Capita £370M bid 40% under UK.gov estimate for Oracle HR and finance system project, court case reveals

A new court filing has revealed the UK’s Department for Work and Pensions accepted a bid from Capita to run its new Oracle-based HR and finance system at £272 million less than its own cost modelling. In March, the UK outsourcing company won the contract for running shared services for £370 million over ten years. The central …

[brym]

Definition of Insanity?

Why do they keep on giving contracts to someone who has repeatedly demonstrated the most effective ways to sh1t the bed in increasingly creative and spectacular ways every single time? They're not called Crapita for nothing!

You'd think the government would have the common sense to stipulate competence and performance clauses after a single instance of incompetence. Yet this company continues to "win" contract after contract, with (no) control over some of the most important systems impacting the staff expected to use them, and the public who depend on them.

[localzuk]

Re: Definition of Insanity?

Even after all these years of bad contracts, public sector procurement rules still do not have anything in them to allow you to take into account poor performance of prior contracts or reputation. For some reason, we steadfastly refuse to change the rules that keep leading to a small number of firms, that consistently provide terrible service, to get all the contracts.

In an unrelated note, some ex-ministers just so happen to leave government and end up as advisors to a certain group of companies that win a lot of contracts...

[elsergiovolador]

Re: Definition of Insanity?

The claim that the rules contain nothing is over a year out of date. Since February 2025 the Procurement Act has let the government weigh poor prior performance and put a failing supplier on a published debarment list. The power exists.

What has it produced in over a year? An empty list. The register is blank. The only investigations opened were the Grenfell cladding suppliers, and even those were paused. Not one firm debarred for performance.

The machinery that builds the cases has just been quietly reshuffled from the Procurement Review Unit into the Government Commercial Agency without ever using the power once. A whole apparatus, no output, then a reorganisation. That is the Civil Service answer to every failure: move the box on the org chart, change nothing.

Yes, the legal bar is high and a debarred firm will litigate. But "we might lose in court" explains caution on a single case, not zero cases in a year against the serial failures everyone here can name. A remedy never used against anyone is a remedy with no deterrent value. The outcome for the public is identical to having no rule at all.

So the ex-minister advising a big consultancy is a sideshow. He cannot direct a panel he never sat on. The bottleneck is the referral, and the referral never comes. The debarment case has to be built by the same Civil Service that scored the firm well in the first place, which would have to indict its own past judgement to make it. So it does not. No curiosity, no referral, no list. The rules changed and nothing else did.

[brym]

Re: Definition of Insanity?

Are they really the actions of the civil service though, or of a small few senior civil servants / project managers who conveniently end up in the same revolving door system localzuk was talking about? Because if I were a betting man, I might be inclined to put my money on the latter.

[elsergiovolador]

Re: Definition of Insanity?

I'd put it the other way. The fact that it's a small few working the door is exactly what lets the rest off the hook, and that is the problem. Everyone else can see the pattern and treats doing nothing as the safe option.

Look at the machinery built to stop it. ACOBA, the body meant to vet officials moving to private firms, was called "toothless" by the Deputy PM and "dead in the water, next to useless, utterly pointless" by its own former chair. The NAO found the centre of government had no oversight of whether departments even applied the rules. Breaches by ministers and officials went unsanctioned for years. It was finally abolished in October 2025 and replaced with an untested system. Years of recording the process and stopping nothing.

That is not the failure of a clique. A clique cannot rob a country for decades. It needs a culture around it where naming the firms and asking the obvious questions is somebody else's job, and never your own. The senior few "cash in" because everyone beneath them is rewarded for keeping their head down, logging the paperwork, and protecting their golden penshion. Referring your own department's commercial decisions is a career risk with no reward, so it does not happen.

The silence is what makes it possible, and silence is a choice.

[druck]

Re: Definition of Insanity?

Oh come on, you've had two posts where it was entirely justified, if not absolutely begging, to include the phrase "wine and steak".

[Anonymous Coward]

Re: Definition of Insanity?

I came here for the “wine and steak” and I’m most disappointed.

- Michael Ellis, Uxbridge

[localzuk]

Re: Definition of Insanity?

While the rule may exist on paper, the actual departments that have to apply the rules cannot actually apply anything because that list is indeed empty. It also means departments and public sector organisations with their own delegated budgets (such as schools), can't take into account prior performance still. If SuperEvilCorp has a contract in a school, and the school want rid, but the contract has to follow tendering rules due to size? There is zero way for that school to prevent that company coming along and winning it.

So, the outcome is the same.

[Anonymous Coward]

Re: Definition of Insanity?

