Sopra Steria sues UK government over £958M Capita outsourcing award

Sopra Steria is suing the UK government, alleging it accepted a bid from rival Capita for an outsourcing contract worth up to £958.7 million that it failed to recognize as too low to comply with procurement rules. In court filings accessed by The Register, the French outsourcer claims the Department for Work and Pensions (DWP …

[Anonymous Coward]

In other news...

Voracious glutton annoyed that someone else ate the pies...

[JessicaRabbit]

Re: In other news...

Indeed, they both seem to have left a wake of poorly implemented solutions behind them.

[hoola]

Re: In other news...

This is everything that is wrong on public sector procurement. These huge companies just suck billions of tax payer's money out for poor value. Then when they don't get their way the sue. Heaven forbid if they don't deliver, nothing is the company's fault. I hope the tender evaluation Haa been done properly (documented and due process in evaluation) and Sopra Steria lose .

[elsergiovolador]

Parasites

From the mugged tax payer point of view, what's the difference?

[theOtherJT]

Re: Parasites

You start to wonder if anyone has even heard the term "accountability costs". I mean, sure, ok, maybe we can save some money on some project by outsourcing it; but when it goes wrong - and it always goes wrong - what leverage do we have over the people responsible and can we get them to carry the costs for making it right? None? We can't? Oh. Not looking so much cheaper than doing it in-house now is it?

I'd have much more sympathy for this sort of thing if we negotiated contracts that said "You're getting paid £100 million a year for ten years to meet the following contractual terms. You will not get paid any more regardless of the cost over-runs. There will not be a contract extension, delivery on this timescale is non-negotiable. If you cannot meet all terms agreed at the pre-agreed milestones you will be considered in breach of contract and you will be required to re-pay everything that has been paid so far. If you go bankrupt because of this you will be nationalised, work will continue, and everyone at the executive level will be fired with no compensation."

Watch how fast people stop lowballing numbers and allowing massive over-runs when the terms of the contract actually include penalties that will hurt for not meeting them. Then watch how much the difference in cost between doing it your damn self and outsourcing it vanishes.

[Chris Fox]

Re: Parasites

I think you meant to say "watch how fast gov ministers step in and scrap/ignore meaningful penalty clauses, to appease their corporate paymasters, and lobbyists." They may present themselves as gamekeepers, while often being in cahoots with the poachers.

[steviebuk]

Re: Parasites

Have said this for years and years in IT, mostly falls on deaf ears despite people practising what I point out.

I point out, when you out source, you loose control of your data, especially if its a database. What to make some changes to the tables? Raise a ticket with the 3rd party. Maybe wait weeks for them to do it, if you want it done quickly "That will incur consultancy costs about £100 an hour".

Keep it all in-house and "We do have SLA's but as you said its for the directors and its really urgent, I'll get it run now, just make sure you raise a ticket after".

And there it is. As long as you don't have jobs worth engineers, you'll always get a better service internally. They know when something is important and will just bend their SLAs to get the fix done. Any time you ask the 3rd party company, they'll direct you to the Account Manager first who introduce you to large consultancy bills.

I once said at work "So the people that got the new contract, were they the lowest bidder?" Yes, was the answer. I said "Well you know the saying, you get what you pay for". It went silent, because they were currently having issues with them being shit :) That contract, not long after was cancelled due to poor performance.

[PB90210]

Re: Parasites

After the Challenger disaster, Richard Feynman reportedly said "x million parts, all made by the lowest bidder"

(and I believe he was just paraphrasing an earlier quote)

[David Hicklin]

Re: Parasites

> (and I believe he was just paraphrasing an earlier quote)

I think it was originally made regarding the Saturn 5 rocket, and maybe before that the Lancaster Bomber being a million rivets flying in close formation.

[[e-mail]]

Re: Parasites

I think it was the Shacklebox... uh, Shackleton that was first described as a million rivets in close formation. Lancasters didn't rattle anywhere near as much.

[Chinamissing]

Re: Parasites

I mean have you seen the output of the 'nationalised' systems? Ever lived in Cuba or the USSR or the PRC, Vietnam? Or perhaps had the benefit of living in the UK and dealing with your local council? Or perhaps watched your tax bill rise and rise, whilst services decline but their salaries go up? Tried to get planning? Perhaps we can say if it is nationalised and you fail to deliver value for money for the tax payer (not the union nor yourself) then you will be required to repay everything that has been paid so far to the tax payers and you will be fired.

[katrinab]

Re: Parasites

Having a privately run Tesco works vs a government owned food distribution network, because if you don't like what Tesco are doing, you can go to Sainsburys, or you can start your own food shop.

