Q41 Jon Trickett: I am trying to establish what the figures are rather than the reasons for them. It is right to say, is it not, that the original Capita contract bid was for £250 million? It is now running at £47 million a year. The £250 million was over 10 years. Am I right in assuming that the annual cost has doubled?
Mr Lewis: No. Perhaps I will ask some of my colleagues to deal with the detail. That figure of £47 million includes two types of payment. Some of it is the ongoing payment for the delivery of the service day-by-day and some items are one-off payments for changes that have been made to the system.
Q42 Jon Trickett: I am going to come to that in a minute. You ignored the advice of everybody around you at the time the contract was let and it had to be one of the most incompetently let contracts this Committee has seen certainly since I have been on it. Above the table I was just referring to is another table which refers back to paragraph 4.18 in the original Report which shows £9 million-worth of payments to Capita over four years culminating this year in a £4.25 million payment. Do I assume that that is a kind of penalty levied against the public purse by Capita for the failure to specify the contract properly in the first place?
Mr Lewis: No. It is not that and while I do not want to pretend that with hindsight every single issue that was discussed in the procurement process would be done precisely in the same way again, I do not actually agree with you that the decision to let the procurement contract was wrong. Indeed, I think in many ways the Agency did follow good practice in allowing bidders to offer innovative solutions, as the NAO make clear, in asking the consultants to audit its procurement process and finding the best in final offers and so on. Those payments in the paragraph which you quote are for changes and enhancements to the service. They are balanced oV, if you look at the paragraph immediately above, by payments by Capita which are payments which have been made by Capita for failures in the service over the period since the contract was let.
Q43 Jon Trickett: When the original bids were being considered Capita's price, as is often the case with Capita, was quite low relative to the other bidders. It has not been analysed in detail here, but it is clear that Capita was making assumptions along with yourself about the number of paper applications which would be received, which were hopelessly optimistic as it turned out. The other bidders had taken account of the fact that there would be more paper requests and as a consequence their price was higher. Capita's price, on your own acknowledgment to earlier questioning, has now gone from £250 million to £380 million. By the end of the 10-year period it is going to be higher, is it not, than the comparative bids? We got the highest tender rather than the lowest in the end as it has turned out.
Mr Lewis: I think that is a perfectly fair way of presenting the facts, with this gloss and this caveat. Had one of the other bids been accepted at that time we do not know what the price would have turned out to be for that bid because what happened was that a fundamental change in the business process was introduced, namely the decision to take most applications on paper rather than by telephone and that fundamentally changed the economics of this contract. It is indeed the case, as you say, that other bidders had forecast higher levels of paper based contracts and lower levels of telephone contracts, but none of them had forecast anything like what actually materialised.
Q44 Jon Trickett: Have you ever heard of a sprat to catch a mackerel? Are those not the normal business contracts which consultants like Capita engage in? Should you not be more rigorous in your analysis? They have landed a whacking great mackerel.
Mr Lewis: The Agency engaged with consultants precisely to look at and identify why the Capita bid was so much cheaper than the others. Their Report did not call into question any fundamental aspect of the Capita bid.
Q45 Jon Trickett: So that was okay then?
Mr Lewis: What is okay is that the contract was properly let, after a rigorous evaluation, to the company which appeared to be offering the best price.
Q46 Jon Trickett: Do you think, as it appears from the evidence before the Committee, that over a 10-year period you will have paid more to Capita than the rival bids were at that stage, admitting that there may have been some modifications to those as well?
Mr Lewis: Yes.
Q47 Jon Trickett: I want to move on. Paragraph 3.5 is dealing with the same issue about the comparative bids. I notice that PricewaterhouseCoopers included an identity verification process and that was then included in the Capita approach. Has that approach now been dropped?
Mr Lewis: Where we have moved to more recently is the view that it would be right to ask the registered bodies to take primary responsibility for the identification process because they are in the best position to do so. It is obviously very important indeed that we do everything to try and ensure that the identification of applicants is accurate.
Q48 Jon Trickett: So the answer is yes, the identity and verification process has been subsequently dropped by the Agency?
Mr Lewis: No.
Q49 Jon Trickett: So it is now being done by an applicant body, say the Boy Scouts?
Mr Lewis: At this point not. At this point it is proposed that the primary responsibility for checking identification should move to the registered body.
Q50 Jon Trickett: It is in the nature of villains that they often use more than one name. Indeed, Huntley used two names, his mother's name and his father's name. If the identity verification budget is dropped, is it not a fact, as I am told is the case even now, that if the school had not properly taken up the verification of his identity; in other words, if he had suppressed one of his names, the Bureau would not have identified him at all or any such person who had done a similar thing, for example produced a false address or used a pseudonym for a time? If at the time at which a person was arrested and charged and found guilty of a sexual oVence they subsequently changed their name and address and they were to fail to notify their new employer or their new organisation that they had changed it, this system actually will not identify that individual because it simply relies on the truthfulness of the applicants and resourcefulness and rigour of the Boy Scouts or of the school or whatever it is. Is that the case?
Mr Lewis: I am very reluctant to speculate on what would have happened if Ian Huntley had made an application for disclosure under a system which did not exist at that point. That is a hypothetical speculation and not a helpful one. The Bichard Inquiry will comment on any issues which it thinks are of relevance to that. It is worth saying, talking in general of the identification process, that applicants for disclosures have to submit a significant amount of identification evidence which enables the registered body and the CRB to have as much assurance as they believe it is possible to obtain, the person for whom the disclosure is being requested, that it is actually the person they say they are.