The Irish government has kicked a Microsoft procurement potentially worth €1 billion into touch amid a political debate about the nation's overreliance on US tech providers and a move to free and open source software. In Ireland's parliament (Dáil Éireann), Frankie Feighan, Minister for Public Expenditure, Infrastructure, Public Service Reform and Digitalisation, said the recent tender for suppliers to take part in a framework agreement to supply Microsoft software and services had been canceled after "matters of concern were raised by an interested party." "Having carefully considered those matters, the [Office of Government Procurement] determined it was prudent to cancel the competition and notify the market accordingly," he said. The Irish government's current framework, valued at a maximum of €350 million, is set to expire in September 2027. Cian O'Callaghan, deputy leader of the opposition Social Democrats, said the estimated value range of the proposed replacement had been between €750 million and €1 billion, according to an earlier response in parliament. He challenged the Irish government over whether it had assessed the risks of the new Microsoft framework "at a time when other European countries are moving away from technological dependence on American companies." O'Callaghan pressed the government on whether it had considered alternatives to Microsoft. "There are a number of alternatives out there that other European countries and states are moving towards," he said. "They are doing so for value-for-money reasons, and so they are no longer technologically dependent on the US but can rely on European-regulated services and products. There is LibreOffice, Collabora Online, Open-Xchange, Nextcloud, Thunderbird and openDesk by Germany's Zentrum für Digitale Souveränität der Öffentlichen Verwaltung, ZenDiS, which is a readily assembled government-grade suite." Feighan responded that the Irish government was reviewing the operation of the existing framework and talking to experts in the hope that it could improve the "scope, specification, and features" of the framework. However, he acknowledged that the framework covered only Microsoft licenses and services. O'Callaghan said: "What I do not understand is why alternatives to Microsoft have not been at least explored as part of this process. The German state of Schleswig-Holstein recently moved 30,000 staff from Microsoft to LibreOffice, Linux, Thunderbird, and Open-Xchange. It is saving more than €15 million a year. The French police, the Gendarmerie Nationale, switched over 100,000 desktops to Linux. They will save roughly €500 million, half a billion, over 15 years." He again pressed the minister on why the government had not considered alternatives to Microsoft, particularly given concerns about digital sovereignty and Ireland's current presidency of the Council of the European Union. Feighan responded that the government intended to publish a new Microsoft tender "as early as is feasible." Digital sovereignty has become a pressing issue in Europe since President Trump returned to power, and it was only heightened after Karim Khan, the International Criminal Court (ICC) chief prosecutor, was sanctioned by the US government and later lost access to his work-based Microsoft services. Microsoft claimed the ICC had removed his access to its services. The Dutch press later reported Microsoft had told the ICC it would have to end services to the whole organization unless the court denied Khan access. Gartner has estimated investment in sovereign cloud across the EU is set to treble over the next five to seven years as the bloc seeks an exit ramp from dominant US suppliers amid heightened geopolitical tensions. European providers account for only around 15 percent of the region's cloud infrastructure. The EU has proposed new procurement measures that would require public sector buyers to take digital sovereignty into account when launching tenders. The plans also include procurement guidance intended to encourage greater use of open source alternatives to proprietary software. Outside the public sector, others are taking an interest in digital sovereignty. Last week, European aerospace giant Airbus announced it was migrating its most critical applications for sensitive workloads from AWS to French cloud provider Scaleway as part of a drive to increase digital sovereignty. ®

The UK government is scrapping the department charged with leading digital and tech change across the public sector. The Department for Science, Innovation and Technology (DSIT) – created by former Conservative Prime Minister Rishi Sunak – will see its responsibilities split among other departments after Science Secretary Liz Kendall was axed by new Labour Prime Minister Andy Burnham. The Department for Culture, Media and Sport is set to become the Department for Digital, Culture, Media and Sport (DCMS), and reports suggest it will take over responsibility for digital transformation in government from the disbanded DSIT. After the Labour government took office in 2024, it moved the Government Digital Service (GDS) and the Central Digital and Data Office from the Cabinet Office to DSIT. They now appear likely to find a new home in DCMS. The new round of musical chairs may be an unwelcome distraction for the team. GDS