Q31 Mr Bacon: I would like to check about the overall costs now. On page 31
there is a chart showing the costs, £98.8 million, and it says, "The Criminal Records Bureau start up costs and operating deficits (actual and forecast) from 2000-2005." I was going to ask if that is the total cost, but Mr Lewis has already assured me that they were more than that. I take it, Mr Gaskell, you are not expecting to get less than the £250 million of the original bid, are you?
Mr Gaskell: No.
Q32 Mr Bacon: What is the total amount of money you are expecting to be paid over the lifetime of this contract?
Mr Gaskell: Over the lifetime of this project we now expect that figure to be approximately £400 million.
Q33 Mr Bacon: So it has gone from £250 million to £400 million?
Mr Gaskell: That is correct.
Q34 Mr Bacon: For a slower service that is delivered a year late and it provides less than it did originally. That is right, is it not, it is being delivered late?
Mr Gaskell: The figure is correct, yes.
Q35 Mr Bacon: Is it right that it is being delivered late?
Mr Gaskell: Yes.
Q36 Mr Bacon: Is it right that it is delivering less now than it was originally proposed to deliver?
Mr Gaskell: That is also correct.
Q37 Mr Bacon: But it is costing £150 million more?
Mr Gaskell: Yes. That is because, as the NAO have rightly picked up in their Report, the channel mix is different. Certainly the volume that we are currently operating at is less than anticipated and, therefore, the unit costs are higher. They are contributory factors.
Q38 Mr Bacon: The Report says that PWC's bid assumed that it would be 40% paper based and, therefore, presumably 60% call centre based. Capita's bid assumed it would be 85% call centre and 15% paper based. Mr Lewis, on what were these assumptions made for PWC and Capita
? How were they reached?
Mr Lewis: There were two bases for this. One, there was a government intention, an e.strategy across government in which direction we believed that we were moving, as we have done indeed, to more of an e.based set of services and there was also a lot of experience from other major service provider organisations such as in the insurance and banking industry which suggested that it was reasonable to look for a telephone channel to be the primary means of contact with the new Agency. What became clear is that that did not meet the preferences of the Agency's customers and when those preferences became clear the decision was taken, rightly, I believe, but at a late stage, to re-engineer the processes so that we would accommodate paper applications in bulk. What went wrong at that stage was that we did not allow sufficient time to re-engineer those processes sufficiently well to ensure that they were going to work in the necessary way at the launch of the Service, which is why I said earlier that more time should have been allowed and the launch should have been deferred at that point.
Mr Bacon: Chairman, I have run out of time. I am still not clear how the percentage figures were reached but perhaps somebody else can pursue that.
Chairman: Ask that last question.
Q39 Mr Bacon: You talked about comparisons with the banking industry and various other industries. What I really want to know is if I am in PWC and I come along and I say you are going to have 40% paper based and I am in Capita and I come along and I say I think you are going to have only 15% paper based, how are these figures actually arrived at? Since they are so at variance with one another how can they both be sound? Then you go and get PA Consulting who you pay some money to go and check, they assure you that it is all okay and that Capita's
numbers are sound. How are they both reached in the first place and why did not PA or somebody else, your own officials, spot that they were unsound figures?
Mr Lewis: One thing we cannot know is what would have happened had we not introduced a bulk paper channel for applications because it is not necessarily the case that those original assumptions were wrong. What was going wrong quite clearly was that those original assumptions did not meet the wishes of the Agency's customers. They did not want, at least at that stage, to use a telephone channel for the bulk of the disclosures to the Agency and that is why at a late stage the Agency decided to introduce a bulk paper channel.
Q40 Jon Trickett: The document which you submitted really quite late to the Committee indicates the scale to which effectively the public purse has had to pay funds to Capita over and above the contract. The document does not have a page number on. It is not a good idea to have reports with no page numbers on. I think you will probably know the one I am referring to. For example, in the current year we have paid almost £50 million over and above the contract to Capita
. Is that right?
Mr Lewis: It is not right. It is not over and above the contract. That is the total paid in the year to 31 January 2004 to Capita for the provision of service. It is worth saying in that context that the volumes that the Bureau are now dealing with-