1.7 By March 1996, GCHQ had realised that funding constraints would mean that the Cheltenham Building Programme would take much longer to implement than planned. At that time it was Government policy to test all capital expenditure for suitability as PFI projects. GCHQ therefore decided to progress its most pressing accommodation need - a proposed £40 million computer block at Oakley - whilst investigating whether a PFI solution for accommodation at Benhall was feasible.
1.8 In May 1996 a GCHQ project team was created to investigate the feasibility of a PFI solution at Benhall. The review considered an accommodation strategy for Benhall and an outline business case, with value for money as the overriding consideration. The scope of the study then widened to include relocation and the provision of other services on one site, such as estate management and training.
1.9 In June 1996, however, the Treasury advised GCHQ that it would not consider approving proposals for the computer block until a PFI solution for all of GCHQ's accommodation needs had been investigated.
1.10 In July 1996 the Benhall accommodation study team concluded that a PFI approach was likely to offer the best value for money for new build accommodation. Its draft business case considered three options. Two of these included the transfer of some of the Oakley operations to Benhall and the third was for a new building for all of GCHQ's Cheltenham operations on the Benhall site.