Britain to investigate Capita over training services contract

LONDON, Feb 11 (Reuters) - The British government is investigating complaints that outsourcing firm Capita overcharged and made late payments to partners in a 250 million pound ($382 million) government contract to provide training services.

Capita (LSE: CPI.L - news) , which runs a range of contracts from back-office IT to pension schemes, had its contract extended two years ago to manage the provision of training across Britain's Civil Service, which included delivering half of the training as well as managing smaller enterprises to provide the rest.

However, a group of 12 companies involved in the scheme have formed a consortium claiming that Capita routinely paid its invoices late, took excessive fees for administering contracts and that it included "non-compete clauses" in its agreements which prevented them from doing further work for the government without Capita's permission.

The firms said the contracts left them facing a drop in turnover, resulting in some going out of business. Three firms have been forced to cease trading, while others have had to leave the UK market, according to Britain's Independent newspaper.

The Cabinet Office said on Wednesday it was investigating the claims of the suppliers.

Capita said it had awarded 59 percent of the training to small and medium-sized (SME) companies, representing 45 million pounds of supplier invoices. It said it was currently paying more than 92 percent of valid invoices on the contract within 30 days.

"Capita has an excellent track record of working with and engaging SMEs and refutes any allegations that it has acted wrongly in this matter," a spokeswoman said.

($1 = 0.6539 pounds) (Reporting by Li-mei Hoang; Editing by Mark Potter)