Serco to sue Government over lost deal

SERVICES group Serco is suing the Government, one of its biggest customers, for £75m over the cancellation of a major computer contract last summer.

Serco, which once ran the computer network that would have broadcast the four-minute warning for nuclear war, is involved in the litigation as a result of buying smaller rival ITNET for £350m in December.

ITNET saw a quarter of its order book wiped out when the Cabinet Office cancelled a deal to build a network of computers that would allow government departments to share information.

The Cabinet Office blamed the cancellation on delays in delivering the project. Among its busineses, Serco also runs the London Docklands Light Railway.

ITNET is now suing the Government on the basis that it was unlawful for the Cabinet Office to end the agreement. High Court documents say that the Government was to blame for ITNET failing to hit targets.

A Cabinet Office spokeswoman said the claim would be 'robustly defended'. Serco did not return phone calls from Financial Mail this weekend.