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Home Office reveals first projects for National Identity Scheme

Ian Grant

The Home Office will call for bids for the first two pieces of work on the National Identity Scheme in May 2008.

The mini projects are for the biometric database and application and enrolment operation. The call will come out as soon as the Home Office finalises the participants in its framework procurement agreement, which is expected by May, a Home Office spokesman said.

On 19 October the IPS shortlisted eight firms for a framework agreement to supply the NIS infrastructure: Accenture, BAE Systems, Computer Sciences Corporation, EDS, Fujitsu, IBM, Steria, and Thales. The spokesman said the Home Office might trim this list in December.

Identity and Passport Service accounts to March show the government spent £31m on the NIS last year. Estimates of the 10-year cost of the national identity system and electronic ID card, to be phased in from 2009, rose £65m in six months, due mainly to VAT that the project owner cannot claim back from the government.

The government's estimate of the cost of the system was £5.56bn in May 2007. This was later revised to £5.37bn. According to figures presented to Parliament on Thursday the estimated cost has risen to £5.43bn. However, the London School of Economics has put the cost closer to £14.5bn.

Responding to the latest estimates, the LSE said the reported figures differed from previous cost estimates in three ways:

- An apparent reduction in the forecast for future passport volumes

- A reduction in the operating cost of producing and delivering passports and identity cards containing fingerprint biometrics

- Adjustments to the total cost of the scheme arising from a different reporting period (October 2007-October 2017 rather than April 2007-April 2017)

The money spent on the NIS will come from the Home Office budget which will rise to £9.8bn for 2008/9, to £9.941bn for 2009 to 2010, and to £10.315bn for 2010 to 2011, the spokesman said. However, actual amounts and budgets are not set until it awards contracts to preserve the government's ability to extract maximum value, he said.

The NIS estimates include all set-up and operational costs, amortised capital costs, a charge for "completeness", and £70m of VAT that is "unrecoverable to IPS but retained by HM Treasury".

They exclude costs to other organisations for using ID cards to verify identities and the costs of issuing passports abroad, which consulates recover directly through fees.

Currently, the government spends around £384m to produce passports, which it gets back in fees, now £72 per adult passport. However, these are expected to rise to close to £100 for both passport and e-ID card.

The Commons Public Accounts Committee said recently it did not understand why the government needed both documents as the documents share most of their data.

Last year the IPS issued 4.8 million passports. It has still to produce a fee strategy to cover the costs of the NIS.

The IPS has to present update cost estimates to parliament every six months.


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