SMEs take Capita contract dispute to UK competition regulator

A group of small businesses that claim to have lost revenue through two controversial government contracts have complained to the regulator

A group of small businesses that claim to have lost significant amounts of revenue through two controversial government contracts have submitted a complaint to the UK competition regulator citing breaches in UK and EU competition law.

The consortium comprises more than a dozen small and medium-sized enterprises (SMEs), all of which are sub-contractors to one of two framework agreements won by Capita – Civil Service Learning (CSL) and Contingent Labour One (CL1) – set up to source training services and temporary workers, respectively, across the public sector.

According to the group, suppliers to CSL were required to sign a sub-contract with Capita containing a “restriction” clause, which they said prevented them from competing and also bidding for the re-tendering of the contract. They said similar restrictive clauses are also present in CL1 contracts, also run by Capita. The National Audit Office has already announced a formal review of CSL, due to take place this spring.

The suppliers have also launched a campaign, called “Not acceptable”, based on comments made by Cabinet Office minister Francis Maude in a House of Commons debate on the CSL contract.

Christine Archer, director of consultancy Faraday Partnership, which co-ordinates the CSL SME consortium, said: “Francis Maude has said that the way CSL is working is “not acceptable” and the National Audit Office is now investigating. Last week we retained the services of Mark Brealey QC, a leading competition lawyer, to examine SMEs’ competition concerns about CSL and CL1. This week we have filed our complaint with the Competition and Markets Authority. We are also considering whether there are grounds for a complaint to the European Commission.”

Archer said her firm had lost 95% of its £3m revenue since CSL was let to Capita by the Crown Commercial Service, the Cabinet Office agency responsible for central government purchasing.

Computer Weekly revealed last month that small and medium-sized IT services suppliers have lost tens of millions of pounds in business after refusing to sign up to the £2.45bn CL1 agreement. The Independent newspaper previously revealed that Capita had been accused of similar behaviour over the smaller, £250m CSL contract, with some SMEs allegedly being forced out of business.

Capita said of the CL1 contract last month: “Capita has an excellent track record of working with and engaging SMEs. We refute any suggestions of wrong-doing regarding this recruitment framework.”

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