Examination of Witnesses (Questions 220
MONDAY 22 APRIL 2002
220. Yes, six% would be the discount rate but
what is the inflation assumption.
(Mr Webb) Two and a half%.
(Mr Gieve) May I just pause there and check? I have
a feeling the £2.9 billion may be a real price. May I allow
a consultation behind me to confirm we have the right answer there?
221. May I suggest that you send us a note on
the exact amount? I am always interested in cash out of the door
because I have this very simple, Mrs-Thatcher-corner-shop approach
to economics. The net present cost of Treasury building for example
is £169 million but the actual cash out of the door is £838
million. I am interested in how much cash you are going to have
tied up. The answer appears to be about £3 billion, but if
you can give us a note on that I should be very grateful and if
you could confirm the discount rate and inflation assumptions
as well, that would be great.
Did the Home Office take legal advice on requiring the Fire Service
to partake of Airwave?
(Mr Gieve) I do not know the answer to
that. The Home Office was responsible for the Fire Service when
this decision was taken. It was probably more a negotiated decision.
222. You do not think you took legal advice.
(Mr Gieve) On whether we could force the fire authorities
to buy Airwave?
(Mr Gieve) Did we?
(Mr Webb) Yes.
224. You did. And what was the answer?
(Mr Gieve) No.
225. The answer was that you could not. Is that
correct? The answer is that you took advice on whether you could
require them to and the answer was that you could not, at least
you could not without further competition.
(Mr Gieve) At that point competition was not the issue.
(Mr Parris) As I understand it, relatively lately
the advice you have received is that it would require an additional
competition. I believe that is the situation.
(Mr Gieve) May I just clarify this? We have taken
some legal advice on whether now we could require the Fire Service
and Ambulance Service to buy into the contract we have. Your question
was on whether we did that in 1996.
226. No, I was asking in general.
(Mr Gieve) In that case, we have taken advice.
227. Could you say whether your procurement
was lawful or unlawful?
(Mr Gieve) I hope it was lawful.
228. You think it was lawful.
(Mr Gieve) Yes.
229. Are you sure about that?
(Mr Gieve) Yes. No-one is suggesting it was not.
230. Did Matra not take it to the European Court
(Mr Webb) Matra took it because at that stage they
did not believe we had specified a technology which
231. Who won the case? Did Matra win?
(Mr Webb) Matra did not win the case in so far as
they were not allowed subsequently to bid.
232. No, I did not ask that. My question was
whether your procurement was lawful or unlawful. If it were unlawful,
it would be very obvious that you could do what you did again.
Could you do what you did again in the way that you did it?
(Mr Webb) Following the court case with Matra, for
future procurements we shall have to say "or alternative
technology", but they did not find that we had contravened
any issues at that time. The Government decided to include those
words so they did not get any future actions of that sort. As
far as we were concerned we were within the guidelines.
233. If you were to try to do now what you did
then in terms of the way you did the procurement, it would be
(Mr Webb) No.
234. So you could do it.
(Mr Webb) The only aspect at that time was that we
specified a technology which at that time was an emerging European
standard of TETRA. Now we would have to specify TETRA for compatibility
or any other system which could be made compatible.
235. And the OGC changed its guidelines, did
(Mr Webb) Yes, it did.
236. May I ask you about the safety aspects?
Paragraph 1.14 of the report refers to a review of operational
effectiveness. It says, "The review could identify no potentially
relevant mobile phone or dedicated mobile communications system
available at the time or in the near future, that could provide
an operationally acceptable service as cost effective as Airwave".
Did that review include health and safety aspects?
(Mr Asque) That review included the health and safety
aspects which were relevant at the time.
237. Or were known about at the time.
(Mr Asque) Yes, that is right. Since, things have
changed slightly, but yes, certainly at the time.
238. Paragraph 3.25 says you have done another
review in July 2001, is that correct?
(Mr Asque) Yes.
239. This has "concluded that the current
evidence suggests that it is unlikely that the special features
of signals from TETRA mobile terminals and repeaters pose a hazard
(Mr Asque) That is correct.
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