179. May I start off by agreeing with my colleague Alan Williams on the question of recognising the need for police radios to be improved? I certainly had a placement with Strathclyde police and I recognise they difficulties they face with radios which do not work, which do not cover the area and so on. I accept that there is a need, but I do have some questions. Does the Home Office generally have confidence in the ability of local police committees to understand the needs of their area and of their force?
(Mr Gieve) Yes.
180. I want to pick up the point about the extent to which this is over-engineered and gold-plated. I understand about having coverage and I understand the point about having encryption. What I am not certain about is the value which was added for the additional costs of some of the extra features. The gain that has been mentioned to us fairly consistently, and in paragraph 13 of the summary for example, is avoiding police Officers having to go back to the station and all the rest of it. Surely they do not need the capacity to roam throughout the whole United Kingdom in order to be able to contact their headquarters. Very low-tech provision, indeed a secure land line almost could enable them to contact the station rather than having to travel back in again. May I just clarify a point on roaming? How many Officers normally operate outwith their own force areas as a percentage?
(Mr Gieve) I do not have that.
181. Could you get that, please?
(Mr Gieve) Yes. I might be able to. I shall look for it anyway.9
182. How many times as a percentage of calls does one headquarters at the moment have to contact another headquarters on an urgent issue which has to go across a force boundary?
(Mr Gieve) I do not have a figure as a percentage of all the calls made. I imagine that the bulk of all calls are local but it is a regular business that police headquarters will be dealing with.
183. How regular?
(Mr Gieve) I do not know. If you take for example the National Crime Squad, counter-terrorist operations, these are all nationwide operations and they all require this.
184. I understand that. I just do not have a feel from this what the additional cost is of having a roaming ability as compared to the number of Officers who would actually use it. You have indicated nothing that would give me any idea as to what that would be.
(Mr Gieve) I shall come back as well as I can. Just to get the figures clear, the £1.47 billion is the cost over 20 years of supplying a radio system and any radio system would cost quite a lot.
185. I only have a limited amount of time, so I do not want you to go back and tell me all the things I know already. One of the gains from the system was intended to be interoperability which we are now not going to have. Was interoperability between all the different emergency services really priced in at all in any way?
(Mr Gieve) We are going to have interoperability across the Police Service.
186. Across the emergency services.
(Mr Gieve) As far as the Fire Service is concerned, which was originally in, they withdrew before we got to the costing.
187. Was an estimate made of how much would be gained by the police in having interoperability with the Fire Service?
(Mr Gieve) In terms of putting a price on it?
188. Yes.
(Mr Gieve) No; I do not think so.
189. It just seemed like a good idea. If this was one of the main gains, I would have thought there was some sort of value attached to it, but no. We recognised early on that police authorities know their area, know the value of particular provisions. According to the summary in paragraph 13, "During the procurement, many police authorities considered that Airwave was prohibitively expensive". Presumably then they were regarding it as over- engineered for their needs.
(Mr Gieve) For their local needs.
190. What other needs are there?
(Mr Gieve) They are part of a national Police Service, so it is quite possible that the sum of the local needs will not add up to a coherent and satisfactory total picture, which is why the Government have powers and are taking more powers to set a national policing plan, precisely to make sure that we do get a coherent picture.
191. Did you identify a value as being above and beyond the local advantages, which presumably the local authorities or the local police boards were pricing and saying this was too expensive? You identified a value from having this roaming ability and interoperability and all the rest of it. Can you tell me how much that was?
(Mr Gieve) The figure in the report is £300 million, although that was not hugely well supported. That was the cost difference between having Airwave and an estimated cost of having a set of local procurements.
192. With respect, that was not what I asked you. What I was asking was what the value to you was. You paid out £500 million to police authorities to enable them to buy this scheme which they thought was too expensive. Presumably then it must have been worth more than £500 million to you to pay £500 million out. Therefore you must have had some calculation that led you to believe that it was worth more than £500 million because presumably otherwise you would not have done it. What was the figure?
(Mr Gieve) Those are two separate questions. In terms of value for money for the country, the figure is £300 million or thereabouts, which is what it would cost to do this system rather than that system. The question for us on the £500 million was within our total budget, some of which might have been going to the police anyway, we found £500 million and channelled it through this means. That was worth doing as a means of getting them to apply a system which was worth having.
193. So you do not have an answer to the points I was raising. You can understand why I am a bit anxious when almost everybody else who looked at this scheme did not think it was value for money. None of the local police forces thought it was value for money, the Fire Service did not think it was value for money and the jury is out to some extent on the Ambulance Service. On reflection, do you not think that perhaps it has been gold-plated?
(Mr Gieve) I do not accept the first premise that no-one thought this was value for money except the Home Office. Is that your starting point?
194. Not all that far away from that.
(Mr Gieve) Before we announced the £500 million I gather 39 of the police forces in England and Wales out of 43 had indicated they would proceed with Airwave. The specification you are talking about and saying is gold-plated is one drawn up by the police authorities. We had a major consultation.
195. If it was drawn up by the police authorities, why did many police authorities consider that Airwave was prohibitively expensive?
(Mr Gieve) Partly because they probably thought they were in a negotiation with us for funds.
196. So they were misleading us all really.
(Mr Gieve) No, I do not think so. They thought that if they had to use their money they would prefer or might be forced to do with less functionality.
197. Yes; absolutely. If they were using their money, they would have preferred to make do with less.
(Mr Gieve) Yes.
