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Volume 472: debated on Tuesday 26 February 2008

To ask the Secretary of State for Work and Pensions how much was paid by his Department to Capita Group plc and its subsidiaries in each financial year since 2004-05; which contracts were awarded by his Department to Capita Group plc in each year to the most recent available date; what the cost was of each contract; what penalties for default were imposed on contract provisions; what the length was of each contract; whether the contract was advertised; how many companies applied for the contract; how many were short-listed; what criteria were used for choosing a company; what provision was made for renewal without re-tender in each case; and if he will make a statement. (180707)

Information on DWP expenditure with Capita Group plc and its known subsidiaries in each year since 2004-05 is provided in the following table.

£ million







2007-08 (to December 2007)


Total = £176.66 million which includes £23.79 million recoverable VAT.

Contracts awarded to Capita are as follows:

Record storage

In 2004, DWP awarded a contract for the provision of record storage services to Capita Business Services Ltd. The contract commenced on 1 July 2004 and is due to expire in June 2011. The contract was advertised in the Official Journal of the European Union (OJEU). 39 organisations applied for the contract and three were shortlisted. Expenditure on this contract between July 2004 to December 2007 is £52.96 million.

Occupational health services

In December 2007, Capita Health Solutions was successful in a competitive re-tender exercise to identify an occupational health service provider for DWP. The competition was advertised in OJEU and a number of organisations expressed interest in the contract, eight were shortlisted and four bids were received. This service went live in April 2007. DWP and Capita mutually agreed to disengage from this arrangement with effect from 15 August 2007. Expenditure with Capita was £1.07 million. Consultancy and Interim Personnel

Capita Business Services Ltd. has a place within four lots on the DWP Consultancy and Interim Personnel framework. This framework was advertised through OJEU and went live in April 2004. Each requirement identified within the Department is competed within the appropriate lot of the framework or through other appropriate commercial arrangements e.g. PAN Government frameworks, CIPHER Communications Framework. Expenditure with Capita on consultancy and interim personnel from April 2004 to December 2007 is £5.63 million.

The UNderpinning IT DeliverY (UNITY) Project

In 2005, Capita Business Services Ltd. was one of 32 suppliers awarded a Framework Agreement under the Department's UNderpinning IT DeliverY (UNITY) project. The UNITY Project was designed to put in place commercial arrangements for the procurement of IS/IT services for DWP which complemented existing contracts. As a result of a formal competition, the UNITY suppliers were selected to compete for business within specific areas or lots. Capita Business Services Ltd. is eligible to compete for business in lot one (application development) and lot two (infrastructure development), if invited to do so by DWP. The procurement was conducted under public procurement regulations with a Contract Award Notice published in the OJEU on 31 May 2005.

Capita Business Services Ltd. is one of 23 suppliers that met those criteria in lot one and one of 12 suppliers successful in lot two. The Framework Agreement itself has no value attached to it, nor is there any guarantee that suppliers will be invited to compete for, or be awarded, any specific business for the four year duration of the Framework, which expires in 2009. To date no contract within the Framework Agreement has been awarded to Capita.

Other spend with Capita

Capita Business Solutions had a contract with DWP until March 2007 for the provision of office services in the north west, north east, Yorkshire and East and West Midlands. Expenditure from April 2004 to March 2007 was £85.38 million. Capita had a contract also for the delivery of winter fuel payments which ended in May 2005, following a re-competition. Expenditure from April 2004 to the end of the contract was £4.84 million.

DWP can access Cabinet Office contracts for the delivery of PCSPS payments (Capita) and their framework for senior level recruitment where Veredus (a Capita subsidiary) is a supplier. In addition, there has been ad-hoc expenditure with Capita for example for the provision of miscellaneous training, IS/IT, property services and access to work payments, to aid in the employment of disabled workers. Expenditure from April 2004 to December 2007 in these areas is £2.99 million.

All DWP contracts are awarded on a balance of quality and cost, to provide optimum value for money for the Department. All contracts are underpinned by key performance indicators and where appropriate, service credit regimes should performance not reach the required standard. DWP also has standard clauses in respect of formal breach of contract action.