Capita has won a £370M contract to provide shared services to four UK government departments, but rival bidder Sopra Steria has launched a legal challenge claiming the bid was 'abnormally low' and based on insufficient staffing levels.
Capita has secured a £370 million, ten-year contract to provide shared services to four major UK government departments, but the deal is now facing legal scrutiny after rival bidder Sopra Steria launched a court challenge alleging the winning bid was "abnormally low" and potentially non-compliant with procurement rules.
The contract covers business process outsourcing for the Department for Work and Pensions (DWP), Ministry of Justice (MoJ), Home Office, and Department for Environment, Food and Rural Affairs (Defra). Capita will deliver tech-enabled back-office services including HR, payroll, recruitment, finance, procurement, and service desk support for approximately 250,000 civil servants.
The deal represents the Synergy cluster of the UK government's shared services strategy, which has seen around £2 billion in contracts awarded to migrate HR and finance systems to SaaS platforms. Capita will use a system being built by Oracle and IBM to support these services.
However, the contract's value has raised eyebrows. The £370 million price tag covers the full ten-year period, representing less than 40 percent of the estimated £958.7 million procurement value outlined during the tender stage in September 2024.
Sopra Steria, which owns SSCL (the incumbent provider for some of the departments), has filed legal papers alleging multiple issues with the procurement process. The French tech firm claims Capita's bid was "abnormally low" and based on staffing levels "significantly below the current levels" required to deliver the services.
According to court filings, Sopra Steria argues that Capita was unable to satisfy the requirements set out in the selection process due to its "limited business in payroll and HR services" and lack of experience with Oracle SaaS ERP systems. The legal papers state that Capita's pricing implies staffing levels that "raise serious and legitimate concerns" about the company's ability to deliver the required services.
Sopra Steria also alleges that after Capita was named preferred bidder, the DWP conducted further renegotiations around Capita's tender without including the rival bidder in the process.
A DWP spokesperson acknowledged the legal challenge, stating: "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."
Capita has declined to comment on the legal proceedings or the pricing of its bid.
The Public and Commercial Services (PCS) union has also weighed in on the controversy, claiming Capita's winning bid was actually £700 million and calling the award a "reckless gamble." This criticism comes as Capita faces ongoing scrutiny over its handling of the Civil Service Pension Scheme, which has seen thousands of complaints from members after the company took over the service under a £239 million contract.
The legal challenge raises questions about the government's procurement processes and whether the significant price difference between the estimated value and the winning bid represents genuine efficiency gains or potential risks to service delivery. The case highlights the tension between securing value for taxpayers and ensuring adequate resources for critical public services.
The contract is set to begin in March 2026 and will run for seven years, with options for three one-year extensions. The outcome of Sopra Steria's legal challenge could have significant implications for how the UK government approaches large-scale outsourcing contracts in the future.
Comments
Please log in or register to join the discussion