1.The modernisation of DBS is currently over four years late and £229 million over its original budget, with no agreed date for completion. In 2012, the Home Office planned that the first stage of modernisation would be completed by March 2014 but it is still not complete four years later. The programme was delayed from the start requiring the contract between DBS and its previous supplier, Capita, to be extended by two years because of delays transitioning the service to DBS’s current supplier, TCS. The safeguarding service offered by DBS remains paper-based and, one year before the contract with TCS is due to end, much of the modernisation programme still has to be delivered, and costs are expected to be £229 million more than initially planned. DBS and TCS are now locked in negotiations about where the fault for these delays lie. Both DBS and TCS claim that modernisation can be delivered before the TCS contract ends in March 2019 but, at the time of our evidence session, neither could offer any details of how or when this might happen. Once negotiations are complete, we expect the Home Office and DBS to agree with TCS a timetable for the completion of the modernisation of the DBS which is realistic and achievable, whilst also protecting the risk to taxpayers’ monies.
Recommendation: The Home Office should write to us before Parliament’s summer recess, setting out the outcome of the negotiations with TCS, a clear and realistic timetable for when modernisation will be completed, and details of the cost implications for DBS and the Home Office.
2.This is another example where the Home Office has failed to deliver a major project. The Home Office and TCS now accept that the contract for modernisation was signed in 2012 without anyone having a clear understanding of what it would take to make the programme successful. TCS did not think it was its job to offer any advice that might have helped the Home Office run the programme better, and adopted an old-fashioned ‘big-bang’ approach rather than splitting the task into smaller, manageable, pieces from the outset. This led to a timetable that was unrealistically optimistic leading to additional costs, as was the case on the Home Office’s largest project, the Emergency Services Network (ESN). The Home Office maintains that, apart from ESN and the DBS modernisation programme, all its other major programmes were under control. However, we remain concerned, based on the Home Office’s recent track record, that there could be other projects where things are going wrong.
Recommendation: The Home Office urgently needs to conduct a full lessons learnt exercise, setting out what it has learnt from the issues arising from its two biggest projects and how these lessons will be applied to its other major projects.
3.A flawed contractual approach has contributed to the difficulties in delivering the modernisation programme. DBS makes payments to TCS primarily on the basis of volumes of transactions, with only 3% of the value of payments being related to completing the modernisation programme. The Home Office tried to transfer risk to TCS, incentivising it to complete modernisation more quickly, by reducing the amount it pays for each transaction after three years; but this has clearly not worked as modernisation is over four years late. Although until recently TCS was able to make a profit of 3% despite the delays in implementing the modernisation programme, the contract allowed TCS to make a profit margin of as high as 22%. TCS says it is only now beginning to make a loss and could still return to profitability through negotiations with DBS.
Recommendation: DBS should ensure that its negotiations with TCS result in an improved contract that ensures TCS deliver the rest of modernisation before March 2019, minimising cost and risk for the taxpayer.
4.The programme has not delivered the safeguarding and financial benefits promised in 2012. The original business case in 2012 was for a cheaper contract delivering a fully digital service that would be cheaper for government and for users, and an update service providing wider safeguarding benefits as well as cost savings. None of this has been achieved: modernisation is delayed, leaving much of the service paper-based; the update service is more expensive for both government and users, and is used by fewer people; and the promised wider safeguarding benefits have been forgotten as they are not being tracked. The Home Office told us that it does not work with regulators such as Ofsted to check how employers use the information provided by DBS to improve safeguarding. DBS reset the business case in 2014 but cannot tell us how much of what was originally promised has been delivered, or what benefits it now expects to deliver before the TCS contract ends in March 2019.
Recommendation: DBS should write to us before Parliament’s summer recess setting out precisely what, if any, benefits the programme will achieve by March 2019, how these will be tracked and measured, and how much of what was promised in the original business case will no longer be delivered before the contract ends.
5.The Home Office introduced the update service without a sound idea of demand or whether customers would use it, and the DBS is only now starting to look at why it is not popular. The aim of the new update service was to make it easier and faster for employers to check whether there are any changes to safeguarding information. The Home Office expected 2.8 million paying users by 2016–17 but DBS only achieved one million users. The Home Office launched the update service without a pilot or properly engaging with users including schools, many of which have policies that require a certain frequency of checks of paper documents and identity verification. It now admits this was a mistake and considers that demand was never likely to be as high as it had initially assumed. But, since 2014, DBS has been content to allow demand to be much lower without taking action to look into what has gone wrong, what users want, or whether the business case still stacks up. DBS has not made any changes to the update service and lacks a good enough understanding of its potential demand suggesting a lack of ambition to make the update service successful.
Recommendation: Before making changes to future public services, the Home Office should undertake a proper and robust forecast of user needs and demand. The Home Office should also confirm that it does have a role in assessing how organisations use the information it provides to ensure the most efficient and effective use of public resource. For the update service, DBS should now conduct such an assessment and write to the Committee setting out how the update service will be improved as a result.
6.DBS has failed to deliver promised savings to customers while building up a £114 million surplus at their expense. DBS is running the update service at a loss despite charging people £13 instead of the £10 expected in 2012. It loses £9 for every application to the update service. The losses on the update service are offset by the profits DBS makes from issuing conventional paper disclosure certificates. Overall, DBS is projecting a surplus of £114 million in the six-and-a-quarter years to March 2019. DBS says it has been unable to model its costs properly because of a changing safeguarding environment, rising demand and delays to the modernisation programme. DBS has failed to understand its cost base and fee structure and it is astonishing that DBS has not been proactive enough to either reduce its fees for issuing certificates, or return the surplus it has accumulated to the Treasury.
Recommendation: As a matter of urgency, DBS should review the fee structure for all its products to consider how it can provide the same level of service at a lower cost for customers.
Published: 25 May 2018