is responsible for setting the digital strategy and managing digital performance for government. For example, 18 months after it moved to DSIT, GDS launched a "roadmap for modern digital government." It promised to harness AI for the public good and to strengthen digital public infrastructure. It also said it would redesign digital public services for people and businesses "by setting high standards and working together as one public sector." However, a recent select committee report noted that although the government set out its intention to make the UK "a truly digital state," it had not "set out what this means in detail or in practice and there is no clear plan to translate this vision into a reality." DSIT also led the Matrix shared services cluster, a project that involves moving nine government organizations to shared ERP and HR systems based on Workday technology. It was recently rated "red" in a government projects report, meaning it has "major issues" with its schedule, budget, quality, or delivery of benefits, and the problems "do not appear to be manageable or resolvable" at this stage. The Register doesn't know whether another change of departmental letterhead will help, but we'll see. We have contacted the Cabinet Office, DSIT, and DCMS for further clarification on the new responsibilities. DSIT's role as the government's interface with the tech industry will also move to another department, with responsibilities going to the new Department for Business, Innovation, Science and Trade (BIST). Jonathan Reynolds was named Secretary of State for the department. Kanishka Narayan has meanwhile been elevated to the Cabinet-attending role of Minister for Artificial Intelligence, working jointly in the Cabinet Office and BIST. ®

The UK government's projects authority has sounded the alarm over progress on Skynet 6, the estimated £8.35 billion program to upgrade the military's satellite communications. The National Infrastructure and Service Transformation Authority (NISTA) rated the Skynet 6 project red, which means "successful delivery of the project appears to be unachievable" in its current form. The definition cites "major issues with project definition, schedule, budget, quality and/or benefits delivery, which at this stage do not appear to be manageable or resolvable." A red confidence rating means the project may need to be rescoped or reassessed, but does not necessarily mean it will fail. Nonetheless, it is hardly reassuring for a program intended to provide the UK's military satellite communications through 2041 and beyond. Skynet has been around since the 1960s. The first satellite in the latest iteration, Skynet 6A, was originally due to launch in 2025 but is now scheduled to fly aboard a SpaceX rocket in 2027. It is being built by Airbus. The project also includes Service Delivery Wrap (SDW), which plans to operate the UK's constellation of military satellites and ground stations under a £400 million contract awarded to Babcock in 2023. The wider program will also provide "new ground and user terminal capabilities to ensure that UK war fighters have modern communications technology worldwide," the Ministry of Defence (MoD) said. A separate aspect of the project, Skynet Enduring Capability, is set to offer new space-based technology from 2028 onward. NISTA, a joint unit reporting to the Treasury and Cabinet Office, said its confidence had fallen from last year's amber rating because department-wide recruitment and resourcing constraints had created workforce shortages, while "sub-par supplier performance continues to delay delivery of the first SKYNET 6 satellite." The Register asked the MoD, Babcock, and Airbus to comment. A spokesperson at Airbus told us: "Airbus is proud to be building the Skynet 6A secure military communications satellite for the UK MoD. We are working closely with our MoD partners and making strong progress in delivering this critical sovereign capability. As this is an active, classified MoD programme, it is not our place to comment on internal departmental metrics or historic NISTA assessments." In 2022, the MoD told Parliament that the estimated cost of all elements of Skynet 6 over its 26-year lifecycle had risen from £7.1 billion to about £8.35 billion. Changes in technology and functionality, the need to address emerging risks, and rising space-sector prices all contributed to the increase, it said. ®

Andy Burnham is barely through the door at No. 10, and one of Keir Starmer's flagship tech projects is already heading for the shredder, with the incoming prime minister set to scrap the UK's digital ID scheme while creating a Cabinet-level minister for artificial intelligence. The move, reported by Reuters, kills off a policy Starmer spent the past year championing. His government pitched digital identity as a way to crack down on illegal working, held closed-door meetings on how to build it, and fought off privacy campaigners. "One of the first things this government will do is put its focus where people need it right now: creating breathing space and delivering change they can feel in their everyday lives," a Burnham spokesperson said. "That means all the time and resource that was going to be spent on a national ID scheme will go instead to where it's most needed, such as helping with