Capita has been handed a contract for military fire and rescue services by the Ministry of Defence (MoD) despite a financial health assessment giving the highest level of risk to the outsourcing firm.
Unite said that by disregarding its own risk analysis the government has shown it has learnt nothing from the devastating collapse of outsourcing giant Carillion in January and demanded an urgent investigation into the awarding of the Capita contract.
Capita was given 10 out of 10 – with one indicating the least amount of risk and 10 the most – for a financial risk assessment undertaken on behalf of the MoD by financial consultancy Company Watch.
Between 1,500 to 2,000 MoD workers will be affected by the decision to privatise the services, with Capita expected to rake in around £500m over 10 years from the move.
The firm has been forced to borrow more than £700 million after racking up losses of £513 million last year.
The risk assessment also awarded Capital a “health score” of just three out of 100. A score of 25 or less puts a firm in a red “warning area” for financial vulnerability.
Capita beat fellow outsourcing giant Serco for the contract, with the MoD saying Capita’s bid offered the best value for money.
An MoD spokesperson said, “All our suppliers are subject to robust assessments ahead of any contract placement and closely monitored throughout.”
Unite national officer for the MoD Jim Kennedy said the decision to award Capita the contract was “scandalous”.
He said, “It is absolutely scandalous that even though the MoD’s own financial check found that awarding a contract to Capita was extremely risky, ministers thought it appropriate to award this contract.
“The government has clearly learnt nothing from the Carillion fiasco. There needs to be an urgent investigation into how and why this contract was let to Capita.”