Capita set to win £1.7bn Staffordshire outsourcing deal

Capita has been named preferred bidder in an educational support services joint venture with Staffordshire County Council, in a deal worth £1.7bn over 20 years.

Capita will hold the majority stake in the partnership, to deliver a range of educational support services for schools and academies in the Staffordshire region.

As part of the agreement with Staffordshire, Capita will acquire its stake in the joint venture with an initial investment of £24.9m in the first year and a further £6.6m over the following 3 years.

Some 3,800 staff are expected to transfer to the newly formed organisation.

Capita said the UK schools education support services market is currently estimated to be worth around £16bn per year.

John O’Brien, analyst at TechMarketView, questioned the revenue attached to the deal. “Even including current spend with Staffordshire the JV will need to generate £115m in additional third party annual revenue to hit this target. Without any firm evidence of interest from other authorities it’s hard to believe that is achievable – certainly we seen very little evidence of similar shared services programmes taking off anywhere near to that degree. There is sure to be plenty more on this as the detail comes out over the coming weeks and months.” 

The deal is subject to approval on 5 December, the council will then start negotiations with Capita.

The deal comes as Capita looks set to win part of Barnet’s controversial One Barnet outsourcing plan, after it is revealed to be the preferred bidder for a back-office services contract.

The contract, worth £32m a year, will see IT and back-office functions such as human resources (HR) and payroll move to Capita for a 10-year period. Hundreds of staff will transfer to Capita.