The cost of vetting people working with children has soared £150m over the cost estimated by the private firm chosen to carry out the work, it has emerged.
The CRB is meant to check staff working with children
At £250m, Capita's was the lowest of three bids for the Criminal Records Bureau contract to deal with three million applications over 10 years.
The bureau had expected between 70-85% of employers to apply for checks on the phone, but most applied in writing.
A Labour MP said estimates for paper applications had been "optimistic".
The Liverpool-based CRB came into operation in March 2002, and was planned as a "one-stop shop" to give employers details about an individual's convictions and cautions, as well as intelligence on them gathered by police.
But the service was beset from the start by problems and delays. For instance,- hundreds of pupils had the start of their school term in September
2002 put back because the CRB had failed to provide certificates
Capita's bid for the contract came in at more than £100m less than tenders submitted by its competitors, including one firm, PricewaterhouseCoopers, which bid £380m.
The low level of the bid sparked alarm bells in the Home Office and outside consultants were called in to assess its viability. They gave assurances that the figures were correct.
The Commons Public Accounts Committee (PAC) has investigated how the contract was negotiated.
Labour member Jon Trickett said assumptions about the numbers of written applications had been "hopelessly optimistic".
"It had to be one of the most incompetently let contracts this committee has seen, certainly since I have been on it," he said.
"We got the highest tender rather than the lowest in the end."
Edward Leigh, the committee's Tory chairman, said: "On the evidence before us, this was a completely unsatisfactory state of affairs."
Capita's bid was based on the Home Office assumption that about 70-85% of people would apply by telephone to a call centre for checks, while others would apply online.
These application channels were designed "to be customer friendly" and consistent with the government's agenda to increase electronic services.
In practice, the NAO found that more than 80% of applications came in paper form, which took a lot longer.
'No paper option'
A Home Office spokesman said: "We actually said right from the outset of the Criminal Records Bureau that the contract was worth £400m over 10 years.
"The original value of the Capita bid was £250m. This has increased by £150m and the fundamental reason for this is the change in the way people are applying for checks.
"We had anticipated that most people would apply over the phone or over the web, but most people applied by paper.
"There was no real option for a paper channel when Capita set up the business."
The spokesman said the costs rose as teams of people had to be brought in to deal with the written applications and IT systems also had to be adapted.
These changes and extra costs would have been incurred whichever competitor had won the contract, he said.
Capita is now handling 50,000 applications a week and is "eliminating backlogs".