DVSA's £700M Theory Test Contract Doubles Without Explanation

The Driver & Vehicle Standards Agency (DVSA) has significantly escalated its online theory test contract value to £700 million, more than doubling the initial £300 million offer without providing any explanation for the substantial increase.

Initial Procurement and Value Escalation

The reprocurement process for the online theory test service began in March last year with preliminary market engagement aimed at generating interest in the potential future opportunity. The service handles approximately 3.6 million online tests annually and was initially valued at £300 million for a five-year period from September 2028 to September 2033, with a possible one-year extension.

Subsequently, the DVSA published two additional notices maintaining the £300 million price tag but extending the service duration to a maximum of seven years. The most recent notice, published last week, dramatically increased the maximum value to £700 million - excluding tax - for a maximum of nine years from September 2028 until September 2037.

This represents an increase from approximately £60 million per year to about £78 million annually, yet the agency has provided no justification for this substantial escalation in contract value.

Agency Under Pressure

The timing of this procurement comes as the DVSA faces mounting criticism over its current systems. In December, the National Audit Office (NAO) sharply criticized the agency regarding long waits for practical driving tests. The NAO identified the primary cause as a shortage of examiners, but noted that the situation was exacerbated by the agency's 18-year-old booking system being vulnerable to targeting by third-party cancellation checkers and slot resellers.

The NAO investigation revealed that some candidates were paying up to £500 to secure a test that officially costs £62 on weekdays, highlighting significant market failures in the current system.

Digital Transformation Challenges

The DVSA is actively seeking a chief digital and information officer to help improve its test booking services. The role, with a salary of £95,000 per year, will face the immediate challenge of managing this massive £700 million procurement for a new online theory test system.

The UK Theory Test is a statutory service owned by the DVSA and serves as a prerequisite for taking the practical driving test. The service is administered by the DVSA and two private organizations, with theory test contracts and digital operations run by the DVSA, while theory test center operations are overseen by the private entities.

Procurement Timeline

The DVSA expects to publish the tender notice to initiate the competitive procurement process in April. The agency has stated that it would not be appropriate to comment further on the preliminary market engagement activity, directing stakeholders to await updates through public procurement channels.

This procurement represents a significant investment in digital infrastructure for the UK's driving assessment system, though the lack of transparency regarding the value increase may raise questions among industry observers and potential bidders about the procurement process and decision-making criteria.

The substantial increase in contract value comes at a time when the DVSA is working to address multiple operational challenges, including improving system security, reducing wait times, and eliminating the exploitation of its current booking system by third-party resellers.