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Well the Home Office clearly doesn't take very seriously the monitoring of the companies it employs does it. They're as much to blame for this as the company involved IMHO - the only thing they're really good at is passing the buck.
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The laws are quite clear and companies are randomly audited. I personally wouldnt expect the goverment to check prior to dishing out a contract to what I assume was a previously reputable and established company.
The failure, which im sure will be pointed out soon is the security checks. I was of the thinking that all ew employees at high profile goverment buildings would be required to pass police checks.