The UK government awarded Capita a £239 million contract to run the Civil Service Pension Scheme (CSPS) after assessing its past performance, despite the rollout later leaving thousands of retirees waiting for payments, a senior civil servant has said.
The tech services biz passed the pre-selection stage for the ten-year contract. At the tender stage, Capita successfully navigated a technical assessment and a commercial evaluation based on price and value for money conducted by two independent government teams, according to a letter to Members of Parliament (MPs).
Catherine Little, Cabinet Office permanent secretary and the chief operating officer of the Civil Service, wrote to the Public Administration and Constitutional Affairs Committee in response to a number of outstanding questions from a recent session on the CSPS.
Capita took over the service for 1.5 million current and former public servants, but a glitchy portal launch after this, in December last year, led to what the Commercial and Public Services union called a "fiasco" that delayed payments to "8,500 newly retired civil servants."
Capita said it was managing a backlog of 86,000 cases inherited from the previous provider, MyCSP, a significant proportion of which were already overdue.
In her letter, Little said the decision to outsource in 2021 followed an "Outline Business Case" and a "Delivery Model Assessment," which included a cost, risk, and benefits analysis of options including insourcing. "The assessment provided a data-driven indication that outsourcing provided the best opportunity to realize defined benefits with the least risk," she said.
The Cabinet Office then launched the competition to outsource the deal in February 2022.
According to Little, a series of detailed requirements were set out that were "a significant enhancement to the previous contract."
The letter – published this week but sent on March 24 – said bidders were assessed on past performance at the pre-selection stage, which Capita successfully passed.
"At the tender stage, bids underwent a technical assessment and a commercial evaluation based on price and value for money conducted by two independent teams. Capita was the winning bidder in line with the evaluation methodology," Little wrote.
Nonetheless, she acknowledged the service did not meet expectations, noting "unacceptable constituent experiences, specifically regarding bereavement call handling."
She said she had escalated one specific case with Capita as a matter of urgency, and the outsourcer was investigating "to ensure appropriate action is taken."
"To bolster capacity, we are finalizing training to allow government surge staff to support this workstream later in March," she told MPs. Initially, Capita expected a transfer of around 37,300 cases from MyCSP. In her letter, Little said that Capita was specifically instructed in July 2025 to prepare for volumes of up to 100,000.
Richard Holroyd, CEO of Capita Public Services, told the Public Accounts Committee in March that although the company was warned about the increasing number of incoming cases, it had little understanding of their complexity or how long they had been outstanding, affecting its ability to clear the backlog.
Little said Capita's performance data across 16 of the government's most important contracts shows that in Q2 of the most recent financial year – July to September 2025 – 90 percent of its KPI data was rated "good" and 5 percent was rated "inadequate."
For the CSPS, Capita had provided inadequate management information to date, but based on available data, the Cabinet Office maintains that Capita has failed the majority of its KPIs, Little said. ®
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