the cost of living." Deputy Labour leader Lucy Powell echoed that message on the BBC's Sunday with Laura Kuenssberg, saying the savings were "not an insignificant amount" but arguing the bigger benefit was freeing up the machinery of government to focus elsewhere. Quite how much money that actually means remains unclear. In November 2025, the Office for Budget Responsibility estimated [PDF] its cost at about £1.8 billion between 2026-27 and 2028-29, although the government repeatedly ducked questions on that point, leaving Parliament and the public to speculate about the eventual bill. The initial proposal looked rather more ambitious than the version Burnham is now consigning to history. Starmer's original "Brit Card" plan called for a compulsory digital credential containing a worker's name, nationality, date of birth, residency status, and photograph, which ministers said would make it harder for people without the right to work to find employment. Privacy campaigners immediately piled in, with the Open Rights Group, Big Brother Watch, and others warning that Britain was drifting toward a national identity system by another name, raising concerns over surveillance, data collection, and mission creep. The criticism forced a rethink. In October 2025, ministers dropped the compulsory element, saying the scheme would be voluntary and that existing documents, such as passports, could continue to be used to verify identity. Burnham appears to have concluded that even the watered-down version wasn't worth saving. Digital identity may be headed for the bin, but AI is getting promoted. According to plans reported by The Sunday Times, Burnham will elevate a minister for artificial intelligence to Cabinet rank for the first time. The role is expected to focus on driving AI adoption across government while supporting Britain's AI industry, with details of the minister's departmental home due next week. "I want Britain to be one of the great technology countries of the world," a Burnham spokesperson told the newspaper. "Building the companies, the jobs and the industries that come with that. That's exactly why the minister for AI belongs in Cabinet." The message from the new government seems clear enough: don't expect a Brit Card in your wallet any time soon, but do expect AI to turn up in just about every Cabinet meeting. ®

The UK government has admitted that two major planks of its multibillion-pound shared services strategy are in serious trouble. Matrix, a project that involves moving nine government departments to shared ERP and HR systems, has been rated red by the National Infrastructure and Service Transformation Authority (NISTA), which monitors the planning and delivery of major government projects. This rating means the project has "major issues" with its schedule, budget, quality, or delivery of benefits, and the problems "do not appear to be manageable or resolvable" at this stage. Matrix is just one of five clusters the government is betting will save £4.3 billion by migrating a total of 17 departments and 300 arms'-length bodies onto shared tech platforms. The NISTA report for fiscal 2025-26 says the rating reflects "a number of material issues" identified during project planning. In 2024, Matrix awarded Workday a contract for SaaS finance and HR software and Cognizant a system integration deal with a combined value of £144.3 million. Matrix was scheduled to begin going live in May 2026, but experienced delays. In March, the Matrix Programme Board met "to consider the case for re-baselining the programme, including the development of a rectification plan and the consideration of several planning scenarios." "Replanning is intended to establish a more realistic, credible, and achievable forward plan in response to ongoing delivery challenges. Current emerging analysis indicates a delay of 3-6 months, which would move the Phase 1 user go‑live to late 2026," the NISTA report says. Although "system issues have now been resolved," the "single biggest risk to this is departments being unable to find functional subject matter expert capacity to undertake the high level of testing they have identified as being required, given their low risk appetite." The Department for Science, Innovation and Technology (DSIT) is leading Matrix. It is joined by the Cabinet Office, Department for Energy Security and Net Zero, Department for Culture, Media and Sport, Department for Business and Trade, Attorney General's Office, and the Department of Health and Social Care. His Majesty's Treasury (HMT) and the Department for Education have delayed their decisions to join Matrix despite the Cabinet Office saying they had "unconditionally bought into joining shared services at the outset" and their "participation in shared services is not optional." MPs said last week that their reluctance to join could undermine the project. The Treasury, for example, already uses relatively modern Oracle Fusion SaaS to run its HR and finance functions. NISTA also rated the Unity shared services project as red, although it said progress had improved. Unity concerns His Majesty's Revenue & Customs – Britain's tax collection agency – and two other departments moving to a cloud-based SAP ERP system. A spokesperson at DSIT told The Register: "Delivery challenges were found in the Matrix Program after a planned review. We have decided to replan the program to make sure we have a realistic and achievable delivery schedule, while continuing work to modernize shared services across government." Officials said the department's program team is developing the next iteration of the business case for HMT and Cabinet Office approval later this year. It is due to set out a timetable for the next wave of departments and arm's-length bodies to onboard to the new system and service, including HMT. DSIT remains committed to the program and expects it to offer £1.67 in benefits for every £1 invested. ®

