4.7 The team reported in late 1999 that undertaking technical transition over a two-year period without unacceptable damage to continuity of services would cost some £450 million. This was some ten times greater than the original estimate, and twenty times the figure initially reported to the GCHQ Board.
4.8 Following this review, GCHQ re-appraised the cost of the whole programme and the realistic best alternative available, kept Ministers informed and ensured that decisions were taken with the benefit of the best information available.
4.9 GCHQ sought assurance in late 1999 that the Treasury would fund the costs of technical transition, but the Treasury said the costs were too high. Consequently, GCHQ considered extending the technical transition period to try to reduce the costs. It could reduce the overall costs of technical transition to £308 million (cash). for the first five years plus a further £60 million (cash), later reduced to £43 million, for the period to 2012. This proposal required keeping part of the Oakley site open until 2012 and providing associated extra running costs. The revised £43 million included a payment of £17 million to IAS to compensate it for the value of the land at Oakley which would otherwise have been sold, but this sum, less demolition costs, would be recouped in 2012.
|
8 |
|
The cost of technical transition for the first five years (£ millions, cash) |
The figure shows the agreed split of funding of the £308 million technical transition costs between additional Treasury resources and use of existing GCHQ budget provisions
|
Item |
|
|
Financial Year |
|
|
|
|
|
00-01 |
01-02 |
02-03 |
03-04 |
04-05 |
Total (rounded) |
|
Cost of transition (A) |
69.7 |
97.8 |
56.7 |
61.5 |
22.9 |
308 |
|
LESS Cost in GCHQ capital budget (B) |
(21.5) |
(20.8) |
(2.1) |
(1.4) |
(0.2) |
(44) |
|
Required Additional Funds (A-B) |
48.2 |
77.0 |
54.6 |
60.1 |
22.7 |
264 |
|
Treasury base contribution (C) |
31.2 |
49.8 |
35.3 |
38.9 |
14.7 |
170 |
|
Remainder split 50/50 Treasury/GCHQ (D) |
17.0 |
27.2 |
19.3 |
21.2 |
8.0 |
94 |
|
Required Additional Funds (C+D) |
48.2 |
77.0 |
54.6 |
60.1 |
22.7 |
264 |
|
Treasury funding (C + 50%D) |
39.7 |
63.4 |
45.0 |
49.5 |
18.7 |
216 |
|
GCHQ contribution to funding (B +50%D) |
30.0 |
34.4 |
11.7 |
12.0 |
4.2 |
92 |
|
Cost of transition (A) |
69.7 |
97.8 |
56.7 |
61.5 |
22.9 |
308 |
In addition to these costs there is an additional estimated £43 million (cash) to cover the costs of continuing operations on the Oakley site until the transition is fully complete in 2012.
4.10 In February 2000, Treasury capped GCHQ's expenditure on technical transition for the first five years at £308 million and agreed to provide additional funding of £216 million as a one off provision. The remainder was to come from GCHQ's existing annual voted provision. The estimated technical transition cost profile and the breakdown of additional funding by Treasury are shown in Figure 8.
4.11 Technical transition as finally agreed between GCHQ and Treasury provides significantly more continuity of service to intelligence customers during the transition to the new building than the highly disruptive "box move" approach. This continuity of service is delivered by rationalising or replacing parts of GCHQ's Information Technology infrastructure, providing Information Technology management tools to improve Information Technology problem management and the creation of contingency facilities for use in the event of a serious outage. There are early benefits from the changes delivered by technical transition which reflect the fact that GCHQ planned to do some of the work whether or not it moved to a new building and which are in line with its contribution to the cost of technical transition from its existing provision.