PAC raises more questions over Capita’s role in government

Raised eyebrows

When the Synergy contract, which could run for a decade, was awarded in May, eyebrows were raised with the backdrop of the ongoing CSPS problems.

Beyond Capita’s poor performance, the PAC questioned the decision to award it the contract based on value. “[The government] has not quantified the value-for-money case of the Synergy cluster outsourcing to Capita relative to the Unity cluster’s in-house service model,” said the PAC.

It also called for details regarding an alleged cut-price deal offered by Capita. “The committee’s report calls for additional details about the contract that was awarded to Capita, including confirmation of whether the contract was awarded at 40% below the model of what it should have cost…”

The PAC requested details on steps taken to provide assurance that Capita will deliver fully on its contract commitments under the Shared Services strategy.

Questions are being raised in parliament and beyond about Capita’s continued success in winning public sector contracts in the light of its failures.

During a joint PAC and Public Administration and Constitutional Affairs Committee meeting last week, chair Simon Hoare MP lamented on rewarding failure. “Isn’t the stark issue, in essence, a company like Capita has the private parts of HMG [His Majesty’s government] very firmly in its grip?” he said.

This comes at a time when the government is attempting to move away from outsourcing in the public sector. Through a value for money test, it hopes to “end the era of outsourcing”.

In March, Cabinet Office parliamentary secretary Chris Ward said “the age of outsourcing will end”.

“For decades, successive governments have been, at best, ambivalent about whether public services are delivered in-house,” he said. “At worst, we’ve had outsourcing by default, with public services hollowed out and sold off to the lowest bidder. That era ends today.”

From 1 April 2027, any central government outsourcing contract with a value of over £1m, including IT and business process outsourcing (BPO), will be put through the government’s Public Interest Test.

The Cabinet Office said: “Before any IT or BPO service is outsourced, departments will evaluate individual contracts on a case-by-case basis – holistically assessing value for money, economic and market impact, and social value goals.

“Departments will make the final decision for each contract,” it added.