Q91 Mr Jenkins: How do you know that because you did not know what you were wiring into the building? Do not tell me that the minister had the full story because he did not.
Sir David Omand: That was March 2000. The contract was not signed until-
Dr Pepper: The contract was signed in June 2000. The cost of technical transition at that point was set by the minister at £308.6 million. That was precisely what we are in the process of delivering.
Sir David Omand: It was only after Sir Edmund Burton's work, and after my predecessor in this role had gone through the figures with a fine toothcomb and had presented his advice to ministers, only at that point was the go-ahead given to sign the contract.
Dr Pepper: There has been no cost escalation since that point.
Q92 Chairman: What would have happened if the minister had said no at that stage?
Dr Pepper: Then we would almost certainly have had to pay compensation to the contractor.
Q93 Chairman: How much?
Dr Pepper: I have no idea.3
Q94 Chairman: It was not going to happen, the minister was not going to say no, was he?
Dr Pepper: Had the comparison that we have put forward between the PFI and the PSC come out very differently, if the PSC costs had come out to be very much cheaper then one assumes the minister would have gone in that direction.
Q95 Jon Cruddas: I will reserve going into some of that and take a more charitable take on some of this. The arguments to date are ones of technical complexity and the imminence of the Millennium in terms of the technical changes. Was that the conclusion of the Burton report itself? I have not read the Burton report; I have just read the way it has been commented on in the NAO Report. They covered some 43 management recommendations on the basis of a more strategic approach to be deployed across GCHQ and not just the management of this PFI project. Is that right?
Dr Pepper: That is right.
Q96 Jon Cruddas: Could you give us a flavour of that because I am slightly blind on that?
Dr Pepper: Yes. You would not have read the Burton report because it has not been made available to you.
Q97 Jon Cruddas: I assumed that.
Dr Pepper: The main thrust of the Burton report was that one of the key failings in the way we had gone about all of this was a lack of strategic approach to our overall planning and management systems. As a result of that, we have done a range of things. We have completely redesigned our financial and operational planning. We now have five and 10 year horizons that we work to, so we are not falling into the trap of only looking two or three years ahead. We have built what we call a blueprint, a description of the model of the organisation five years hence, which is completely all-embracing. We have adopted the formal programme methodology, the OGC methodology, for all our change programmes. We are using OGC gateway reviews with external reviewers for all big programmes. Again, we are bringing in outside expertise to look at the planning of what we are doing to make sure that we are doing it properly. We now have three external non-executive directors on the Board. One of them is Sir Edmund Burton, the other two are from industry, so they are able to bring industrial best practice to make sure that, firstly, we have decent systems and, secondly, they are able to cast a sceptical look at particular projects and say, "Have you thought of this?"
Q98 Jon Cruddas: None of this existed before May 2000?
Dr Pepper: Correct.
Q99 Jon Cruddas: The changes in the estimates occurred 1989-90?
Dr Pepper: Late 1999.
Q100 Jon Cruddas: Late 1999, okay. Can I just ask a question on this three year horizon for strategic planning. Does that mean that in 1996 you would not have had the Millennium on your three year strategic horizon?
Dr Pepper: In 1996, although it was not built into the financial modelling, we were already starting to say "It is coming".
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