Millions wiped off value of Capita outsourcing deal with English councils amid 'further contract variation agreement'

Procurement services? Not any more. Exchequer services? No thanks. IT Services? Reduced


Updated Capita, the outsourcing provider held dear to the hearts of Reg readers everywhere, is seeing millions of pounds lopped off the value of its contract with a gaggle of small councils in the middle of England.

A tender document published recently confirms the outsourcing provider has had £14m removed from the deal with a shared-services group of Oxfordshire district councils, shrinking it to £126,528,796 (yes, count every last pound).

Having signed the initial nine-year £140.3m contract with Capita in 2016, South Oxfordshire District Council, Havant Borough Council, Vale of White Horse District Council, Mendip District Council, and Hart District Council have decided, we assume, that they've seen as much as they needed to.

"The Councils intend to enter into a further contract variation agreement with Capita for the purposes of removing the requirement for Procurement and the majority of the exchequer services and the reduction of the current IT service requirement from the scope of the original contract," the notice states.

This would result, the tender added, in "an immaterial reduction in contract value".

The councils had already reduced the scope of the deal in March, cutting back the HR advisory hub, licensing services, human resources operational and payroll services, and finance services. As a result, 34 staff were moved back in-house along with the novation of a contract for Zellis payroll software.

Those inclined to snuffle out reasons for a bit of thanks-but-no-thanks to Capita could point to the fact that two-thirds of annual leave calculated for staff employed by South Oxfordshire and Vale of White Horse district councils was wrong, according to local news reports last year.

Then again, tthe BBC reported in 2018 that the same two Oxfordshire councils were left disappointed after finding that expected savings of £18m in the shared services deal had not come to pass.

A report from Vale of White Horse District council admitted the financial benefit had been "considerably reduced" or even negated. Errors in pay, shortcomings in IT services, and difficulty getting in touch with Capita via its helpdesk were also mentioned in the report.

Not to worry, though. Both councils say the headline savings are just one benefit of the five authorities' partnership.

They aren't the only public-sector organisations struggling to recognise the immense value Capita brings to every contract. Earlier this month, Three UK ended its business process outsourcing contract with Capita years ahead of schedule. Instead, the telco and ISP plans to bring certain functions in-house and offshore others to Tech Mahindra in India. Capita has now put 380 UK staff assigned to work on the Three contract at risk of redundancy. ®

Updated at 12:42 UTC on 23/11/20 to add

A Capita spokesperson said: "We can confirm that we have agreed a proposal for the Exchequer Service to return to the 5 Councils Partnership in March next year. Additionally, there is a draft agreement to hand back the procurement service from 1 January 2021. "We look forward to continuing to work with the 5 Councils to deliver some of their essential public services."


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