Change | Increase/(decrease) in payments to BT (£ millions, present value) | Increase/(decrease) in costs remaining with the Department (£ millions, present value) |
Growth of Packet Switched service in the UK, and inclusion of Packet Switched service in Germany | 32 | 0 |
Addition of Local Area Network Interconnect | 8 | 0 |
Addition of call logging | 12 | 0 |
Reduction in UNITER and other costs | (15) | 0 |
Interim tariffs for Circuit Switched and Point to Point | 25 | (25) |
Inclusion of Circuit Switched services for Army Districts | 15 | Approximately (15) |
Net reduction in other residual costs | 0 | (35) |
Total increase/(decrease) in programme costs | 77 | (75) |
Source: Ministry of Defence | ||
The table shows that after BT's selection as preferred bidder, estimated payments to them increased by £77 million. This was largely offset by reductions of £75 million in costs remaining with the Department, of which £35 million related to the Department's ongoing programme of cost reductions. The greater part of the increase in payments to BT comprised additional services purchased at tariffs determined in the competition. The Department consider that, because of this and the reduction in the cost of UNITER, overall there was a small improvement in value for money as a result of these negotiations with BT.