Up until this point most of the large government suppliers have towed the line and signed memorandum of understanding (MOU) with the government, but Serco has taken a different line looking to pass on the cuts it is making to its own suppliers.

Over the weekend it came to light that Serco sent a letter to suppliers for a 2.5% cash rebate on the work it has done this year of risk losing contracts.

An article in the Sunday Telegraph said that the request for a rebate had followed on from the government making a simliar request of suppliers under the campaign led by Francis Maude at the Cabinet Office to deliver millions in savings.

The letter ends with a direct reference to the constraints that the government has placed IT suppliers under.

"Like the Government, we are looking to determine who our real partners are that we can rely upon. Your response will no doubt indicate your commitment to our partnership but will also be something I will seriously consider in our working relationship as Serco continues to grow."

Most of the other suppliers have signed the MOUs with a staple paragraph stating how they wish to work with the government but Serco has opted for a different option bringing down the wrath of Maude and the Cabinet Office, according to reports.

Following the revelation of the move, Serco has backed down on the demand for rebates and issued a statement this morning indicating that.

"Serco yesterday reaffirmed to the Cabinet Office that Serco's most recent offer of savings to the UK Government will not result in any of the Government's cost saving programme being passed on to our suppliers," it stated.

"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. We are now communicating this to our supply chain partners and retracting the letters," it added.


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