Zero Option (£ million)1

B costs (£ million)

BT Saving against ZeroOption1

Racal costs (£ million)

Racal additional costs against Zero Option1

£ million

Per cent

£ million

Per cent

Central case

1203

1159

44

4

1279

(77)

(6)

Economic conditions one per cent more favourable2

1126

1094

32

3

1237

(111)

(10)

Economic conditions one per cent less favourable

1285

1228

57

4

1322

(37)

(3)

10 per cent a year growth in data traffic over 10 years

1276

1194

82

6

1327

(51)

(4)

25 per cent a year growth in data traffic over 10 years

1310

1242

68

5

1376

(66)

(5)

10 per cent a year growth in data traffic over 15 years

1318

1219

99

8

1354

(36)

(3)

25 per cent a year growth in data traffic over 15 years

1429

1347

82

6

1480

(51)

(4)

Figures may not sum due to rounding.

Notes: 

1.  The Zero Option represents the Department's estimates of the costs of their existing network provision in 1996, plus plans to maintain that level of service over the ten year period.

2.  The sensitivity tests on economic conditions assumed a one per cent change in conditions against the central case assumptions. So, the favourable change in economic conditions assumed that labour costs increase by one per cent a year, rather than two per cent as in the central case. Also that equipment and service costs fall by four per cent a year, rather than three per cent as in the central case. The unfavourable change assumed a three per cent annual increase in labour costs and a two per cent annual fall in equipment and service costs.

All options change under each test, including the Zero Option, so the figures for savings of the bids are against the Zero Option in that line.

Bracketed figures show that the Racal bid was more expensive than the Zero Option under all sensitivity test scenarios