The cost-cutting comes as Carillion slashes its supplier base from 25,000 companies to just 5,000.
The Sunday Telegraph said it had seen documents showing some suppliers have offered to discount rates already agreed with Carillion by up to 20% during the next three years.
The agreements cover construction, rail maintenance and facilities management contracts.
Carillion said it has no group wide policy requiring discounts. But the Telegraph said suppliers were told that if they fail to accept the new terms they were likely to lose work as it consolidates its supply chain in an attempt to save £140m by 2013.
One supplier said he was pitching for work despite the fact it would be loss-making.
He said: “We don’t have a 20% margin to give them. To get to work on a Carillion contract is super competitive anyway.”
Carillion said it selected its preferred suppliers on “a myriad of requirements” including health and safety, quality, reliability of delivery, and pricing.
A spokesman said: “It is a competitive market and if suppliers offer discounts, and some instances double digit proposals, this sets a benchmark for other suppliers.”