Transparency data

6 September 2022: Future Supplier Services Programme accounting officer assessment

Updated 21 November 2024

The Outline Business Case (OBC) to enable the programme to proceed to the procurement phase was approved by the Home Office Finance and Investment Committee (FIC) on 01 October 2021. Cabinet Office (CO) and HM Treasury approval followed in November 2021.

Background and context

It is normal practice for accounting officers to scrutinise significant policy proposals or plans to start or vary major projects, and then assess whether they measure up to the standards set out in Managing Public Money. From April 2017, the government has committed to make a summary of the key points from these assessments available to Parliament when an accounting officer has agreed an assessment of projects within the Government’s Major Projects Portfolio.

Future Supplier Services (FSS) Programme

The Future Supplier Services (FSS) programme was established to re-procure a global network of visa application centres pending the expiry of the existing contracts. Visa application centres (VACs) are operated today by Sopra Steria (SSL) in the UK under the FES contract and by VFS and TLS outside the UK under the NGOV contracts. Whilst VACs themselves are not intended to be profit making for the Home Office, they are a critical enabler for our global visa service which generates over £1.5bn of revenue annually (pre pandemic). All customers (other than EEA and BNO) who require a visa need to enrol their fingerprints and obtain a vignette to travel. Whilst VACs also help to support citizens with passports abroad and assist HM Passport Office’s (HMPO) service delivery. Without the VAC network, the UK would not be open for business.

The previous FSS Accounting Officer Assessment (FSS AOA) dated 24 May 2021, (which was not published as it was created prior to the OBC being drafted and approved), set out that the current NGOV contracts would be extended to facilitate a more realistic mobilisation timetable, comprehensive finalisation of requirements, and alignment of the programme with key dependencies.

The Accounting Officer Assessment for the extension of the NGOV contract dated June 2021 – containing the 24 May 2021 FSS AOA at annex A, outlined the range of extension should be between 6 and 18 months. Following careful consideration, an 18-month extension which can be terminated at any point, subject to value for money, was approved before being signed on 10 June 2022.

The FSS programme developed an Outline Business Case, which takes this revised timetable into account. This OBC secured FIC approval to:

a. re-procure UKVI’s UK and overseas front-end customer services – named as the Visas & Citizenship Application Services (VCAS) contracts, for an initial 4-year contract (with scope for a 1+1+1 potential extension).  The economic and finance cases assume a 10-month mobilisation and transition in the UK and 15 months overseas.

b. a whole life spend of £369.0m for the new contracts, £42.1m spend for change resource from programme start until contract end date, totalling £411.1m - excluding optimism bias.

The preferred option is more expensive than the current contracts, even before optimism bias is applied. However, there is no option available to extend the current contracts at the same cost, and all three available options under consideration are more expensive than the current contract and funding. The preferred option maintains business continuity, enables flexible incorporation of digital transformation under the Future Borders and Immigration System (FBIS) programme and is the cheapest of the three options (both before and after optimism bias is applied). FIC have considered the financial risk associated with the OBC and concluded that the right decision is to proceed with the re-procurement.

The procurement stage for the new VCAS contracts is currently mid-flight, and subject to commercial sensitivity. Following the Supplier Selection Questionnaire (SQ) stage, five bidders have been invited to respond to the Invitation to Tender (ITT) covering the five contract lots.

The procurement has progressed through the evaluation and moderation of bids and is now in the negotiation phase. The Best and Final Offers (BAFO) stage is scheduled for later this year.

Preferred Bidders will be known at the start of 2023, and at the point the FSS Full Business Case (FBC) will be updated outlining the procurement outcome as well as the updated whole life cost of the contract. The FBC will then begin progressing through the appropriate Home Office, Cabinet Office and HM Treasury governance approvals, and upon the conclusion of this, a further update of this Accounting Officer Assessment will be produced.

Following the approval of the OBC by FIC, and the commencement of the procurement, the VCAS procurement timeline has changed, with mobilisation and transition now commencing in May 2023. This ensures that each phase can be concluded with the appropriate level of assurance and, importantly, to ensure that the Home Office receives the best possible result in relation to quality of service as well as price. However, it does mean that it has been prudent to explore an extension of the FES UK contract by up to 12 months to enable a smooth transition to the services under the new VCAS contracts without impacting business continuity of Home Office visa services.

Assessment against the Accounting Officer Standards

Regularity

The provision of these services within the VCAS contracts is a fundamental aspect of the visa operating mandate without which basic visa services will be unavailable for those wishing to enter the UK. The biometric obligation when issuing visas stems from the immigration rules based on the Immigration Act 1971 (as amended). There are no policy changes proposed, therefore no novel or contentious aspects associated with continuation of the existing operating model.

The FSS Programme does not require new or amended legislation to progress. I therefore consider it to conform to the Regularity Accounting Officer standard.

Propriety

As articulated in the OBC, The FSS programme continued to operate within its Spending Review 2020 (SR20) spending limits and in line with principles and controls set out in Managing Public Money and the HMT Green Book. Upon approval of the OBC in 2021, The programme team worked through their SR21 bid in conjunction with wider Home Office colleagues to prioritise work without putting the programme’s critical path in jeopardy. Confirmation of the SR outcome for FSS has been received and the programme has moved forward to the procurement stage. There will be a further assessment of the allocated spend in the SR22 bid ahead of the Full Business Case (FBC), which will document the procurement outcome and final assessment of Whole Life Costs (WLC), prior to going through governance approvals in early 2023.

