29. The Department has 81 current contracts with Capita, as well as 49 more where the final payments have not yet been made or which have yet to be closed. Together these arrangements are worth £1.28 billion.55 The Department told us that of the contracts it had with Capita, two - for army recruitment and for managing the defence estate for the Defence Infrastructure Organisation - account for around 90% of payments made last year to the company. In addition, in June 2018, Capita won a further important contract for Defence Fire and Rescue Services but this is currently subject to a judicial review.56 Most of the remainder are small contracts, where the Department told us that it is not dependent on Capita as it could use alternative suppliers. Capita secures around 46% of its revenue from the public sector as a whole, but just 4% from the Department.57
30. As we noted last year, poor performance by Capita on the defence estate contract has led the Department to end it five years early and take responsibility for managing the estate back in-house in 2019.58 A number of aspects of the inadequate set-up and management of that contract were similar to that for army recruitment, including the delay to the necessary IT system and misaligned objectives.59 Both Capita and the Department state that their relationship is now stronger, with new people in post on both sides. Capita was supportive of the reforms that are being pushed forward by the Cabinet Office and stated that it is committed to the 'living will' concept, in case of contractor failure.60 The company told us that the calibre of dialogue with government is much higher than it was, and that closer working relationships was important in avoiding problematic outsourcing contracts. The Department also considered that Capita had been constructive in their approach to transferring key personnel over.61
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55 Q 133
56 Qq 157-162
57 Qq 134, 141-142
58 Committee of Public Accounts, Ministry of Defence's contract with Annington Property Limited, Fifty-third Report of Session 2017-19, HC 974, 13 July 2018
59 Q 154
60 Qq 144-150, 156
61 Qq 153,155-156