Sopra Steria Widens Legal Challenge Against Capita's £370M UK Govt Contract
Sopra Steria expands legal challenge over Capita’s £370M UK government contract.
Why it matters: This legal dispute underscores scrutiny around government outsourcing deals and their impact on public sector legal advisory and compliance. It signals ongoing tensions in managing critical public services amid concerns over value and risks.
- Capita won a £370 million, ten-year shared services contract for four UK government departments.
- Sopra Steria alleges preferential treatment and increased risks to DWP after accessing an unredacted contract copy.
- Capita’s bid was under 40% of the DWP’s initial £958.7 million estimate, raising concerns of an 'abnormally low' offer.
- Capita has faced criticism over delayed pension payments affecting retirees, prompting government insourcing plans.
Capita secured a £370 million contract to provide shared services to four major UK government departments: the Department for Work and Pensions (DWP), Ministry of Justice, Home Office, and Department for Environment, Food and Rural Affairs. This ten-year deal affects approximately 250,000 civil servants and includes management of the Civil Service Pension Scheme, valued at £239 million.
Sopra Steria has expanded its legal action challenging the DWP's contract award to Capita after obtaining an unredacted version of the agreement. The challenger alleges the government granted Capita preferential treatment and exposed the DWP to increased risks by accepting an abnormally low bid. Capita’s bid was less than 40% of the DWP’s initial estimated value of £958.7 million, a key point of contention in the lawsuit.
The challenge comes amid mounting criticism of Capita’s handling of critical public services. Retired civil servants have faced delays up to one year in receiving pension payments under Capita’s administration, leading to significant distress. Fran Heathcote, General Secretary of the Public and Commercial Services union, spoke out, saying, "Privatisation is failing, so why does the government continue to reward those responsible with yet another massive public contract?"
In response to these challenges, the UK government has announced plans to establish a new unit within the Office for the Prime Minister and Cabinet to coordinate insourcing initiatives and review critical service contracts. This effort aims to bring outsourced services back in-house to improve oversight and accountability.
A DWP spokesperson stated, "We are aware of the legal challenge and are cooperating fully with the relevant processes. As this matter is currently subject to litigation, it would be inappropriate to comment further at this time. Our priority is to ensure continuity of service and value for money for the public."
By the numbers:
- £370 million — total value of Capita’s ten-year government contract
- Less than 40% — Capita’s bid compared to DWP’s initial £958.7 million estimate
- 250,000 — civil servants affected by the shared services contract
What's next: The government’s new unit for coordinating insourcing is expected to start assessing key contracts and devising plans to bring services back in-house in the coming months.