Serco has had to apologise to its suppliers after trying to get them to reduce their costs so it could meet the cost cutting targets set on it by the government.
According to an article in The Telegraph, Serco, which is a major IT supplier to government, wrote to its major suppliers asking for a 2.5% rebate in return for still being considered for future contracts.
The government is furious according to the report. This is against the spirit of the cost cutting. It was supposed to encourage suppliers to find innovative ways of providing more for less.
In July government minister Francis Maude met the CEOs of the government's major IT suppliers to ask them to reduce the cost of services. The government said it was willing to listen to suppliers for ideas about how to cut costs.
The Telegraph article quoted a Cabinet Office spokesman as saying: "We unequivocally disagree with and are highly critical of the approach taken by Serco. Francis Maude will be calling them in to explain themselves."
According to an article on The Register Serco has apologised. "As a company that values our relationships with all our supply chain partners, large and small, we deeply regret this action and apologize unreservedly to them for the concern that this has caused."