5.29 Although GCHQ had agreed with Treasury the funding for an extended technical transition period up to 2012 prior to completion of the negotiations with IAS, the contract signed in June 2000 was based upon only a 17 month period. This was to run from the date IAS made the new accommodation available for GCHQ to commence occupation to the date the old sites would be vacated fully. GCHQ had concerns that renegotiating the transition dates in the contract would require a revised schedule of Unitary Payments delaying further the signing of the contract with the risk of not completing the deal. Therefore, to address the extended move, GCHQ and IAS ensured that contract terms would allow for a longer technical transition period although such changes would be subject to financial compensation.
5.30 The beneficial financial effect to IAS from the timing of funds available from the sale of Benhall and Oakley land is reflected in the agreed annual Unitary Payment profile. This assumed that proceeds from land sales would be available to IAS from early 2007. Under the terms of the contract GCHQ is required to finance any delay in receiving sale proceeds due to land not being released by agreed deadlines. The current extended transition period will cause a delay in the release of a significant element of the Oakley site with an estimated sale value of around £17 million. GCHQ expect to compensate IAS for the delay by paying them £17 million in 2007-08 and recovering this when the site is sold in 2011-12.
5.31 The costs of retaining part of the Oakley site open and operational from 2005-06 to 2011-12 and the associated technical transition running costs are currently estimated at £43 million (cash). This includes:
■ additional demolition costs due to the delay;
■ maintenance costs over the period of decanting into the new building; and
■ transition running costs.
5.32 In detail these comprise six years' running costs at about £6 million per year and £7 million extra demolition and associated costs. GCHQ expects that some 70 to 80 per cent of existing equipment will still be on the Oakley site at the start of 2005-06.