Serco, the outsourcing giant, has announced it will exit an unprofitable contract with the Australian government for the maintenance of twenty Armidale-class patrol boats. The deal was signed in 2010, and contributed to Serco’s £1.35bn reported loss for 2014.

The contract, expected to run until 2022, will now be terminated in 2017. The agreement started running into trouble more than a year ago, when Serco reported the boats suffered from major design flaws, which led to corrosion and cracking demanding critical repairing.

The overhaul of the contract is part of Serco’s new CEO, Rupert Soames, review of the troubling outsourcing firm, aimed at transforming Serco’s ruinous business practice of winning contracts at any cost.

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