Well they do. That was the part of the remit of the Procurement Act 2023 and debarment from public contracts…

… unless this was just a cynical ploy to retroactively target some blame for only Grenfell tower fire. (Same as Misconduct in a Public Officer is good enough for bent councillors, bent coppers, Andy and Mandy … but not for Boris ‘PartyGate and Proroguing’ Johnson or WMD B-Liar).

https://www.gov.uk/government/publications/procurement-act-2023-guidance-documents-procure-phase/guidance-debarment-html

[localzuk]

Re: Definition of Insanity?

Somewhat useless, as it requires the Cabinet Office to do the work. It doesn't allow anyone else in public sector to look at contract performance for their own suppliers and ignore them.

[Fruit and Nutcase]

Re: Definition of Insanity?

Why do they keep on giving contracts to someone who has repeatedly demonstrated the most effective ways to sh1t the bed...

Why do victims stay in abusive relationships?

[Sproggit]

Re: Definition of Insanity?

I haven't read the contracts, so this is just wild speculation...

But if my experience of this sort of contract is anything to go by, Craptia [sic] are viewing this initial deal as a short-term "loss leader". There are enough clauses in the contract to allow them to claw back the gap and then some, once this initial phase moves in to a longer term relationship.

I'd guess that there are no clauses in the deal that limit the amount by which Crapita can increase costs in future years.

I'd guess there are no clauses that prevent Crapita from hiring the critical experts out of the public sector and in to their company - where they will continue to provide the same basic service for the government, but wearing a different hat and with a very different set of priorities and a very different master to serve.

I'd guess that nowhere in any of the paperwork will you find any reference to the inducements - such as e.g. Non-Executive Directorships - offered to relevant Committee members or Decision-Makers to usher this deal through.

There's something decidedly fishy going on with deals coming out of Westminster at the moment. The same old "Usual Suspects" - Crapita, Palantir - keep turning up, keep seeming to win dubious bids - and even more odd, their bids seem either way over-the-top or below-cost-price.

And final thought... If our own government expected a contract worth hundreds of millions to be likely to cost 42% *more* than the winning bid, I'd expect the NAO to IMMEDIATELY start a detailed investigation of the leadership of that function, the processes they followed, the extent and quality of their work.

What's that you say? The NAO is too busy investigating the prices charged to MP's in the Westminster Village Cafeteria? Oh, sorry, I didn't realise they were all fully occupied with a matter of such grave national importance.

Snort.

[Altrux]

Re: Definition of Insanity?

I know people in government agencies who have retired a year ago and not received a single pension payment yet. Crapita's hellish incompetence is causing real stress and hardship to thousands, but the contracts just keep rolling in...

[Guido Esperanto]

DwP Produces a should-cost model to protect against low cost bias.

Also..Awards to low cost bid.

The checks and balances are falling over.

[Anonymous Coward]

It’s a bizarre day when you are fully behind and are rooting for Sopra Steria as the plucky underdog.

[Anonymous Coward]

Bids on the cheap

Some years ago, as a mid-level engineer, I joined a company which had recently installed a new plant.

They had received 3 bids, £5.6M, £5.3M and £3.6M. They went with the cheapest bid.

Needless to say it was a complete POS and 18 months after installation it still didn't work properly despite much additional time, effort and modifications being put in.

I will let you work out the moral of this story.

[Gavsky]

Re: Bids on the cheap

Amen to that. On a smaller scale: my Dad has a tendency to fixate on cheaper, which has led to a unbelievably crap web cam, dash cam & mobile. I tend to go mid-range & have suggested this approach to him. I can't justify a £1000 mobile, but a £200-250 one can be great.

[VoiceOfTruth]

I'm not sure who to trust here

Typically, government 'experts' vastly underestimate the costs of pretty much everything. But they are also useless at getting a reasonable price.

But it's only taxpayers' money, not their own. So they don't really care.

>> defense

Please... when writing about the UK, deign to use UK spellings.

[Anonymous Coward]

UK Government Contracts

I used to be a director of a small company (technically a SME) which was periodically invited for government contracts. I can tell you from grim experience that it's extremely difficult to win a government contract. Once you have negotiated your way through the complexities of the initial Request for Quotation there is a tsunami of requirements, and the failure to meet any of these can result in immediate exclusion. You can start with:

* Subcontract Framework Terms and Conditions (Typically anything from 40 - 50 pages of legalese)

* Project deliverables (10 - 50 pages)

* Contract Management: The Contractor shall establish clear organizational lines of authority and responsibility to ensure effective management of resources assigned to the requirement

* The Contractor must maintain continuity between the mission partner and the contractor’s corporate offices.

