Capita wins £500m MoD contract despite financial health warning

21 Jun 18

The Ministry of Defence has handed Capita a contract to run military fire and rescue services despite the outsourcing company being given the highest risk rating possible by financial analysts, the Financial Times has reported.

The company scored a maximum 10 out of 10 for risk and was given a ‘health score’ of three out of 100 by Company Watch - an independent analytics company - commissioned by the MoD to carry out the financial health assessment, the FT has written. 

Capita will reportedly receive £500m over ten years for the MoD contract, which was given to them ahead of competitor Serco. Company Watch gave Serco an eight out of 10 rating.

One means a company is the furthest away from distress while ten means it is in the worst possible financial health.

Jim Kennedy, Unite national officer for the MoD, described the decision as “absolutely scandalous”.

“The government has clearly learned nothing from the Carillion fiasco. There needs to be an urgent investigation on how and why this contract was let to Capita.”

Unite say that there are 1,500 to 2,000 workers who are affected by this decision.

An MoD spokesperson said: “This contract will deliver a more modern and agile defence fire and rescue service, by investing and improving in the whole range of firefighting infrastructure, equipment and training to improve fire fighter safety.

“Robust assessments have been made to ensure the financial health of suppliers ahead of any contract placement. We will monitor the performance of the supplier throughout the contract’s duration.”

The department said financial assessments only provide background information and the ratings are from Company Watch, not the ministry.

Capita issued a profit warning in January 2018. 

A Capita spokesperson said: “We are executing our strategy announced in April, including action to address the balance sheet.

“Our successful £701m rights issue and the £160m disposal of Supplier Assessment Services demonstrates the progress we are making to simplify and strengthen the business to deliver future success.”

Recently, the National Audit Office found that the government failed to give Carillion the highest risk rating after its second profit warning.

Read John Tizard’s blog for PF on his views on public service providers acting ethically.

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