NAO to review Capita's government training deal – but not bigger contract for temporary staff

The NAO is to review a controversial government training deal with Capita – but not the larger contract for supply of temporary staff

The National Audit Office (NAO) is to review a controversial government training deal with Capita – but has no current plans to also investigate problems with a much larger Capita contract for the supply of temporary staff.

The £250m Civil Service Learning framework managed by Capita came under scrutiny last week when the Independent newspaper revealed claims that some training suppliers had been forced out of business. Cabinet Office minister Francis Maude was quizzed about the deal in the House of Commons and promised an investigation.

The NAO has now responded with plans for a formal review of the contract this spring. “We are currently undertaking a review of the central arrangements for procuring Civil Service training on behalf of all government departments. This work is in response to concerns we have received from a variety of sources,” the NAO said in a statement.

“The purpose of this review is to establish whether the allegations made to us have any validity and to establish the facts. The scope of our review includes examining various aspects of the Civil Service Learning contract, such as: the payment of subcontractors within 30 days; the calculation of the administrative fees; the amount of training that goes out to open competition; and any non-compete clauses within the contract.”

This week, Computer Weekly revealed similar allegations made by SME IT services suppliers over a much larger £2.45bn government contract with Capita called Contingent Labour One (CL1). Several SMEs claim to have lost tens of millions of pounds in business after refusing to sign up to the deal, which covers the sourcing of temporary staff across the public sector.

One supplier claims to have lost more than £20m in revenue and to have been forced to lay off 10 staff. Another firm estimated it has lost out on £12m of sales opportunities, and other SMEs are believed to have missed out on tens of millions of pounds in potential revenue.

The SMEs cite contractual clauses that they say allow Capita to poach staff by banning restrictive covenants; prevent them from competing for business through potentially illegal non-compete terms; and could eliminate them from the market for government temporary staff altogether. Much of their anger is directed at the Crown Commercial Service (CCS), the Cabinet Office agency responsible for all government procurement. 

The affected SMEs said they made CCS aware of their concerns about CL1 over a year ago, but CCS has yet to provide a satisfactory response, they claim. Capita said CCS approved all the contractual clauses the SMEs object to.

Despite the similarities between the two deals, the NAO confirmed it has no current plans to extend its review to other Capita deals beyond the Civil Service Learning contract.

IPSE - the Association of Independent Professionals and the Self Employed – welcomed the NAO review.

“The NAO is right to investigate accusations of supply chain bullying and anti-competitiveness in government contracts,” said Andy Chamberlain, deputy director of policy and external affairs at IPSE. “Government should be supporting the UK’s small businesses by making contracts as accessible as possible.”

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