Sopra Steria challenges £958M Capita contract award, alleging procurement breaches

The UK government faces a legal challenge from French outsourcing giant Sopra Steria over its decision to award Capita a £958.7 million contract to manage payroll for 250,000 civil servants across multiple government departments.

Sopra Steria has filed court proceedings alleging that the Department for Work and Pensions (DWP) failed to properly identify that Capita's winning bid was "abnormally low" compared to its own tender for the same work. The French company claims the DWP also breached procurement rules by renegotiating Capita's bid after it had been selected as the preferred bidder, without allowing Sopra Steria to participate in those discussions.

The contract in question is part of the Synergy program, which aims to consolidate shared services across four major government departments onto a single SaaS ERP and HR system. The program already awarded Oracle and IBM a £711 million contract for the underlying technology platform.

Sopra Steria, which currently provides shared services to three of the four departments through its Single Operating Platform based on Oracle EBS, argues that Capita's bid was fundamentally flawed. According to the legal papers, Capita had "limited business in payroll and HR services" and could provide "few examples of design, deployment and operation of BPS Services running on... an Oracle SaaS ERP system."

The French outsourcer claims that even after the DWP's own assessment identified Capita's implementation service charges as "appearing abnormally low" in July 2025, the department later concluded through a clarification process that the bid was "not abnormally low." Sopra Steria argues this conclusion was reached after the evaluation deadline had passed.

Adding to its concerns, Sopra Steria alleges that Capita's pricing suggests staffing levels "significantly below the current staffing levels for the BPS service," raising questions about the company's ability to deliver the required services.

The legal claim also alleges that the DWP renegotiated Capita's tender to align with changes to the broader Synergy program, including consolidated go-live dates and altered solution components. Sopra Steria argues this renegotiation violated procurement rules.

This legal challenge comes at a sensitive time for both Capita and the Synergy program. Capita has been under fire for its handling of the Civil Service Pension Scheme, which has generated numerous complaints from retired civil servants. The Public and Commercial Services Union has described the contract award as a "reckless gamble" and questioned why the government continues to reward a company "at the center of a pensions crisis."

For the DWP, the legal case threatens to derail progress on the Synergy program, which has already faced challenges. In 2021, the Ministry of Justice cancelled its ERP upgrade project to align with the broader program, highlighting the complexity of coordinating such large-scale transformations across multiple departments.

The Synergy program represents one of the UK government's most ambitious shared services initiatives, aiming to standardize business processes across four major departments while delivering "modern and innovative value for money services." The program's success depends on careful coordination between technology providers, business process services, and the various government departments involved.

Sopra Steria is seeking to have the procurement process terminated and/or rerun, along with damages. No hearing date has been set, pending requests to assess further commercially sensitive information.

The case raises important questions about procurement practices for major government contracts, particularly regarding how abnormally low bids are evaluated and whether post-selection renegotiations are appropriate. It also highlights the tensions between driving value for money and ensuring service continuity in public sector outsourcing arrangements.

As the legal proceedings unfold, both the DWP and Capita will be keen to demonstrate that proper processes were followed and that the contract award represents the best outcome for taxpayers and civil servants alike. For Sopra Steria, the challenge represents an attempt to overturn what it sees as a flawed procurement decision that could have significant implications for its business in the UK public sector.