Serco loses DLR deal to French firm (Daily Express 05/07/2014)

[whole diary]

[JayMac]

From the Daily Express:

BELEAGUERED outsourcer Serco was thrown into fresh turmoil yesterday when it lost the contract to run a London rail franchise to a French rival bid.

Serco has operated the Docklands Light Railway (DLR) rail network in London since 1997 but lost out to a joint bid between French transport group Keolis and support services ^provider Amey, a subsidiary of Spanish multinational Ferrovial. The French will take over the contract from ^December up until 2021.

Managing director of Serco^s ^transport business David Stretch said he was ^disappointed^ in losing the ^contract that marked the latest ^setback to hit Serco, which also runs the Boris Bikes scheme.

Serco has been battling to revive its reputation following allegations of fraud on a prisoner tagging contract, which resulted in it paying out ^68.5million to the Government and forced the resignation of chief executive Chris Hyman last year.

New chief executive Rupert Soames has been forced to issue three profit warnings already this year including one earlier this week indicating that a writedown on important contracts could impact its full-year results.

The DLR contract was worth ^90million in revenues to Serco, according to Oriel Securities. The broker added: ^The profit hit is not material but this is another body blow to Serco. The loss today shows that Serco has fights on its hands to hold on to business as well as restore new win momentum.^

According to Transport for London (TfL^» (Transport for London - about)), which runs the DLR, around 100 million passenger journeys are made between the City, Canary Wharf and Stratford each year. The DLR is part of a growing TfL network of rail services, which also includes London Overground routes across the capital.

Serco claimed that in the past 12 months it had delivered ^in-service reliability^ of over 99 per cent and also pointed to its ^flawless delivery^ during the 2012 Olympics.

Soames is undertaking a review of its business strategy, which has included a writedown in the value of a clinical healthcare contract and a reassessment of a contract that provides accommodation for asylum seekers.

Small correction to this item. Docklands Light Railway is a concession not a franchise.