* Contract Administration: The Contractor shall establish processes and assign appropriate resources to effectively administer the contract

* The Contractor shall assign resources to maintain proper and accurate records related to this contract.

* The contractor shall provide such progress reports as are required by the government against agreed milestones & deliverables (weekly / monthly)

* The contractors shall be certified to ISO 9001, 14001, 27001, 45001

* Contractor shall provide a full organisation chart

* Contractor shall provide all relevant qualifications and certificates for personnel involved in the project

* Contractor shall provide a business continuity plan

* Contractor shall provide a schedule of rates for all personnel

* Contractor shall provide at least £10M of insurance which shall be retained for 12 years after project completion (I shit you not) - this for a £150k project

The above copied and pasted from a government contract document for a project value of between £150k and £200k. there is another 3 pages of specific project requirements.

Basically the only people who can comply with the procurement process are the big consultancies who have a team of people working full time to complete these highly complex RFQs. Never mind the brown envelopes and friends of friends who used to work for the ministry, the whole thing is rigged to exclude SMEs from the process hence only a small number of the *usual suspects* can possibly hope to get through the selection process.

Bitter? Moi?

[James R Grinter]

Re: UK Government Contracts

> team of people working full time to complete these highly complex RFQs

Indeed, that’s all these companies really are: bidding machines.

[Gavsky]

Those of us who work for Crapita have always suspected that our bid teams deliberately 'go low'. There's a joke at work about our company slogan: "We're shite, but cheap!" It's very sad - we actually do a lot of great work; we have hard-working & talented staff; we can use AI to actually deliver some real improvements & efficiencies.

But, an under-resourced contract leads to things going badly wrong: drag in staff from other contracts because this one is falling behind (Civil Service pensions); suddenly more agency staff appear - some very good, others definitely not. Pay 'fines' etc. for missing SLAs, anger a LOT of clients, damage what reputation we have. Cue no profit, or even a loss; too often - rinse & repeat.

[IGotOut]

Simple answer to low bids...

Make sure the contract is correctly written, with no wriggle room and lock them to that price.

But of course, the specs will be badly worded, the contract as watertight as a paper bag and a break clause penalty greater than the cost of the contract, so even if they deliver nothing, the tax payer, sorry, Government still is on the hook for 5x the original quote.

[Anonymous Coward]

Run away

Run away

- Sir Robin

[Ken Shabby]

Re: Run away

Very brave

[Anonymous Coward]

The real problem has been stated BUT no solution.!!!

Thr problem is many fold:

1.) The Civil Service is bad at estimating costs & writing contracts that are not able to be gamed by using the 'exceptions' to increase the scope/cost later in the delivery.

2.) The Civil Service will not admit they are at fault because they NEVER accept blame EVER.

3.) The Usual Suspects are 'good' at navigating the procurment process and can afford to 'Loss lead' to win because they CAN get the real costs later.

4.) Because of 2.) the same mistakes are repeated year after year, any other response is career-limiting and most people are in the Civil Service for the long-term.

5.) The level of egregious failure is almost beyond imagination, both in the selection of the 'winner' and the management of the ensuing project(s) ... yet no-one is blamed.

The only solution is 'Nuke it from high orbit, just to be sure' as far as the Procurement process is concerned.

Past performance is really taken into account, which means there is no room for giving (people/Civil Service) the means to ignore past failures.

This means that any past failures IF ignored will evoke penalty clauses in ANY new projects when found and that they can be found by 3rd parties as a matter of law/contract conditions.

This is a big hit to the powers of the existing Civil Service BUT it needs to be done as the Civil Service outlives any govt and tends to have long-term objectives that exceed the current govts lifetime.

The mess is a combination of the Civil Service attitudes and 'Usual Suspects' too close relationship with the people who decide who gets the 'pot of gold'.

This will, of course, never happen as the Civil Service is too powerful and always outlives any minister who deigns to challenge them.

:)

[Anonymous Coward]

Government is into Scat

Only fetish of the most extreme kind would possess Whitehall officials to enable Crapita to yet again pull down their pants and squat over their gaping mouths; each awaits hungrily for Crapita to squeeze out load after load, pinched off and dropped inside their eager gobs.

The whole thing sinks cos it’s dirty. Those filthy foul animals!

[MrGreen]

Easy Money

The same companies keep winning the contracts because the elites all own massive amounts of shares in these companies.

It’s easy money. They don’t care if they deliver a good service or not.

The transfer of wealth via tax.