Watchdog Questions Capita's £370M DWP Win Amid Pension Portal Crisis

The chair of the UK Parliament's Public Accounts Committee has raised serious questions about the government's decision to award Capita a £370 million contract to provide shared services to multiple Whitehall departments, just months after the outsourcing giant took over the troubled Civil Service Pension Scheme.

In a letter to the Cabinet Office, Sir Geoffrey Clifton-Brown described the timing as "extraordinary," noting that Capita's administration of the pension scheme has been plagued by technical failures since December 2024. The scheme serves approximately 1.5 million current and former public servants, many of whom have reported being unable to access their accounts or receive payments.

Pension Portal Failures Continue

The problems began almost immediately after Capita took over the £239 million pension contract. Users reported unrecognized passwords and usernames, forcing them to create new accounts that also failed to work. The online portal contained broken links and circular navigation paths, suggesting inadequate testing before launch.

The situation has deteriorated to the point where retired civil servants have had their income slashed after payments failed to arrive, according to BBC reports. Capita acknowledged to the news outlet that it was struggling with a larger backlog of cases than originally agreed.

Multiple Contract Values Create Confusion

Adding to the controversy, different figures have been cited for the shared services contract value. Capita initially announced a £370 million award, while the Public and Commercial Services union claimed the contract was worth £700 million. The official contract award notice states £606.6 million, with a Department for Work and Pensions official clarifying that £370 million represents the minimum value excluding optional services and contingencies.

Legal Challenge and Procurement Questions

The contract award is already facing legal scrutiny. Sopra Steria has launched a legal challenge alleging that Capita's bid was "abnormally low," raising questions about whether the winning bid adequately accounted for the complexity of the services required.

Clifton-Brown's letter specifically asks whether the Cabinet Office shared details of Capita's performance on the pension scheme with the DWP before the shared services contract was awarded. This suggests concerns that the DWP may have proceeded without full awareness of the ongoing issues.

Government Response and Industry Context

The DWP has defended its procurement process, stating that Capita was selected through a "robust procurement process." However, the timing of the award has raised eyebrows given the visible problems with the pension scheme.

This situation reflects broader challenges in government outsourcing, where large contracts are awarded to firms with mixed track records. The term "crapita" has emerged among users frustrated with Capita's performance, highlighting the reputational damage from service failures.

Implications for Public Services

The controversy raises fundamental questions about how government departments evaluate contractor performance and whether adequate safeguards exist to prevent problematic providers from winning additional work. With Capita now responsible for HR, finance, and payroll services across four major departments, the stakes for service delivery have increased substantially.

The outcome of the legal challenge and the Public Accounts Committee's investigation could influence future procurement practices and accountability measures for government outsourcing contracts.

Featured image: Cabinet Office sign (Credit: Shutterstock/RegMedia)

What happens next: The Cabinet Office must respond to the Public Accounts Committee's questions, and Sopra Steria's legal challenge will proceed through the courts. Meanwhile, Capita faces pressure to resolve the pension portal issues affecting millions of civil servants while delivering on its new £370 million contract.

Why it matters: This case highlights the tension between cost-saving outsourcing goals and the need for reliable public services. The outcome could reshape how government departments assess contractor performance and award future contracts.