1. In February 2000, the Police Information Technology Organisation (PITO1) signed a framework arrangement with 02 (formerly the mobile communications arm of British Telecommunications plc) for a new radio service, known as Airwave, for police forces in England, Wales and Scotland. The framework arrangement was negotiated under the Private Finance Initiative. 02 will design, build, finance and operate the service and in return PITO and the police will pay charges over 19 years of some £1.5 billion. Roll-out of the new radio system started in 2001 and is expected to be completed by 2005, when all police forces will be using Airwave.
2. On the basis of a Report by the Comptroller and Auditor General2 the Committee took evidence from the Home Office, PITO and 02 on three main issues: the costs and expected benefits to the police of the project; the negotiation of the deal with 02; and the extent to which the new radio system will provide for interoperability between the emergency services.
3. Our key conclusions are:
• Airwave might be more sophisticated and expensive than it really needs to be. As a result of the procurement of Airwave, the police are acquiring a radio system which permits a very high degree of interoperability between forces throughout the country. Compared with a series of regional procurements which would have provided more limited interoperability but including interoperability with other emergency services, Airwave will cost an additional £300 million. It is significant that individual police authorities and the fire service cited the cost of Airwave as their reason for being unwilling to subscribe to it.
• There is no substitute for full competitive tendering. But where full competitive tendering is impossible or fails, departments should follow the example set by PITO and seek to use appropriate mechanisms, such as should-cost models, to protect the taxpayer.
• In negotiating a deal with 02, PITO and the Home Office failed to secure any clawback for the taxpayer of additional profits if other emergency services decide to join Airwave or if the system is sold by 02 to overseas governments. 02 was prepared to share the rewards from bringing extra users onto the system only if the Home Office was prepared to share the risk if extra users did not join. Failure to negotiate a clawback agreement was a product not just of 02 being in a powerful position as the only bidder but also the inability of the Home Office to bring the fire service and other safety organisations on board by demonstrating the real benefits that Airwave had to offer.
• It is now nearly ten years since a Home Office review recommended a joint approach to the procurement of new radio systems for the police and fire services. But the emergency services within a particular area or region are still unable to communicate easily with each other during major incidents, and a solution is still a long way off.
4. Our detailed conclusions and recommendations are:
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1 A Non-Departmental Public Body established by the Home Office in 1998 to provide a procurement, contract management and advisory service for communications and information technology used by police forces Negotiating the deal
2 C&AG's Report, Public Private Partnerships: Airwave (HC 730, Session 2001-02)