Q111 Jon Cruddas: Minor marginal issues.
Dr Pepper: Would you like me to explain a bit more?
Q112 Jon Cruddas: Yes.
Dr Pepper: The problems in June were not much more than the normal snags that you get with a new building. They had been rushing to finish it by the middle of June, they had done a 99.9% job but there were inevitably still things to be done before we could move in. The variations reflect the fact that we are in a volatile business. The specification for the building had been finalised three years ago and a lot has happened in the world in those three years, including 9/11, and we have necessarily had to make quite a lot of changes to our organisational configuration. Consequently, before we could move our people in there were changes that had to be made from the way it was originally specified to the way we wanted it. We could not force IAS to incorporate those changes in the building process because that would have put the achievement of their bonus at risk and so on, so they would not take it on. What we wanted to do, therefore, what we had to do, was to get those changes made at the last minute. What we worked towards in the methods as we describe in this update memo was a way of getting those done but still getting in on time on 17 September.
Q113 Mr Bacon: Dr Pepper, how many directors have there been of GCHQ since January 1998?
Dr Pepper: Since January 1998, Francis Richards and myself.
Q114 Mr Bacon: I have the CV of Sir Kevin Tebbit here, from when he appeared before us last, which says that he became Director of GCHQ in January 1998.
Dr Pepper: For six months, that is right.
Q115 Mr Bacon: Then he left in July 1998.
Dr Pepper: That is right.
Q116 Mr Bacon: Since then there has just been Francis Richards and yourself. You have been there since April.
Dr Pepper: Yes.
Q117 Mr Bacon: You are not expecting to go anywhere in a hurry?
Dr Pepper: I am not expecting to go anywhere in a hurry.
Q118 Mr Bacon: I would just like to continue the point Mr Cruddas was making. If you continue down on page 19, paragraph 4.21, it is talking about the recommendations of the Burton report and it says: "The remaining recommendations addressed issues of leadership and management; communications between different types and levels of staff . . .". That probably covers a multitude of things. ". . . capture of information for planning; investment in people and staff training; project management; and the oversight and control of programmes of work". That paragraph covers just about everything one way or another. It is written in that exquisitely understated NAO style. It sounds very much as if the management of your organisation has been very poor, as Mr Cruddas was saying. Do you think that is fair?
Dr Pepper: No, I do not think it is fair. Although the Burton report-
Q119 Mr Bacon: I do not mean that it is now.
Dr Pepper: No, no, even then. The Burton report did indeed address all those but it did not address them by saying "all these aspects are a complete disaster, GCHQ is a shambles, you need to put something in place". He made recommendations to improve all of those things. Some of them were worse than others. As I have said, the planning mechanism was too stove piped and not far enough looking ahead and that was seriously flawed. On the others he was making points that existing systems could be improved.
Q120 Mr Bacon: For obvious reasons there is a secrecy surrounding the work that you do but do you think that for too long people have assumed culturally do not touch, do not ask about that? It is rather like the Royal Family and when they did ask about royal travel when Sir Michael Peat moved in they cut costs from 17 million to five million and increased the amount of travel and scrutiny is improving in the Royal Family in many ways. Do you think that in a Cold War sense there is a throwback that you do not ask about this and management has suffered because of that?
Dr Pepper: In many ways, yes. If you go back to about 1995 there was a report written on various aspects of the UK intelligence community but there was a recommendation in that report that was written by a retired Permanent Secretary saying much of what you have just said and recommending that it would be a good idea if some outside expertise was brought in to look at GCHQ's management. As a result of that, a senior industrialist came and spent three months looking at the way we manage the place and he made a whole series of recommendations. That was the beginning of a major period of change. We then had Sir David's appointment as Director, the first ever director from outside the organisation. Since then we have had a couple of other directors from outside. As I mentioned earlier, we now have three non-executive directors on the Board who are from outside the organisation. We have moved from a situation seven or eight years ago when we were really very inward looking and entirely content that we knew how to manage the business to one where we are very actively seeking the best possible practice from the outside world.