Ministers refused to log off £563m Capita contract amid civil service pension catastrophe
Ministers refused to log off a contract to Capita on account of the provider’s much-publicised issues in civil service pension administration.
Pc Weekly understands a £563m contract that Capita had all however sewn up with the Cupboard Workplace was cancelled after ministers refused to approve it because of Capita’s Civil Service Pension Scheme (CSPS) administration failures.
In response to sources, Capita was set to be awarded the Studying Frameworks 2.0 contract, which can substitute current studying and improvement contracts held by KPMG, however the authorities has cancelled the procurement and can convey the service in-house.
The Studying Framework gives entry to studying, improvement and training for public sector organisations.
The Cupboard Workplace, which is the awarding authority, was contacted for touch upon the standing of the tender, however had not responded when this text was revealed.
Capita refused to touch upon the Studying Framework 2.0 contract.
Awarding Capita profitable authorities contracts now has a political value on account of the CSPS mess. In response to figures from Tussell, Capita at the moment has about 230 stay contracts with the general public sector, price £7.7bn.
Political stress
MPs and authorities ministers perceive the robust public sceptisim related to the provider and are questioning choices to decide on it for presidency contracts.
Capita has already been faraway from the Royal Mail Pension Scheme administration following failures and the ramifications of dangerous publicity round CSPS, and there’s political stress on authorities to seek out alternate options.
Cupboard Workplace minster Nick Thomas-Symonds instructed MPs that the contract was terminated following what he described as Capita’s “failure to fulfill crucial transition milestones, and a insecurity within the provider’s means to implement and transition to the brand new working mannequin in a well timed vogue…”
MPs are additionally turning the screws. Throughout a Public Accounts Committee (PAC) listening to earlier this month that quizzed officers about authorities shared providers, MPs questioned Capita’s continued success in tying down profitable authorities contracts.
Throughout the listening to, consideration turned to Capita’s latest cross division Synergy Synergy Enterprise Course of Providers contact win, price virtually £1bn. The last decade-long contract helps back-office providers for the Division for Work and Pensions (DWP), Ministry of Justice, Dwelling Workplace, and the Division for Surroundings, Meals and Rural Affairs.
PAC member Clive Betts requested Dianne Denims, senior accountable officer for the Synergy programme on the DWP, whether or not she understands “the quantity of scepticism there’s, given Capita’s efficiency, of the CSPS?”
“It’s been an sad expertise at each single stage with Capita, however you’ve awarded this contract with none reference to that, apparently,” he mentioned.
Capita not doing the tech
Denims mentioned the Synergy contract is “a really completely different situation to the pension scheme”.
“Capita emerged because the clear most popular bidder underneath authorities procurement processes,” she added.
Denims reassured MPs that Capita will not be delivering the payroll know-how on the core of the service, which is being supplied by a consortium made up of IBM, Oracle and Deloitte.
“It’s based mostly on an Oracle HR and finance platform, and Capita will use that system, however are usually not really designing and delivering it,” she mentioned.
She additionally mentioned it’s a completely different division of Capita delivering Synergy in contrast with pension schemes. Denims added that the issues skilled on the CSPS throughout transition to Capita from MYCSP will probably be averted because of “contractual obligations” for a easy transition between Capita and current provider Shared Providers Related, and a “very optimistic working relationship rising to this point”.
Betts mentioned: “We had numerous assurances on the pension scheme earlier than it went stay, that everybody had talked to everybody the suitable method, received agreements and assurances, and so they weren’t definitely worth the paper they have been written on. They failed.
“I do know you’re saying it’s a unique a part of Capita to the pensions half, but it surely’s nonetheless the identical firm, the identical tradition, the identical ethos, isn’t it?”
Denims reiterated her level that Capita is “not delivering the system”.
In 2023, the Cupboard Workplace awarded Capita a seven-year contract price £239m for the administration of the CSPS, which has 1.7 million members. In October 2025, approaching the 1 December date for Capita to take over from MYCSP, the Public Accounts Committee (PAC) warned the federal government about “missed milestones”.
The report cited the missed IT milestones as issues, amongst different issues.
On the time of the report, MPs mentioned Capita had solely delivered one out of eight transition milestones on time, and that the Cupboard Workplace had withheld £9.6m in funds.
The issues continued, with large delays in offering pensions, leaving many scheme members in monetary misery, together with individuals with no different supply of revenue receiving no pension.
Denims mentioned that not like the CSPS programme, there’s “no laborious cease with Synergy”.
“We is not going to go stay with the system except it’s completely examined and secure,” she mentioned. “We’re very acutely aware of the problems which have occurred within the pension area … we’re very targeted on continuity of service, and we’re completely staying near the Cupboard Workplace and studying all the teachings that they’ve from that pensions expertise.”
Betts requested: “Why do you want them there? Why shouldn’t or not it’s insourced?”
In regard to the Synergy contract, Capita mentioned: “We took half in a sturdy procurement course of and stand able to work with the DWP to make sure a easy transition of service. Our precedence stays to make sure worth for cash for the general public.”
Insourcing technique
In March, Cupboard Workplace parliamentary secretary Chris Ward mentioned “the age of outsourcing will finish”, and introduced plans to insource providers. “For many years, successive governments have been, at greatest, ambivalent about whether or not public providers are delivered in-house,” he mentioned. “At worst, we’ve had outsourcing by default, with public providers hollowed out and offered off to the bottom bidder. That period ends at this time.”
The federal government launched a Public Curiosity Check, requiring all departments to evaluate whether or not a service may be delivered extra successfully in-house earlier than any outsourcing determination is made. This may apply to service contracts of £1m and above, masking over 95% of central authorities spend.
“All departments should additionally publish insourcing methods to make the largest wave of insourcing in a era a actuality,” mentioned Ward.
Denims mentioned: “Insourcing [what Synergy does] hasn’t been executed in-house for 10 years. We are literally with an current outsource supplier. We’ve harvested all the advantages and financial savings from working with an outsourcing supplier and we’re constructing on that frequently.”
Concerning the Synergy contract, Capita mentioned: “We took half in a sturdy procurement course of and stand able to work with the DWP to make sure a easy transition of service. Our precedence stays to make sure worth for cash for the general public.”
