What's the price of failure? For Capita, it's a £140m extension to its MoD recruiting contract
Yes, the one that cost the British Army 25,000 new soldiers when IT went live
Capita has scored a payday after the British Army quietly handed it a £140m extension to its shambolic DRS military recruiting contract and tacked on a project to migrate certain systems to Microsoft Azure.
The deal, confirmed by Capita to the financial markets on the afternoon of 11 December, will see the notorious Recruiting Partnership Project (RPP) deal extended until 2024.
"The two-year contract extension is worth £140m and will start in March 2022, when the current 10-year contract was due to end," Capita stated. "Under the original contract the MoD had the option of extending Capita's contract, which the company has now successfully secured."
Senior MPs from Parliament's Public Accounts Committee (PAC) last year lambasted both Capita and the Army for ongoing problems with IT systems critical to making the RPP work, labelling the contract "abysmal".
Jon Lewis, Capita's chief exec, trilled in a canned statement: "We are delighted that the British Army has chosen to extend our recruitment contract. This marks another important contract renewal for Capita this year, as we continue to transform the business."
Determined to see off criticism, the infamous outsourcer wheeled out the Army's Lieutenant General Tyrone Urch, who claimed: "Thanks to the British Army's strong partnership with Capita, applications to join the Army hit a five-year high this year."
After a working lifetime in uniform, it appears the general might have forgotten that applications for public-sector jobs tend to increase when the economy crashes and jobs in the private sector evaporate. Around 30,000 jobs were put at risk this month alone after retail chains Debenhams and Arcadia Group both crashed into administration.
Capita is not the sole winner from the contract extension: the Defence Recruiting System (DRS), a bespoke IT project intended to underpin the RPP's workings, will be migrated onto Microsoft's public cloud as part of the deal – or, in Capita's words, "to provide a better candidate experience, faster response times and enhanced functionality."
Figures revealed in July this year showed that the DRS cost the Army 25,000 potential applicants in the month it was switched on, November 2018. That month coincided with the MoD stopping the regular publication of statistics showing how many people applied to join the Armed Forces.
The Sunday Times last year reported an unnamed MoD press officer as saying that the two-year extension would be a "fair and open competition".
Capita's Lewis last year described an MoD penalty of £26m as having swallowed up "close to 100 per cent" of the 10-year, £1.3bn RPP deal's profit margin. The sum is 2 per cent of the original contract. ®