Serco Wins $63 Million Extension for London’s ‘Boris Bikes’

Serco Group Plc, Britain’s largest government outsourcing provider, won a two-year contract extension from Transport for London to operate the Barclays Cycle Hire Scheme until July 2017.

The extension is valued at 38 million pounds ($63 million), Hook, England-based Serco said in a statement. There are now 11,000 of the public rental cycles, commonly called Boris Bikes after Mayor Boris Johnson, and 756 docking stations. The company has worked on the system since 2009.

“TfL continues to work with Serco to deliver improvements to the redistribution of bikes around London,” Leon Daniels, managing director of surface transport at local government agency Transport for London, said in the statement.

The extension promises new work for Serco at a time when it is barred from consideration for certain government contracts after overcharging for electronic tagging of criminals, including some who had died. Serco said last month that an opinion on its plans for a management overhaul is expected this month, which may restore the government’s confidence and allow the company to bid for all new work.

The Justice Ministry canceled a tender in November for a contract worth as much as 30 million pounds a year to run three prisons, due to “uncertainty” about the investigation into billing. Serco was the lead bidder. Serco and partners withdrew from a competition for military purchasing, and Defense Secretary Philip Hammond has said he may keep procurement in public hands.

Serco said on Dec. 19 that it would repay 68.5 million pounds to the government to settle the inquiry into overcharging that caused the resignation of its chief executive officer and shaved about 30 percent off its share price since July.

The shares fell 0.7 percent to 502 pence at 4:05 p.m. in London, extending the decline in the past year to 8.6 percent and giving the company a market value of 2.5 billion pounds.

Before it's here, it's on the Bloomberg Terminal.