4.1 When GCHQ had originally scoped the PFI project, its best estimate in 1997 was that completing technical transition in-house would take around two years. This was based on a high level extrapolation of the cost of moving into a new computer hall, a feature of the proposed Cheltenham Building Programme before the privately financed solution had been sought.
4.2 GCHQ had estimated the technical transition costs at some £41 million, based on a "box move" - shutting down each system, moving it to the new building and re-starting it. Given GCHQ's understanding at that time of the inter-relationships between different systems, GCHQ judged that the consequent disruption to its operations would be acceptable. This cost was reported as only £20 million to the GCHQ Board. GCHQ has since been unable to explain why the full estimate of £41 million was not reported. The GCHQ Board considered that £20 million costs could be covered by its existing Technical Investment Programme funding, so there would be no need to bid for further funding to cover the costs of transition.
4.3 GCHQ undertook a review of technical transition costs in Autumn 1998. This review concluded that a "box move" would cost £60 million. As described below, the significant underestimate of technical transition costs did not emerge until later and could not have been known to Ministers when the preferred bidder was appointed in September 1998.