Capita has been awarded preferred supplier status on the Armed Forces Recruiting Partnering Project (RPP) - a potential £500m ten-year deal to deliver ICT and recruitment services for the armed forces. Capita beat off competition at the final stage from Serco’s Prospector Group consortium partnering with Logica and marketing agency AMV Group. The deal is expected to be signed by the MoD in March, and brings to a conclusion a long-running procurement exercise, which started back in April 2009.
Specifically the deal will see Capita take on responsibility for recruiting ‘regular and reserve’ Army personnel ‘from the point of receipt of the initial recruiting target to the securing of an individual's commitment to the Armed Forces.’ In the original OJEU this accounted for 23,000 people each year. Alongside recruitment, Capita will also provide ‘enabling ICT’ for the Royal Navy and the Royal Air Force. An additional 10,000 are recruited annually in to these two forces, so there should be the potential for Capita to expand its recruitment offering over the longer term.
This is an important win for Capita. Alongside its 12% revenue uplift on the recent renewal of the BBC licensing contract (see here), this deal should add c£50m in new annual revenue to Capita. Most importantly, it shows the momentum for organic growth is now gradually returning. Investors recognised the upsides for Capita, pushing its shares up 2%.
For Serco the award is clearly going to be a disappointment. No doubt it would have considered itself in pole position having secured deals in the other big government recruitment/employment exercise the DWP’s Work Programme (see here). To shrug off the blues, it announced a £55m ten-year contact centre deal with catalogue company Freemans Gratton Holdings (£5.5m p.a). Although the first big deal it has won in the contact centre space since acquiring call centre provider The Listening Company last March (see Serco acquires contact centre provider) it will not be much consolation for management whose eyes will have been on the bigger prize.
We will have more to say on this important deal once it has been signed off and more details become available.