An assessment in 2021 of the delivery model for the administration of the Civil Service Pension Scheme concluded that outsourcing was the “least risky” option.
In a letter MPs published on Tuesday, Cabinet Office permanent secretary Cat Little has shared a summary of the process that led to the decision in 2021 to continue to outsource the contract and then to award it to Capita in November 2023.
The Cabinet Office has been questioned over its choice to outsource the contract given failures under MyCSP and the crisis that has unfolded since the transition to Capita in December.
Cabinet Office permanent secretary Cat Little was asked last month during a Public Administration and Constitutional Affairs Committee session what the department had considered when decidng whether it was better to bring the contract in-house.
In an update to PACAC, sent on 24 March but only published yesterday, Little said the decision to outsource in 2021 "followed a Delivery Model Assessment in line with the Sourcing Playbook, which included an analysis of insourcing options".
An annex to her letter on this process says: “The decision to outsource the contract was made in 2021 as part of the Outline Business Case approval. To inform this decision, a Delivery Model Assessment was undertaken in line with the Sourcing Playbook, which included a cost, risk, and benefits analysis of options including insourcing. The assessment provided a data-driven indication that outsourcing provided the best opportunity to realise defined benefits with the least risk.”
It adds that the assessment “led to a procurement process under the Public Contracts Regulations 2015. A series of detailed requirements were set out which were a significant enhancement to the previous contract. Bidders were assessed on past performance at the pre-selection stage, which Capita successfully passed. At the tender stage, bids underwent a technical assessment and a commercial evaluation based on price and value for money conducted by two independent teams. Capita was the winning bidder in line with the evaluation methodology.”
In the update to PACAC, Little also set out Capita's performance across 16 government contracts.
In Q2 of 2025-26, Little said 90% of Key Performance Indicator data was rated as ‘Good’, and 5% as ‘Inadequate’. The inadequate ratings related to the Recruitment Partnering Programme and the Teacher’s Pensions Scheme.
On the Civil Service Pension Scheme specifically, she said the contract includes 21 KPIs subject to service credits.
"Capita has provided inadequate management information to date, but based on available data, the Cabinet Office maintains that Capita has failed the majority of these KPIs," Little added.
Little said the transition for the scheme was structured across 11 milestones and a final Contract Performance Point (CPP), which is contingent on performance standards. She said seven milestones have been achieved and paid in full, one was partially met with a part payment, and three milestones remain unpaid. The final CPP payment will be withheld until standards are met, Little added.
Little also revealed that 646 loans had been paid out as of 10 March totalling £3.5m for people who have not received pension payments. She said the Cabinet Office is also working on a standardised mitigation letter for members to share with lenders to explain temporary financial difficulty and is aiming to make this available later this month.