Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 220 - 239)



  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.[10] 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?

  223. Yes.
  (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 of Justice?
  (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 unlawful.
  (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 it not?
  (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 to health".
  (Mr Asque) That is correct.

10   Ev 25. Back

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