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Cabinet Office investigating Capita over training services contract

The Cabinet Office is investigating claims that Capita used a major government contract to short-change small companies, forcing many out of business.

Twelve companies have come together to accuse Capita of abusing its position in administering a £250m contract to provide civil service learning and development training at the expense of small suppliers.

They say that that Capita routinely paid its invoices late, took excessive fees for administering contracts and that it included ‘non-compete clauses’ in its agreements, which prevented them from doing further work for the government without Capita's permission. They also say that Capita undermined them by hiring their sub-contractors to do work directly, cutting them out of the process.

Responding to a question from his Labour shadow Lucy Powell MP in the Commons, cabinet minister Francis Maude said yesterday: “We’ve learnt a lot of lessons from this contract and I absolutely am as disappointed as she is. It should not be working like this. I’m aware of the concerns and we’re investigating them very rapidly to get remedial action. It’s not acceptable.”

Powell added later: “Ministers have questions to answer about when they knew about these dodgy practices from Capita. Ministers lauded this contract as a boon for small business – yet instead, it has led to some going bust due to late payments and departments being charged more for services than they were under previous arrangements.”

In a statement issued after Maude’s comments, Capita said: “The key objectives of the contract were to get a control on both the spend and the quality and relevance of training across the civil service. Capita committed to managing the supply chain and delivering some training directly ensuring that at least 50% of the training was delivered by SMEs.

“Capita has met and exceeded these objectives, delivering tens of millions in savings to Government and a significant improvement in the quality of training. Crucially, 59% of training has been awarded to SMEs, representing 70% (£45m) by value of supplier invoices. Capita has an excellent track record of working with and engaging SMEs and refutes any allegations that it has acted wrongly in this matter.”

A Cabinet Office spokesperson told PSE: “As part of our long term plan to support small businesses, the contract for learning and development for central government includes a provision that more than half of the business must be competed, to encourage SMEs. Some changes have already been made to improve these contracts, but we are aware of ongoing concerns from a number of suppliers and are currently investigating these issues.”

Update 26/03/2015

The National Audit Office has published its findings on the Civil Service Learning contract with Capita Business Services. The report says the NAO has seen no evidence that Capita has inflated its management fees, or that it has intentionally delayed payments to suppliers.

(Image source: Cabinet Office/Crown Copyright)

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