11 The cost of the additional measures taken by the Agency to deal with the failures during the year from October 1998 will be around £12.6 million, after taking into account compensation received from its contractors to date. This estimate excludes the extra costs and around £9 million in lost business borne by Siemens Business Services. The total compensation paid to members of the public for missed travel dates and other expenses currently amounts to £161,000, but is likely to rise further as outstanding claims are settled. The unit cost of producing a passport in 1999-00 is likely to be between £15 and £15.50, including the impact of the exceptional measures and more recent service improvements, compared to the target of £12 in the Agency's business case. The longer term impact on unit costs remains uncertain, in part due to planned further improvements to customer service and the extent to which productivity from the new system can be improved.
12 The Agency has received compensation totalling £69,000 from its contractors for shortfalls in performance. The Agency has waived other compensation due from Siemens, estimated by the Agency to be worth £275,000. Initially, the waivers had been granted to allow time for the new system to settle down. At Siemens' request, the Agency agreed in May to extend the waiver until the end of June 1999; Siemens had encountered technical difficulties in scanning data from application forms prepared by the Agency, and had altered its procedures at the Agency's request in response to the surge in applications. In granting the extension, the Agency intended to allow Siemens time to clear its backlog. The Agency is now discussing with Siemens how the costs of the crisis are to be shared.