I consider the FSS Programme to align with the principles documented in Managing Public Money and to conform to the Propriety Accounting Officer standard. It will continue to be monitored by the Home Office and the National Audit Office.

Value for Money

FSS Programme delivery of the VCAS contracts is first and foremost providing business continuity for visa services which are vital to the HO’s mandate and enable a significant contribution to the UK in terms of finance, business, security and culture.

The business case is a net cost to the taxpayer and the proposed benefits do not offset the cost. However, the existing system must be replaced for the UK to continue to offer visas. I have assured myself that this option still provides value for money by considering the following factors.

The preferred option in the OBC is the least expensive of the options available with total discounted costs of £510.4m and a positive Net Present Social Value (NPSV) of £24.1m compared to the baseline of reprocuring the contracts on a like for like basis.

This option improves the customer journey, enables flexible incorporation of digital transformation of the Borders and Immigration System under the FBIS programme, provides continuity of service whilst those key digital changes under FBIS are implemented and incorporates feedback from the market, including existing supplier on the viability of the providing the service.

The VCAS contracts are a key enabler of the FBIS programme and its wide range of benefits at the heart of the digital transformation of the Borders and Immigration System. Some of the benefits, initially included with FSS Programme business case such as document upload savings (specifically licences), digital permissions (vignette and courier costs) are now included in the FBIS business case. The VCAS contracts have the flexibility to implement several transformational changes envisaged as part of FBIS during the contract term.

Additionally, when the FBIS delivered system for biometric reuse is introduced, it will reduce biometric capture volumes over the life of the new contracts but until then, the services provide under the VCAS contracts are crucial to providing business continuity for visa services.

We are undertaking a comprehensive commercial exercise to secure the best long-term arrangements for the Department and customers and this will be reflected in the FBC.

Taking into account the essential nature of these services and the considerations above, I am satisfied that this project meets the VfM test.

Feasibility

The FSS Programme was rated amber following an IPA review in April 2021; and a further IPA review (completed on 30 September 2021) reaffirmed an ‘Amber’ delivery confidence whilst noting the risk around delays with the pricing model; they rated the action plan as ‘Amber’. Risks around costs, resource and getting requirements ready for going to market, including revising delivery scope, had been addressed. The progress made by the Programme on those delivery challenges enabled the OBC to be approved by various internal (FIC) and external governance forums (CO and HMT) and to launch the procurement phase to time as articulated within the OBC.

In August 2022, the IPA completed a Gateway 0 review which concluded with a delivery confidence assessment of ‘Amber’. The IPA review acknowledged progress over the past year, with scope clearly defined and sharp focus on maintaining continuity of frontline services ahead of future strategic transformation. The invitation to tender resulted in 17 bids across 5 lots, so there is competition to drive optimal outcomes. One key area of commercial risk is the successful completion of the financial pricing model and the resourcing model that underpins it. The model underpins the approach to volume risk and pricing, and inevitably has a degree of complexity. The programme has a schedule in place that plots a path through to implementation and there is good engagement from key stakeholders. As the programme is working to a fixed end date, required activities have been compressed to support that deadline, which introduces risk.

The risks identified within these reviews continue to be monitored as part of ongoing risk, issue and dependency management activities imbedded within the Programme, aligned to Home Office standards. Suitable funding and resources are available to the programme this financial year 22/23 and were included in the bid as part of SR22 to assist the programme to continue to deliver.

The procurement timeline has been adapted since the OBC was approved by FIC to ensure that each phase can be concluded with the appropriate level of assurance and, importantly, to ensure that the Home Office receives the best possible result in relation to quality of service as well as price (as discussed above) within a relatively small market of suppliers. The programme continues to review the challenges associated with a longer procurement timeline and has advised that extensions to the FES UK contract is required to ensure that continuity of service is ensured whilst providing appropriate time to allow the transition from the existing contracts to the new contract services.

Additionally, the programme continues to work with key enablers such as operational colleagues within SRS who will manage the contracts, DDaT and dependent programmes (FBIS) to monitor risks to the transition timeline and put in place the appropriate mitigations to ensure that programme delivery remains feasible. This will continue during the procurement phase and as the transition timeline is finalised when the Full Business Case documents the procurement outcome, preferred bidders, refined transition timelines and whole life costs.

Based on the IPA reviews and FIC scrutiny of the resultant revised business case I consider the programme to meet the feasibility test.

Conclusion

As the Accounting Officer for the programme, I have prepared this assessment to set out the points that informed my decision in August 2022. I consider that the programme meets the four accounting officer standards of regularity, propriety, value for money and feasibility. I am therefore satisfied that the programme is a good use of public resources.

If any of these factors change materially during the lifetime of this project, I undertake to prepare a revised summary, setting out my assessment of them. This summary will be published on the government’s website (GOV.UK). Copies will be deposited in the Library of the House of Commons and sent to the Comptroller and Auditor General, Treasury Officer of Accounts and the Chair of the Public Accounts Committee.

Patricia Hayes CB

Second Permanent Secretary for the Home Office

6 September 2022