That argument doesn't apply to these sorts of government outsourcing contracts.

[Anonymous Coward]

Re: Parasites

A key reason “nationalised systems” are rubbish is because of idiots who go on and on about the poor performance of the public sector and so “punish” the public sector by under funding it…

Exhibit A: The Tories since Ted Heath ?

[Anonymous Coward]

Re: Parasites

"I mean have you seen the output of the 'nationalised' systems?"

Yes. They were usually far better than the crap we got after they got privatised: water and trains for example. And we didn't have the likes of Fushitsu and Crapita ripping us off while providing an much shittier service. Or vulture capitals stealing our money instead of investing in the infrastructure they got on the cheap.

[Anonymous Coward]

Re: Parasites

Local councils have to publish their pay scales by law, and I bet you won't find a single one that pays as well as the private sector. The "extra" benefits they used to provide over the private sector have been eroded over the years until the only real advantage for most staff to working in the public sector is the warm glow we get from helping people rather than rooking them to pay the shareholders.

Do not confuse multi-billion £££ bungs to junior doctors and train drivers, driving up the "average" pay rise, with every public servant getting a huge raise.

And we pay tax too, which goes up at the same rate yours does - but our wages go up by less.

[Catch-the-Pigeon]

lowest price - lowest service

A number of years ago I was working at JPMorgan when they had outsourced their IT services to IBM, who had won the contract as the lowest bidder. However, the agreement included professional services billed separately from the core contract.

By the time I joined, the arrangement had been running for several years, and it was widely understood internally that almost any change was classified as professional services. The associated costs steadily accumulated and, over time, likely matched or even exceeded what some of the higher bidders would have charged in the first place.

As I understand it, JPMorgan eventually decided to terminate the remaining contract early and bring it all back-in-house (backsourcing). This may have not been the only reason because there was a merger at the time and I guess there probably were a few reasons.

[Gavsky]

Re: lowest price - lowest service

Outsourcing can work: delivering good service at a lower cost, or simply more efficiently. But, as you & I have experienced: it can simply be cheaper...but sh*tter. Some company-types become obsessed with cutting expenditure, at any cost! The actual effect of that seems irrelevant to them.

[VoiceOfTruth]

As much as I dislike Crapita

This is something that should be handled in the UK by a UK company. Data like this should not be handled by a foreign company. Full stop.

[Steve Foster]

Re: As much as I dislike Crapita

Better yet, as this is the Civil Service, they should be running payroll and HR directly in-house, and not pissing taxpayers money away on private profits at all.

Of course, that modestly increases the total number of civil servants required, which is currently anathema to the British Govt (even though a broadly-similar number of workers will be employed just to service the CS contract), so simply cannot be countenanced.

[Like a badger]

Re: As much as I dislike Crapita

I'm a civil servant, and I've got a decent mount of private sector support services and IT experience, and Mr Foster has identified exactly the problem.

There's zero proprietary skills in pensions, payroll or the like, the civil service easily has 10x the mass to deliver economies of scale in house, and the IT involved is relatively simple. However, moron politicians (of both main parties) get themselves lathered up about the number of civil servants, and then conveniently ignore the fact that there's a huge "shadow civil service" of outsourced work - whether back office like payroll and pensions, all IT, FM and property, or actual service delivery.

And what's worse, government ties itself up in knots with its own shit-headed procurement roles. I'm sure Sopra Steria have a point that Crapita have bid at a loss, but it's the f***ing government, why are they allowing shitbag companies like SS to sue them? Bad enough making two poor decisions (outsourcing, then choosing Crapita), and now they've compounded it by ending up fighting a civil case where there's a good chance they'll have to pay off SS.

[paluster]

Re: As much as I dislike Crapita

Ex civil servant (retired) here.

This rubbish started under the blue mob who were, and still are, utterly convinced that the private sector does everything better. That's absolute bullshit of course since a private company has its attention split between providing a servive and making a profit.

[SamanthaFA]

Re: As much as I dislike Crapita

This rubbish started under the blue mob who were, and still are, utterly convinced that the private sector does everything better. That's absolute bullshit of course since a private company has its attention wholly on making a profit. FTFY ;)

[Gavsky]

Re: As much as I dislike Crapita

Absolutely so, but this is nothing new: our payroll at least, was already outsourced when I worked for the DWP over 20-years ago.

Memorable moment: they didn't pay me properly one month, so my manager arranged for a cash payment from the actual Job Centre funds; cue me walking around with over £600 in cash until I could pay it into my bank the next day! You couldn't make this sh*t up.

