Sopra Steria has expanded its legal challenge to a major UK government contract award after obtaining an unredacted copy of the agreement between Capita and the Department for Work and Pensions (DWP).

The company alleges that previously undisclosed terms gave Capita preferential treatment, reduced the outsourcer's exposure to risk, and left the DWP carrying more of it. One clause could allow the department to fund technology needed to compensate for deficiencies in Capita's tender, Sopra Steria claims.

Capita values the deal at £370 million, although government documents put its potential value as high as £873.4 million. Sopra Steria has been challenging the award since March, alleging that the DWP accepted an "abnormally low" bid based on staffing numbers "significantly below the current levels."

The dispute concerns a contract to provide finance, payroll, HR, procurement, and other shared services across four government departments. Capita, which is also responsible for the troubled transfer of the Civil Service Pension Scheme, beat incumbent provider Shared Services Connected Ltd (SSCL), a former joint venture with the UK government that is now wholly owned by French-headquartered systems integrator Sopra Steria.

At the time of the award, Capita said it had participated in a robust procurement process and was ready to deliver value for money. The DWP maintained that it had conducted a fair competition and that the deal represented value for the public.

The DWP leads the Synergy shared services program, which is intended to put the DWP, Ministry of Justice, Department for Environment, Food and Rural Affairs, and Home Office onto a common SaaS ERP and HR platform with shared business processes. All four departments are defendants in the case.

Oracle and IBM previously secured a £711 million deal covering the ERP software and systems integration. Synergy forms part of a wider program to move central government departments and arm's-length bodies onto cloud-based shared services, creating contracts worth about £1.7 billion for technology suppliers.

Sopra Steria said the DWP agreed to a Project Change Clause allowing the department to amend the contract to "expand Capita's technology base and/or otherwise compensate for the deficiencies in Capita's tender."

Sopra Steria alleged that the provision reduced Capita's exposure, cutting "the contingency that Capita may otherwise have needed to price into its tender" and providing "a means for Capita to boost its margin despite its abnormally low tendered price."

It further alleged that responsibilities assumed by the DWP allowed Capita to bid on the basis of a contract that "has a materially reduced level of risk borne by Capita but a materially greater level of risk borne by the [DWP]."

Sopra Steria argued that, across a number of the responsibilities accepted by the DWP in the contract, the same or equivalent terms were not offered to Sopra Steria.

The DWP denied treating the bidders differently. It said each received equal time and opportunity to negotiate, and that when they raised the same question or request, both were given the same response.

General clarifications were shared with both bidders, the department said, while concessions secured through negotiation were disclosed only to the bidder that requested them. Any differences therefore related to the particular points raised by Capita rather than unequal treatment, it argued.

A DWP spokesperson said: "We don't comment on live legal proceedings."

A spokesperson at Capita told : "We took part in a robust procurement process and stand ready to work with the DUP to ensure a smooth transition of service. Our priority remains to ensure value for money for the public." 

The filings also highlight competing descriptions of the contract's value. In March, Capita said the deal was worth £370 million over ten years, including all extension periods. That figure was its IFRS 15 transaction price, or order-book value, and excluded change and expansion services expected during the contract.

The DWP said it had no record of approving Capita's announcement and denied Sopra Steria's allegation that the agreed price remained unclear.

According to the department's filing, the estimated undiscounted value is £606.6 million over the initial seven-year term and £873.4 million over the maximum ten years, including estimated projects and optional services. It stressed that Capita has no automatic entitlement to that additional work. ®