UK government auditors are calling for officials to consider the impact of AI on the size of the workforce needed for the civil service and wider public sector. The National Audit Office (NAO) recommends civil service leaders to "reflect the impact of major technological change in their long-term workforce planning," including on "workforce size, roles and grades, tasks and skills." These are among the workforce changes on which senior management should focus "to realize productivity benefits from AI and digital transformation." "The major challenge for the government is reflecting the fundamental impact of AI and digital change in planning for how organisations will operate in future. This includes expected implications on staff numbers, the nature of work, and capabilities required to carry out that work," the recently published report says. The NAO references the government's claim that it can create efficiencies from digital transformation and AI amounting to £45 billion each year. However, as The Register has already reported, others were much more skeptical about the claim, with Nick Davies, program director at the Institute for Government, pointing out it was a "huge amount" given most spending is on salaries or infrastructure. Later, Parliament's Science, Innovation and Technology Committee said the figure was "worryingly optimistic," calling it an example of "hype" that could impede progress in digital transformation. The NAO report says "reduced staffing needs and improved productivity" are expected from digital self-service for areas such as tax and benefits, and automating manual tasks such as checking planning applications. However, the report also points out the challenges to workforce changes, not least that the public sector lacks the tech and digital skills needed to reap the slated efficiencies from AI. "The published efficiency plans do not provide details of how departments derived their expected workforce efficiencies. There is a risk that departments are not identifying and estimating workforce efficiencies consistently. There is also a more fundamental risk that departments may not be identifying the full opportunities for efficiencies from reshaping workforces in response to wide-ranging digital and AI adoption," the NAO report says. The report also notes that Cabinet Secretary Dame Antonia Romeo had already pointed out that current workforce plans for the civil service "do not sufficiently reflect how AI and technology are going to change the shape of the civil service". It stresses that government departments need to prepare their digital and AI plans to sit alongside their strategic workforce plans. The NAO report also warns: "There may be ethical concerns around AI use in some circumstances, resulting in organizations restricting its deployment." ®

The UK Home Office has awarded contract extensions worth £28 million to two incumbent tech suppliers of the much-delayed Atlas immigration and asylum system after a legal challenge derailed an earlier procurement process. The Whitehall department in charge of policing, borders, and immigration awarded PA Consulting a five-month contract extension worth £13.5 million and Mastek a four-month extension worth £15 million. Both contracts were awarded without competition. The Register understands the Home Office began an open procurement for new contracts in the summer of 2025. However, Mastek launched a legal challenge in October after it was eliminated following the second stage of bidding for a £138 million Atlas contract. Mastek alleged there had been "manifest errors" in the scoring and that competing bidders had access to information that had not been made available to it. It sought about £47 million in lost profits and approximately £158,000 in wasted bid costs. The case was settled in May 2026 and the procurement was withdrawn. A Home Office spokesperson told The Register: "These allegations, including that the Home Office acted in breach of the Public Contracts Regulations, have never been proven or accepted, and there has been no admission of liability." The Register understands the Home Office extended its existing tech supplier contracts to ensure service continuity. In June 2026, the department published an early market engagement exercise – which does not mark the start of a competition – concerning the provision of services, support, and development to the case management software that supports the asylum system, a politically contentious issue in the UK. "The system has a requirement to 24 hours a day, 7 days a week availability, with updates and enhancements continually delivered to enhance functionality and capabilities. It underpins a range of