* Says Home Office to select alternative supplier
* Capita to sign interim extension beyond 31 March 2013
* Shares down 2 pct, second biggest FTSE100 faller
By Neil Maidment
LONDON, Oct 3 British outsourcing firm Capita
said on Wednesday it had lost out on a new government
contract to run criminal records checks after the Home Office
pursued talks with a rival supplier.
The trade union representing staff under Capita's existing
contract said the coalition government is likely to award the
deal to Tata Consultancy Services, part of India's
salt-to-steel conglomerate Tata Group. Analysts also expected
TCS to get the nod.
Capita has run the UK's Criminal Records Bureau disclosure
service for over 10 years under a deal worth around 400 million
pounds ($650 million), and had hoped to secure a similar
contract to support the replacement Disclosure and Barring
"Capita is disappointed not to have been selected by the
Home Office to support DBS," it said in a statement on
Wednesday. "We will now work with the CRB, and its new partner,
to enable the smooth transfer of the service."
Capita shares, which started the day 18 percent up on three
months ago, were down 2 percent to 760 pence in heavy trade at
1325 GMT, the second biggest FTSE 100 faller.
The Home Office would not make any comment on the contract
supplier, only confirming in a statement that the deal had yet
to be awarded by the coalition government.
However, the UK's Public and Commercial Services Union,
which represents Capita's CRB staff, said the Home Office had
indicated in July its "intention to award" the DBS contract to
IT firm TCS.
While there was no immediate response from TCS, analysts at
Shore Capital said they believed the new supplier may be Tata,
which already has operations based in Liverpool, from where the
existing contract is primarily delivered.
Espirito Santo analyst David Brockton said the market had
expected bad news for Capita after the contract award was
delayed earlier this year.
"We remain cautious on Capita as we believe there will be
greater competition for back office outsourced solutions, as
supported by the fact that another supplier has been favoured to
win the DBS contract."
The DBS is the merger of the Criminal Records Bureau, which
helps employers make safer recruitment decisions, and the
Independent Safeguarding Authority, which prevents unsuitable
people from working with vulnerable groups, including children.
Capita said pending the finalisation of a full handover of
the services to the new supplier the CRB would extend its
contract with the firm beyond the current expiry date of March
31, 2013 - probably until June next year at the earliest.
In July Capita, whose contracts range from managing over 21
million life and pension policies to providing radios for
Britain's emergency services, posted a 10 percent rise in first
half profit and said work with central and local government was