3.7 During Autumn 1998 GCHQ carried out a Value Engineering exercise2 to help identify areas where costs could be reduced from IAS's Best and Final Offer. Results of this exercise identified some £3 million of savings from proposals that were taken up as later offers were clarified.
3.8 After selection of IAS as preferred bidder, GCHQ's original project manager resigned, and a number of other changes occurred in the GCHQ personnel involved in the negotiation. As a result there was a break in the continuity of the negotiation, with some issues being revisited and thus extra delay.
3.9 The new Programme Director, who was appointed in December 1998, undertook a further internal consultation exercise with technical end-users and other GCHQ staff to confirm their needs and ensure that the IAS bid met all their requirements. These consultations led to changes in those requirements, the major one being an increase in the number of workplaces from 3,750 to 4,025 (7.3 per cent). This change reflected the fact that GCHQ staff numbers were not decreasing as previously envisaged.
3.10 At the same time GCHQ worked with IAS to resolve non-compliances, previously agreed scope changes and lack of sufficient detail and affordability of its bid. These tasks included:
1 provision of a logistics building which IAS had offered only as an option but without which it would be unable to run the specified services for GCHQ under the PFI deal;
2 ensuring that IAS's designs for the supercomputer halls, office floors, and laboratory space complied with GCHQ's requirements; and
3 ensuring that IAS's design for blast proofing the whole building was compliant with GCHQ's requirements.
3.11 The resolution of non-compliances, previously agreed scope changes and an increase in workplace numbers resulted in the size of the building increasing by 30 per cent.
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2 Value Engineering comprises an organised effort directed at analysing designed building features, systems, equipment, and material selections to identify changes that will achieve functions at the lowest life cycle costs consistent with required performance, quality, reliability and safety. The process is typically also used by contractors during the ensuing construction phase.