[Chinamissing]

Re: As much as I dislike Crapita

Or of course having competent civil servants who deliver value for money and are efficient, rather than declining and lower than before covid. Given the public sector accounts for 25% of GDP now you would hope that they could actually deliver what they promise rather than asking for more money, more time, more resources.

Given that it is more likely that a civil servant will die in service than be sacked you have to wonder what they would have to do to actually be disciplined. Perhaps their job?

[Anonymous Coward]

Re: As much as I dislike Crapita

I read the story and wondered holy fuck why is something as basic as HR and Payroll (even on Oracle) costing nigh on one beeelllioon fucking pounds…. On top of the abortion Crapita have already made of the Civil Service Pension Scheme.

[Yorick Hunt]

French?

Is this them?

[Ian Johnston]

Capita's bid for the contract was "abnormally low"

Capita's final charges, however, will not be abnormally low. And they won't do the work, either, because why change a winning formula?

[Gavsky]

The utterly bizarre, & Impossibly frustrating fact, is that Crapita have too often ended-up losing money on a contract - because of financial penalties & extra expenditure! The work gets done - too often poorly & some late - always with huge stress for the staff at the 'coalface'. Why they keep this 'winning' approach to contracts is beyond my comprehension. The CS pension is just the latest example.

[R Soul]

Why they keep this 'winning' approach to contracts is beyond my comprehension.

Simple. If Crapita ever lose money on a contract - a very if - they know they have HM taxpayer by the balls and a bale-out is guaranteed.

It's not as if those contracts could easily be taken away and handed over to another provider. Who at best will be just as bad as Crapita.

[Gavsky]

I work for Crapita, I know what can happen based on personal experience. Bid low just to get a contract; don't invest enough, quickly enough - to service a contract properly. Panic when it goes wrong (Civil Service pensions is a great example); drag staff in from other contracts & employ agency staff to catch-up.

Suffer terrible PR, deliver poor service, face possible financial penalties. Realise that you may actually face a LOSS overall on a contract, because of everything above. Repeat, ad nauseam.

[Anonymous Coward]

Same story here.

I work for Sopra Steria.

[Tron]

Absolutely legit.

It's a government contract, so the bid need only be 2% of the final cost.

It will take at least 10 times as long as documented. By which time the platform it runs on will be EOL'd and they will have to start porting it to another one.

They don't need lots of staff - they have AI. AI is magic. Cost nothing, does everything. Haven't you been keeping up with trends?

As it involves multiple components from multiple big tech companies, it is unlikely ever to work, so it doesn't matter.

Still, bonus points for any outsourcer who can bag cash in court for a project they didn't even get. That would be impressive, and set a new standard for all outsourcers.

It would have been cheaper to do it on paper/with basic tech. But that is just crazy talk in the Age of AI.

I

[Richard 12]

Re: Absolutely legit.

It's not that rare.

It's mostly because some upper manglement and politicians have a tendency to ignore the procurement rules and to pay more attention to nice dinners and informal hints about future revolving doors, than the actual tenders.

Sadly it rarely happens when politicians award horrifically bad value contracts without tendering at all, ref Lord 'Ben' Houchen and the repeated and ongoing extreme enrichment of a couple of (now foreign for tax purposes) 'business' families. Still not entirely sure whether he's an idiot or very, very smart at hiding stuff.

[Albert Coates]

Re: Absolutely legit.

The ongoing saga of Houchen and the Teesworks scandal which Private Eye has been covering passim ad nauseam tends to indicate that he's just a slimy crook like Maxwell and Al-Fayed. He is most certainly not an idiot.

[xyz123]

In Capita's defence (stop laughing you at the back), £958.70mil is BEFORE bribes.

over £50mil direct to DWP "assessors" bank accounts to disregard every other bid. DWP needs an independent audit of everyone involved's finances and stocks/shares.

[Anonymous Coward]

obvious

Obviously 700,000,000 squid was a low ball, I could have told them that.

I have no idea what they are meant to consult/support but frackme, 700 million is is shit load of money. That's £2800 per pensions employee, what happened to economies of scale? I hope this includes software licensing for the next couple years too but guess it doesnt.

It's a different world.

[Three_Cross]

Having written a few Government IT procurement specifications I can understand how easy it is for challenge. Get one requirement wrong and you are stuck taking a bid that definetely doesn't deliver the expectation. UK Government procurement law is a nightmare and as an IT architect I dread all involvement!

[Taliesinawen]

It's all government money, an endless money tree /s

Pardon my cynicism :(

[Rosietk]

It was already a doomed programme if they've chosen Oracle ERP and IBM (likely with their expensive proprietary integration). So adding in Crapita was just the icing on the cake. And Sopra Steria is adding a very expensive cherry on top.