Q61 Jon Trickett: Exactly.
Mr Glicksman: The figure here is at the lower end of the range of cost overruns that have been found in practice on public sector projects and the analysis was done by a firm of consulting engineers for the Treasury. I do not think these figures were plucked out of the air.
Chairman: We do not want another comment, Mr Trickett.
Jon Trickett: Capita seems to me to figure in a lot of these analyses and once again we hear that this remarkable firm Capita is back in here giving advice. People should manage to make up their own point of view as to whether they have competence or not.
Mr Allan: When you said "the figure" is at the lower end of the cost overruns, to which figure were you referring?
Mr Glicksman: The 24%.
Q62 Mr Allan: You were referring to the £156 million?
Mr Glicksman: To the 24%, yes.
Q63 Mr Allan: I want to pick up on points about the technical transition costs and in particular Sir David's comments, first that the project team and the board focused on the building and not the softer aspects of the move and, secondly, that things were not picked up until 1998; in 1996 things were not apparent, in 1997 they were not apparent and they were only apparent in 1998, but at the end the two elements were broadly speaking equal. We are talking of the order of £300 million to £400 million for the building and £300 to £400 million for the technical transition. I find that amazing. It is rather like IBM planning a move and finding out later in the day that the computer costs for a computer business were high rather than the building costs. Do you find that amazing now that that was not picked up?
Sir David Omand: Yes, I do, but I think we have to be careful how we describe it. The cost of moving, packing up the boxes and moving them and putting them back in operation is turning out to be broadly equivalent to what was forecast at the time. What was not forecast was the cost essentially of providing a new information technology architecture, for GCHQ, which is what it now has. Referring to Mr Williams' point about Pindar, although I am sure there are a lot of valuable lessons we should have learnt from that, this is one area that I think is different, that the larger expenditure which was authorised on technical transition has produced lasting value in terms of the new architecture and the ability to manage it and considerably more resilience. That would have been expenditure needed whether the project was a publicly funded project or a PFI. It is a very large sum of money but it does represent real value.
Q64 Mr Allan: In terms of the large sum of money, I would agree that with 308 million as opposed to, say, the NHS national IT programme over the next few years, which is two billion, we are talking about a very large chunk of public IT spend. In terms of what we are getting for that, I do not know what you are allowed to confirm or deny but the sort of systems that are publicly described under names like Echelon in the press, those kind of collection and processing systems, communication information, those are what we are talking about that you are having to upgrade here?
Sir David Omand: No. A better analogy in your mind might be just to think of the member of staff sitting at a desktop where now, given the range of business that GCHQ has to do to deal with terrorism, serious crime, and support of military forces, that requires access to information from a wide range of systems. They are on to the same desktop but that has to produce a far wider range of material than was ever the case in the past and the access to tools to manipulate that information. For an organisation of this size that is a very major undertaking which the technical transition has provided.
Dr Pepper: That is right. There is quite a lot that comes out of the 300 million but a very, very important part of it, as David has said, is an entirely new infrastructure which will set us in very good stead for the future, not building the sort of systems that you were talking about a moment ago but enabling us to operate and control and bring the right things to the desk in real time and with very great flexibility.
Q65 Mr Allan: So when we use the phrase "technical transition", we are probably talking about an upgrade. What you have done is upgraded your systems.
Dr Pepper: An element of it. We have reached a point where, as with all IT systems, every now and then you have to replace them. If what you are talking about is a single stand-alone system then you can bring in a new one and let the old one go, but the complication we face is that we have a very large number of systems which interact in a very complex way. The great advantage we get from moving to a new building, which is one of the reasons why the concept of a new building was so attractive in the first place, is that effectively it gives us the IT equivalent of a greenfield site and rather than having to move lots of boxes or cram new boxes into an existing computer hall while the existing ones are there, we can actually build a new infrastructure in a new computer hall and then eventually turn the old stuff off and have the new stuff operating and properly networked. It is something that we would have had to have done. It is arguably easier and cheaper doing it this way into a new computer hall than it would have been if we stayed on the old site.
Q66 Mr Allan: Is not the net effect that you as a public organisation got a 300 million upgrade to your computer systems disguised as part of this move when otherwise you would have had to have gone and bid for 300 million quid's worth of money in the same way as the NHS or anyone else?
Sir David Omand: Part of it, if I can interrupt, as the Principal Accounting Officer, had to be found by GCHQ itself, so they had to dig into their own programme.
Q67 Mr Allan: 218 as a present from the Treasury, 218 million.
Dr Pepper: I would not call it a present from the Treasury; I would call it recognition of a step we had to make to move into the future.
Q68 Mr Allan: As budgeted unplanned expenditure.
Dr Pepper: Frankly, we would have faced the problem had we not gone with this project. We would have faced this problem at about this stage anyway. We realised that we had a major upgrade, to use that word in that sense, challenge facing us.
Q69 Mr Allan: Can I go to the role of the Board in this. You said earlier that the figure of 20 million was reported to the Board for these initial costs, it should have been 41 million and all the directors knew it really should have been 41 million because they had worked on it. Why was that not corrected at the time?
Sir David Omand: I am searching my memory because a lot has happened since those days. The figures were presented in a rather different way in the paper that was formally the submission to the Board but it would be wrong to assume from that that there was an escalation of cost between 20 and 41 because it always was 41.
Q70 Mr Allan: So the paper said 20 million but everyone who sat around the table knew it was 41 million and nobody corrected the paper?
Sir David Omand: We have looked back but we have been unable to explain why the figures were presented in a rather different way on that particular piece of paper. By the time the figures were then taken on further and worked on and put to ministers the proper figures were being-