Public Accounts Committee

Capita's contracts with the Ministry of Defence

Inquiry status: open - accepting written submissions

Scope of the inquiry

The British Army needs to continually recruit new soldiers and officers to replace those who leave or retire from service. In July 2018, the Army was 5,600 regular soldiers and officers (7%) below its required strength and will not meet its 2020 target of 82,000 regulars. It has significant skill shortages in specific trades. The failure to meet its recruitment requirements can affect the Army’s ability to meet operational demands and new threats.

In 2012, the Army contracted with Capita to transform its recruitment approach. The Army committed £1.3bn to a 10-year programme and partnership with Capita to manage its recruitment process. Since the contract began Capita has not recruited enough Army regulars and reserves in any year. In 2017-18, Capita recruited 6,948 fewer regular and reserve soldiers and officers than the Army’s target. The shortfall has been largest for regular soldiers. Since the contract began, Capita has missed the Army's annual target for regular soldiers by an average of 30%, compared to 4% in the preceding two years.

In April 2017, the Army agreed to reduce Capita’s recruitment targets by around 20% for the next three years as it believed Capita was insufficiently incentivised to improve performance. Over the last year, the Army and Capita have introduced some significant changes to their approach to recruitment, although these have not yet resulted in the Army’s requirements for new soldiers being met. The cost of the Capita contract has risen by 37% to £677 million. The Project will not achieve its planned savings of £267 million for the Ministry of Defence. The Army has begun to consider options for the successor contract to start in 2022 and has commissioned a review to understand the lessons from the Project.

A recent NAO report has found that the Army has not managed either the project, or contract, effectively. Moreover, it found that the Army and Capita underestimated the complexity of the proposed changes to recruitment.

The Committee will challenge officials from the Ministry of Defence and Capita on why the Project is still failing to meet recruitment targets and how they plan to respond. Members may also wish to scrutinise the Army’s management of the Recruiting Partnering Project.

The Committee may also wish to examine the performance of MOD’s other contracts with Capita and the performance of MOD’s contract with Annington Property Limited.

 

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