critical national priorities and a significant amount of continuous improvement work driving strategic outcome delivery," the notice says. The procurement is expected to be split into asylum and non-asylum immigration systems. The notice says Atlas is "a containerized open source Java microservice application deployed into AWS, which orchestrates workflow following business process management processes, triggered by events, using agile release trains which group microservices for release." The plan is also "to evolve and enhance the overall immigration caseworking operating model, with a greater emphasis on supplier accountability, collaboration, and strategic partnership," the notice says. It places a value of £336 million (including tax) on the deal, which is set to last from June 2027 to May 2031, with the option to extend until May 2033. In 2025, the Home Office blogged that Atlas was ready to replace CID, the legacy system that began development in 2000. Atlas was built by Accenture, Mastek, and PA Consulting, and was projected to be fully implemented in 2021. However, the Home Office missed that deadline. In 2023, The Register revealed the Home Office had missed a second deadline for the full handover and decommissioning of CID. As of December 2025, Home Office staff still appeared to be using the legacy system for some information. As of June 2026, a report from the Public Accounts Committee confirmed the department no longer used the legacy system, although it found staff still needed to maintain their own spreadsheets in parallel to the case management system. Also in June, a report from the Independent Chief Inspector of Borders and Immigration slammed Atlas for failing to help case workers learn from the outcome of legal appeals. ®

The UK Treasury's reluctance to fully commit to a cross-government £1.15 billion shared service strategy it has funded risks making the whole effort "potentially unworkable," the Public Accounts Committee (PAC) has warned. HM Treasury's (HMT) decision in June to delay joining Matrix - one of five clusters the government hopes will save £4.3 billion by moving 17 departments and 300 arm's-length bodies onto shared ERP and HR systems - sends "a very poor reputational signal to the rest of the project," the House of Commons spending watchdog said. Under Matrix, the UK administration plans to support the Department for Science, Innovation and Technology, Cabinet Office, Department for Energy Security and Net Zero, Department for Culture, Media and Sport, Department for Business and Trade, Attorney General's Office, Department for Education (DfE), Department of Health and Social Care, as well as HMT - with Workday cloud-based finance and HR software. In a letter to Parliament's PAC last month, HMT confirmed it would not commit to whether it was prepared to move off its existing Oracle Fusion SaaS finance and HR system until December, despite funding the program for five years. The PAC has now slammed HMT's decision. "The ambition for shared services rests upon different parts of government acting collaboratively. The Cabinet Office considers joining shared services to be compulsory. However, HM Treasury is failing to lead by example, providing funds for the strategy and expecting others to sign up, while it remains unconvinced by the likely benefits and unwilling to do so itself," the report published on Wednesday says. "The Cabinet Office must urgently revisit all aspects of its strategy in light of these significant problems and provide assurance that proceeding with shared services will not prove a costly failure. If they are unable to provide such assurance, serious consideration should be given to abandoning the project before even more public money is potentially wasted." According to MPs, the Cabinet Office believed HMT and the DfE had "unconditionally bought into joining shared services at the outset," and maintained that their "participation in shared services is not optional." "HM Treasury now claims that it has the right to unilaterally decide whether to proceed with joining its assigned shared services cluster or not, subject to its Accounting Officer's assessment of further information from the Matrix cluster. Clusters' delivery has been delayed by the Cabinet Office's ineffective management of interdependencies with other government digital programmes," the report adds. The report points out that the DfE's formal commitment would depend on more detail about the project's feasibility and value for money. "These actions, by two major government departments, send a very poor reputational signal to the rest of the project," the PAC said. "For a strategy whose ambition rests on government acting as 'One Civil Service,' a case-by-case approach sets a very dangerous precedent, rendering the strategy optional and therefore potentially unworkable," the report adds. The Register has asked HMT to comment. The PAC called for confirmation of HMT's and the Department for Education's positions on onboarding to Matrix, including the rationale behind this. HMT has committed at least £1.15 billion to the Shared Services Strategy for government, which was launched in March 2021. Since then, the Cabinet Office, the Prime Minister's engine of government, has said it would produce £4.3 billion in benefits "calculated from a mixture of its dashboard and clusters' full business cases" over a 15-year period, according to the PAC. However, benefits for the Matrix cluster are dependent on HMT and the DfE joining. The Cabinet Office gave cost figures ranging from the £846 million spending review figure to "around £1.6 billion," the select committee said. The Shared Services Strategy is set to affect around 470,000 civil servants. The clusters had planned to onboard departmental users to their platforms between July 2026 and March 2029, although the kick-off has been delayed until December this year. "We are concerned that the Shared Services Strategy will fail," the PAC letter states. "The Cabinet Office cannot give assurances that it will overcome critical challenges. Overly complicated governance, no clear ownership, inconsistent departmental buy-in, delays in readying data, and poor interdependency management risk another failed major government initiative." ®

South Korea’s government has posted a tender seeking suppliers to build a universal basic AI chatbot, and an AI agent for government services. The “AI for everyone” plan calls for private entities to create and operate the AI systems under contracts that expire in the year 2031. Bid documents reveal that Seoul will provide up to 256 Nvidia B200 GPUs to successful bidders. Winners must match government funding. The aim of the policy is to ensure that every resident of South Korea can access a free-to-use quality AI chatbot, a tool Seoul has decided no local should be without. The tender also calls for creation of an agentic system that allows citizens to interact with government services. South Korea’s government wants to ensure that residents can always access a locally hosted and operated service, to reduce reliance on overseas providers and ensure that AI services reflect local culture. Successful bidders must therefore use locally developed AI models as the foundation for the services. Bidders have until August 11th to file their proposals. South Korean media reports suggest local tech giants Kakao, Naver, SK Telecom, and LG are all keen to participate. The tender landed just weeks after the US government compelled Anthropic to prohibit all foreign nationals from accessing its Mythos 5 and Fable 5 models. Because Anthropic has no idea which passports its US-based users hold, it was unable to comply and therefore took both models online. The incident sparked increased interest in sovereign AI capabilities that would mean netizens in each country can’t be cut off from AI services by policy decisions made abroad. South Korea’s lawmakers are surely aware that funding free local AI services will improve the nation’s sovereign capabilities. They also likely recognize that the country is fortunate to have a cohort of tech companies capable of doing the job. Messaging service Kakao is an equivalent to WhatsApp, while Naver is a Google analogue. Past policy decisions have those companies grow: South Korea has restricted Google’s ability to run a mapping service on national security grounds, leaving mapping apps from Naver and Kakao vastly superior and making their other services more attractive. ®

Capita has yet to agree to reimburse the UK government for the full cost of recovering the failing Civil Service Pension Scheme (CSPS) it administers. In a testy Parliamentary hearing in which Capita was called to account for its performance since taking over the CSPS, Adolfo Hernandez, group chief executive, refused to be drawn on whether the company would pay the full amount that the government had invested in emergency support. Capita's CSPS went live in December last year, after which The Register exclusively revealed problems with its online systems. By January, it was clear the service was seriously failing, leaving some retired civil servants struggling to make ends meet. Capita won the seven-year, £239 million contract to oversee the CSPS in November 2023, taking over from MyCSP, which ran the scheme on behalf of the Cabinet Office under a £238 million contract first agreed in 2012. Speaking to MPs this week, Minister for the Cabinet Office Nick Thomas-Symonds said the government deployed 140 officials in a pensions recovery team on January 13, but was determined Capita would pay for it. "I will not have a situation in which public money is funding corporate failings, so I will fight relentlessly to ensure that we recover every single penny of the cost of the surge interventions from Capita," he told a joint meeting of the Public Accounts Committee and the Public Administration and Constitutional Affairs Committee. Later in the meeting, Angela MacDonald, Permanent Secretary and Deputy Chief Executive at HM Revenue & Customs, estimated the total investment in the government's recovery program, which includes 40 people beyond the surge team, would amount to £12.5 million for the 2026-27 financial year. Hernandez refused to say whether Capita would pay for any earlier spending in the previous financial year, which ended in April. "In the first place, we never intended to have a surge team," he told MPs. "I made a commitment to… the Cabinet Office that we would start picking it up from April." Aghast, PAC chair Sir Geoffrey Clifton-Brown, interjected. "Let me stop you there. The minister said that