AFAIK, the dictation engine does not treat the word “cap” as a command to capitalize only the next letter. Instead, it interprets “cap” as the word “CAP,” which is why you are getting “CAP program” instead of “Program.”
You can try “Caps on” before the word and “Caps off” after the word. For example, you would say: What is wrong with this caps on program caps off question mark. That should produce: What is wrong with this Program?
If that still produces full uppercase words or inconsistent results, it means Dictate is prioritizing natural language interpretation over command parsing, which unfortunately happens frequently in Word and other 365 apps. In that case, try to pause briefly before saying “caps on,” and speak the capitalized word clearly as a standalone word.
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hth
Marcin