UK Government Accepted Capita's £370M Bid 40% Below Its Own Cost Estimate, Court Filing Reveals
A court filing in a legal dispute has revealed that the UK Department for Work and Pensions accepted Capita's £370 million bid to run HR and finance systems for four government departments, despite the bid being 42% lower than the department's own £642 million cost model. Rival bidder Sopra Steria is challenging the award, alleging Capita's bid was abnormally low and based on inadequate staffing levels. The case highlights concerns about whether government procurement guidelines designed to protect against suspiciously low bids were properly followed.
The UK's Department for Work and Pensions awarded a 10-year contract to Capita worth £370 million to operate Oracle-based HR and finance systems for four government departments, despite the bid being significantly below the department's internal cost projections. According to court documents disclosed in an ongoing legal challenge, the DWP had developed a "Should Cost Model" estimating the contract at £642 million—a figure 73% higher than Capita's winning bid. Cabinet Office guidelines state that bids more than 10% below cost models should be referred to the Government Commercial Function for review, though the DWP has declined to confirm whether this occurred. Sopra Steria, the incumbent service provider and unsuccessful bidder, is contesting the award on grounds that Capita's bid appears abnormally low and relies on staffing levels significantly below current levels. The DWP has defended its decision by arguing Sopra Steria's own bid was excessively high and by raising procedural objections about how Sopra Steria obtained the cost model information. The dispute is part of broader government efforts to consolidate shared services and achieve claimed £4 billion in benefits.
What's missing
The sources do not provide details on what specific staffing reductions Capita proposed compared to current levels, nor do they clarify the outcome or timeline of the ongoing legal challenge. Additionally, while Cabinet Office guidelines are referenced, the sources do not explain what consequences, if any, exist for failing to refer a bid to the Government Commercial Function when guidelines suggest it should be referred.
What different sources said
- The RegisterCenter
Capita £370M bid 40% under UK.gov estimate for Oracle HR and finance system project, court case reveals
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