GCHQ's option appraisal indicated a single site solution

2.1  The scope of the business case was based on existing needs but emphasised strongly the need for future flexibility to meet GCHQ's requirements over the contract period. It summarised the condition of the existing buildings on GCHQ's Cheltenham estate and looked at a range of 12 accommodation options in detail (Appendix 1). GCHQ required that the options provided a safe and secure operating environment, which was continuously available to support its operations.

The 12 options were analysed under various criteria. These included the impact on capital investment, the disruption to the business, the needs of customers and the impact on staff, many of whom had very specialised skills and lived in the Cheltenham area. GCHQ eliminated seven of the 12 options as being impractical or unlikely to meet its business needs. It considered five options in more detail, of which four involved major development.

2.2  The five options were:

■  do minimum maintenance and refurbishment, known as the Service Cost Benchmark;

■  develop both existing sites, continuing the Cheltenham Building Programme;

■  consolidate at Benhall, using PFI and benefit from the disposal of the Oakley site to meet future accommodation needs;

■  consolidate at Oakley, using PFI and benefit from the disposal of the Benhall site to meet future accommodation needs; and

■  relocate to a local green field site, using PFI. This would require the purchase of a new site, the costs of which would be offset by proceeds from the disposal of both the Oakley and Benhall sites.

2.3  GCHQ estimated the construction and operating costs of the five options using a discounted cash flow analysis over a 30 year period. Three main types of benefit were identified - productivity gains, improved working environment and ease of implementation - and these were assessed using specific criteria and a weighting system. GCHQ also assessed the risks and uncertainties of each option.

2.4  GCHQ's assessment indicated that a single site option would yield financial and operational benefits, so the other options were not pursued further. The cost estimates were very close for the three single site options (Figure 1), as were the benefit scores for the Benhall and green field site options. The April 1997 Business Case therefore recommended that GCHQ pursue an integrated accommodation solution, and that the cost estimates in the appraisal would be tested through a bidding competition. The choice of site was to be left open to bidders in the competition.