198. But if they were spending your money, they would take these extra features. There is an issue here in terms of the local police authorities believing that some of the add-ons were not value for money, basically.
(Mr Gieve) There was also, no doubt wrapped up in that, the question of whether they thought it would work, because this is an unproven technology. They were taking a risk on this as well.
199. Mr Parris, the 17% profit. Anxieties have been expressed here as to whether or not the add-ons will give you much more. Are you prepared to open your books to the Home Office to let them see how much profit you are making as the contract goes on?
(Mr Parris) The 17% figure you quote and which is in the report has been acknowledged as an estimate of our return from this contract in isolation. What we made clear at the time and we still stand by, is that we would not have done this project in isolation for the police at that return. We have taken this project on, on the basis that it would give us an opportunity to be able to market it to the Fire Service, the Ambulance Service and such like.
200. Is that a yes or a no about open books?
(Mr Parris) This contract was not procured under open-book accounting.
201. I understand that. I am asking whether, in order to maintain good will, and as anxieties have been expressed, you are willing to demonstrate on an ongoing basis-we are talking about 15 years here- by operating some sort of open book system to show the Home Office that you are not profiteering.
(Mr Parris) There is a mechanism within the contract which is similar to an open-book accounting mechanism which requires us to prove value for money on an ongoing basis. The broad answer to your question is yes. The additional thing I would say is that we have talked in this meeting about the additional possible service to fire and ambulance and such like. Those are discussions and negotiations yet to be had and I would fully expect to be able to demonstrate the provision of a value for money service to anybody else who joined up.
202. Somewhere in this report it mentions that they were trying to estimate costs and so on. You were refusing to provide cost information. That does not sound like the actions of a partner and it does look rather as though you are concealing something, does it not?
(Mr Parris) When this procurement went down to a single bidder we recognised that there was a need to adopt and change our approach. Indeed there were some advantages from being in a single-bidder situation. We proposed and PITO accepted the concept of the "should-cost" model, which is the basis of what you are referring to. We also suggested that in effect the bill of quantities would describe the bits which go to make up this system and we would make our own estimate of what those costs would be and PITO could check whether they felt they were appropriate estimates and such like. We did do that and we did do it for six major cost items. If I am reading your question correctly, there was some issue during the negotiation when frankly our design had not materialised, had not matured, to a level where we could provide all the detail which was required at that stage.
203. Perhaps I have picked this up wrongly or it has been phrased wrongly in the writing. You would have no difficulty about providing any cost information which was sought either by the NAO or by PITO or by anybody else in order to demonstrate that you were not over-charging.
(Mr Parris) We have done that.
204. Mr Gieve, is that your impression?
(Mr Gieve) May I ask Philip to answer as he was negotiating that contract?
(Mr Webb) Yes, it was. During that period we worked very closely with Airwave.
205. Thank you very much. I just wanted to clarify that. One of the other issues which causes us concern is this refusal to share profits from bringing in new users. It seems to me that is counter-productive from your perspective as well. If the Home Office and the police forces were your partners and had to have a profit-sharing arrangement they would have an incentive to help you bring more people in, yet at the moment you do not have that. Why is that?
(Mr Parris) The discussion which took place at that time was very much around the way you have just described, that is we were prepared to engage in discussions about sharing benefits, sharing the rewards, as long as the Home Office could bring those users to the table, which unfortunately they could not, as events show, and if they were prepared to share in some of the risks, which for the same reason they were unprepared to do. I was quite prepared to engage in a risk/reward type of arrangement, as is fairly common in partnerships.
206. Mr Gieve, could you comment on that? Is that your understanding of the position?
(Mr Gieve) I will ask Philip, because he was negotiating the contract.
207. But you must have an impression.
(Mr Gieve) The impression is that we would have liked to get a better deal than we did, but in a commercial negotiation you have to settle for what you can get in the end.
208. You have to settle for what you can get in the end. That is presumably because at the stage when you were discussing that really the O2 people had you over a barrel and you are on "Take it or leave it". You had to have this radio, so they could play hard to get and there was nothing else you could do but accept it.
(Mr Gieve) No, it was not. The Home Office have been held over various barrels in the past in that way but it was not true in this case.
209. Usually for your own good.
(Mr Gieve) In this case O2 definitely had already invested heavily in this project and phase 2 stood to lose a lot if the project did not go ahead. It was more even than you say. Having a single body is not ideal and that is why we did the "should-cost" model and so on, to try to ensure that we were getting a value for money deal.
210. May I clarify one point on page 12 which mentions extra charges? In the nice picture at the bottom on the right hand side it says "Where the police force requires its Officers to operate inside buildings on a regular basis" basically you have to pay more. As far as I know, there are no police forces with no buildings, therefore presumably all police forces will at some stage have to operate inside buildings and presumably all of them are going to have to pay an extra charge. Am I picking this up wrongly?
(Mr Webb) They would not necessarily have to pay an additional charge. The system does work reasonably well in most buildings, but in areas where they want a much higher level of coverage, like large shopping malls and airports, they would want a better service. What most police forces have done is look at the standard coverage and buy additional coverage for those areas which did not meet the full requirement.
211. You are wiring inside the airport or wherever it is to provide that service.
(Mr Webb) Yes.
212. When this wonderful scheme is being rolled out, why is Scotland last?
(Mr Webb) As part of the original arrangement Scotland chose to go last.
213. Do they get it cheaper?
(Mr Webb) Let us put it this way, we shall have rolled out to an awful lot of other forces and ironed out a lot of problems before we get to Scotland.
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9 Ev 24-25.