IT Services firm Capita expects to double the profits it generates from its £400m Criminal Records Bureau contract, even though key services the bureau was to provide have been postponed.
The contract with the agency, which provides employers with checks on job applicants' criminal history, will be renegotiated in response to recommendations from an independent review commissioned by the government, which highlighted a wide range of shortcomings in how the bureau operates.
The government has been forced to postpone the introduction of the lowest level of record check, basic disclosure, until the Criminal Records Bureau's systems have been developed to provide greater capacity. Civil servants say Basic Disclosure checks have been put on hold until demand has been met for higher levels of checks.
Capita has told analysts that the Criminal Records Bureau contract contributed £30m of turnover and a 6% profit margin in 2002. It expects its profits to rise to 10% this year on turnover of £40m, assuming a successful renegotiation of the contract.
In an official response to the findings of the review, home secretary David Blunkett said the Criminal Records Bureau needed to improve its efficiency.
Capita, which is also responsible for running the congestion charging scheme in London, was awarded a 10-year contract to develop the Criminal Records Bureau's IT infrastructure and operate parts of the agency in August 2000.
The Criminal Records Bureau, which became operational in March 2001, aims to help employers to identify candidates who would be unsuitable for certain types of work, especially that involving contact with children or other vulnerable people.
Last summer, teaching unions expressed dismay over backlogs at the Criminal Records Bureau, which caused some schools to remain closed after term began.
Blunkett said the government will now renegotiate its agreement with Capita to support an IT system upgrade at the Criminal Records Bureau. This follows calls by the review team for enhancements such as improved links with the Police National Computer and electronic applications for checks.
A Home Office spokesman said parts of the deal will be renegotiated to implement the review's recommendations. "Not all the recommendations could have been foreseen, so we will be renegotiating parts of the contract," he said.
Capita said it welcomed the chance to build on recent enhancements to the Criminal Records Bureau. "We look forward to continuing [improvements] once the negotiations have been concluded," a spokesman said.
Experts say the problems experienced at the Criminal Records Bureau underline the importance of change management in major government contracts. "Change management in contracts is something that the government has been poor at in the past. It has not really got the experience to run the mega-contracts," said Georgina O'Toole, analyst at Ovum Holway.
Poor project management has already resulted in spiralling costs for other government IT programmes, such as the Libra project for IT systems in magistrates courts. Libra was commissioned by the Lord Chancellor's Department at a cost of £146m in 1998. The scheme is now expected to cost taxpayers about £390m.
Since its launch, the Criminal Records Bureau has been overseen by Bernard Herdan, who became chief executive of the Passport and Records Agency in 1999. At that time, problems with the implementation of a new IT system at the agency resulted in a backlog of 565,000 passports, delays of up to 50 days and queues outside passport offices.