What does the challenge over Capita’s shared-services contract show about negotiated procurement, bidder risk and equal treatment?
The challenge has widened after disclosure of the contract
Sopra Steria has expanded its legal challenge to the award of a major government shared-services contract after obtaining an unredacted agreement between Capita and the Department for Work and Pensions. It alleges that terms not previously disclosed gave Capita preferential treatment, reduced the risks it had to price into its bid and left more exposure with the DWP. One disputed provision, the Project Change Clause, could allow the department to fund technology intended to address deficiencies in Capita’s tender, Sopra Steria claims. The company has challenged the award since March, also alleging that the DWP accepted an “abnormally low” bid based on staffing levels significantly below current levels. No allegation has been proved.
Negotiation can produce bidder-specific terms, but fairness is contested
The procurement involved finance, payroll, HR, procurement and other shared services for four departments. In a negotiated competition, suppliers can raise questions and seek changes to the proposed contract, rather than responding only to an unchanged set of terms. The DWP says both bidders received equal time and opportunity to negotiate, and that identical questions or requests received identical responses. It says general clarifications were shared with both, while concessions were disclosed only to the bidder that requested them. Sopra Steria argues that this process left Capita with responsibilities and protections that were not offered to its rival, materially reducing Capita’s risk while increasing the DWP’s. The competing interpretations put the focus on whether a concession made during negotiation changes the basis on which bids can fairly be compared.
The contract sits inside a wider shared-services programme
The DWP leads the Synergy programme, which aims to put the DWP, Ministry of Justice, Department for Environment, Food and Rural Affairs, and Home Office on a common software-as-a-service enterprise resource planning and HR platform with shared business processes. Oracle and IBM previously secured a £711 million contract for the ERP software and systems integration. The Capita award concerns the services operating around that platform. Capita values its deal at £370 million over ten years, including extension periods, while the DWP’s filing gives an estimated undiscounted value of £606.6 million over the initial seven-year term and £873.4 million over a maximum ten years. The higher figures include estimated projects and optional services, to which Capita has no automatic entitlement.
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The DWP denies treating bidders differently and says the competition was fair and represented value for the public. Capita has described the process as robust and said it is ready to deliver value for money. The four departments are defendants in the case, which remains a live legal proceeding.
Reported from theregister.com, 2026-10-01. The Tender Wire is published by Otnox.
