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Capita has been awarded another significant new public sector deal, less than a week after its £500m ten-year recruitment services contract with the armed forces (see Capita trumps Serco for Army recruitment deal). This time it’s a £100m+ two-year training contract for the entire Civil Service, which will see Capita’s Workplace Services division manage training via Civil Service Learning (CSL), one of the Government’s new ‘HR hubs’.
Capita will in effect become a centralised procurer of training services to the Civil Service to reduce cost, complexity and duplication via a mix of e-learning and classroom training. Capita is being charged with ensuring that the number of similar training courses is reduced and procurement isn’t duplicated, to ensure that Government doesn’t end up paying multiple times for the same products, daily rates are standardised across similar courses with the same supplier, and utilisation of courses is increased. Capita has also committed to cut the cost of classroom courses by up to 70%. The contract is expected to make a ‘significant contribution’ to the £90m p.a. savings targeted for CSL.
The really interesting part is that Capita will be delivering just under half (49%) of the contract direct, and the other 51% via a supply chain of specialist small and medium sized (SME) training providers. This is the first time UK Government is ‘mandating competition in the supply chain’ according to Sir Gus O’Donnell. It shows an innovative solution for Government to contract with SMEs, something it is very keen to do, but using a large prime contractor like Capita to reduce the risks. Capita will run open competitions among the SMEs to procure the training services, but this will be overseen by Government to ensure all remains fair and open.
If all goes according to plan, Capita (and its partners) could stand to share a further £150m over the next two years from the contract, up to a total contract value of £250m. Capita remains conservative on the potential upsides. However with this and the recent Army deal we now have clear signs of sustained progress from Capita on its path back to organic growth. The benefits of this however will only come through from FY12 onwards.