was completely unacceptable, and that you have to pick up the entire bill for the surge team from February, when it started." "I heard him say that," Hernandez replied. "We have not had that conversation yet. I made an offer." To the clear amazement of MPs, Hernandez plowed on. "There are a lot of decisions that need to be made; there are no isolated decisions," he said. "There are decisions that pertain to this particular investment. There are decisions about others. I think we need to have a commercial discussion and put them all together. I hear you loud and clear. I heard the minister loud and clear. I heard the permanent secretary loud and clear. I know what is being asked of us. When we sit around the table, this will be taken favorably, but we have not sat around the table." The meeting heard that Capita promised to get CSPS back to normal service levels by the end of June, a deadline it has now missed. The company told MPs it would return to normal service for all but the most complex cases by September. The government said it had penalized Capita £10 million in payments for its performance during the transition of the pensions service and was negotiating further penalties. Hernandez had earlier apologized for Capita's performance on the CSPS. ®

The UK government has withheld £10 million in payments to tech and business process outsourcing biz Capita following the disastrous takeover of the Civil Service pensions scheme (CSPS). The penalties (£9.9 million) in the £239 million contract relate to the transition from the earlier scheme provider to the Capita service. Since the service went live in December last year, Capita has continued to miss the majority of its KPIs and is locked in a dispute with the government over further penalties, MPs heard yesterday. The outsourcing giant apologized for its performance to MPs in the meeting, which can be viewed here. Capita had promised to use AI to help automate the administration of the 1.7-million member pensions scheme. But after The Register revealed its troubled launch in December last year, the performance has continued to hit the lives of civil servants waiting for their pensions, some of whom have been “left struggling to make ends meet at a pivotable point in their life, causing them significant distress and anxiety,” according to the chair of the Public Accounts Committee (PAC), Sir Geoffrey Clifton-Brown. Speaking to a joint meeting of the PAC and the Public Administration and Constitutional Affairs Committee, Andrew Forzani, government chief commercial officer, said £9.9 million would be withheld from Capita for failing the transition. Forzani said the government had hired an auditor to settle a claim for further penalties. “In addition to that, we have been deducting monies every single month for failed service delivery. We haven't declared those numbers because we are in dispute with Capita about the numbers each month, because of some lack of agreement on some of the data, which is why we've brought in the independent auditor,” he told MPs. Cat Little, civil services chief operating officer, told the joint committee that Capita was on track to fail 16 of its 21 headline KPIs this month. “They are not at the pace they need to move through the processing of the work, the backlog is just getting higher and higher, so my expectation is that this trend worsens and worsens, unless something radically shifts in their ability to tackle the most important, urgent, high-priority work.” As it transitioned to take over the service last year, Capita gave no indication its contract win would lead to this kind of performance on what is developing into a national scandal. Cabinet Office minister Nick Thomas-Symonds said he felt personally let down by the Capita chief executive over assurances given before it took over running the scheme. “I was being told by the chief executive, on 25th of November last year — before the go-live date on the first of December — that the UK government would be presiding over the largest AI-enabled pension in the UK, and I would therefore have — and I quote — ‘a flagship use case’.” Capita won the seven-year, £239 million contract to oversee the CSPS in November 2023, taking over from MyCSP, which ran the scheme on behalf of the Cabinet Office under a £238 million contract that was first agreed in 2012. MyCSP was a mutual joint partnership between employee partners, who owned 25 percent of the company, and a private sector partner, Equiniti. Also addressing MPs, Adolfo Hernandez, Capita group chief executive officer apologized to all the pension scheme members “who have been receiving a very poor service at a very difficult and challenging time in their lives.” He said Capita inherited a case backlog that was much higher than anyone expected, and also more complex. The provider was dealing with cases up to four years old, some of which related to government departments which no-longer existed. “The service record is incomplete and the sheer scale of the data that was missing upon transfer is huge. We're talking about 20 million records,” he said. In a trading update, Capita said the financial impact of its work on the CSPS would be between £25 million and £40 million in operating profit in 2026, and between £35 million and £50 million in free cash flow. ®