Select Committee on Public Accounts Appendices to the Minutes of Evidence


Supplementary memorandum submitted by the Home Office

Question 53: Calculation of risk costs?

  As part of the work developing the Public Sector Comparator (PSC) a workshop was convened to assess the risks, led by Masons Communications (technical consultants to PITO) who were developing the PSC for the Police Information Technology Organisation (PITO). Experienced engineers from the Home Office and three forces supported by operational police officers attended the workshop. Each of the 17 risk areas identified either previously or during the workshop was placed into one of four risk categories. The categories covered financial, technical including system design, programme related and commercial risks. There was little factual information available that could be used to assist the workshop in quantifying risk in particular that relating to the deployment of TETRA technology due to its newness. The workshop therefore had to rely on its collective experience and judgement to estimate the probability of the risk happening and the associated cost. The costed risk estimates (product of risk probability and cost) were then profiled over the system roll and operational phases of the project. Risk consists of that arising as risk to capital during the build of Airwave and that to on-going operation and support of the Airwave service. The former was only applied to costings during the initial five years' roll-out.

  The total Net Present Cost (NPC—a method of assessing a series of future payment by discounting them back to a single value in today's money terms) of the risk profiled over the life of the project was estimated at £170 million, approximately 10% of the total cost of the PSC. A risk value of 10% for a technically advanced and complex project is considered reasonable.

Questions 68-73: What is the cost per radio under this deal?

Typical costs of radios, inclusive of generally required accessories such as carrying cases and battery chargers etc., are approximately £800. Prices are dependent on quantities and exact equipment requirements as in any other procurement and the handsets can be obtained for less than £800.

  Deployment of handsets is dependent on the operational practices of different forces. In some forces they are shared by officers, in others they are personal issue. This is an operational decision for the force and not for Airwave.

Question 181: How many [Police] officers normally operate outwith their own force areas?

  No data is centrally held by the Home Office, HM Inspector of Constabulary or the Public Order Branch of the Met (which co-ordinates mutual aid) to say what numbers or proportion of officers operate outside their force boundary. Examples of officers operating outside their force boundary are given below.

  The British Transport Police and Ministry of Defence Police each provide policing for organisations which requires them to interoperate with other forces nationally.

  Members of the National Crime Squad will routinely operate across force areas, as well as officers on specialist units (Mounted Branch, Diving Unit, Air Support Unit, motorcycle teams) who are "loaned" to other forces for special events (football matches, Commonwealth Games). The East Midlands Air Support Unit has an aircraft shared by Leicestershire, Northamptonshire and Warwickshire. Diplomatic Protection officers accompany their subjects wherever they go.

  Non-specialist officers are likely to work outside their forces on mutual aid in cases of major incident such as the Miner's Strike, the Brighton Bomb or the Lockerbie air crash. The latter occurred in Dumfries and Galloway, the smallest force in Scotland, who were heavily reliant on mutual aid (not just from adjacent forces but from many in England including the Met) to assist in an incident they were unable to resource.

  Major incidents are not necessarily contained within a single force area. Most air crashes, for example, occur on landing or take off and many airports are near force boundaries. Heathrow airport is policed by the Met but adjoins Thames Valley police area. Gatwick Airport is surrounded on three sides by the Surrey police area. The last aircraft to crash there, in 1967, was an Ariana Boeing 727 which came down on approach in Surrey one mile away. In December 1994 an Air Algerie Boeing 737, on approach to Coventry airport in Warwickshire, crashed in the West Midlands police area. Both forces (and fire brigades and ambulance services) were involved in the incident. The Kegworth air crash occurred near Junction 24 on the M1 motorway near East Midlands airport, where the boundaries of the Leicestershire, Derbyshire and Nottinghamshire forces meet. All three were involved, as were their respective fire and ambulance services. A typical Major Incident exercise at Gatwick Airport might involve Sussex and Surrey Police, Surrey, West Sussex, East Sussex and the Airport Fire Brigades, Surrey and Sussex Ambulance, Gatwick Airport Limited (GAL) staff and the Army.

  Officers working in areas adjoining another force will routinely cross into the other force area and liaise with officers from that force. Motorway patrol officers may have no choice but to do so because of the limited number of motorway exits and routinely patrol on adjacent force areas. In case of hot pursuit of a suspect vehicle or persons, the pursuing officers will notify the force into whose area they are crossing. Should the suspects be armed, this is imperative, because only with the express authority of a Chief Officer of the host force may firearms be deployed.

  The old force radio systems have always been locally based and work well so long as, in radio terms, the handset can `see' the mast. Once contact is lost- during a pursuit, for example, which takes an officer away from his local base to a neighbouring division, that officer must change to another radio channel. A pursuit of 15 miles in the same force area might require four or five changes of channel and rely on the officer's knowledge of which to use. The same officer using Airwave could remain on the same talkgroup whether the pursuit remained in force or entered another (or several others).

  Airwave gives officers the ability to communicate effectively within and outside their force boundaries. Derbyshire Constabulary, for example, adjoins eight other forces. One of these is Leicestershire, which itself adjoins eight forces. For all of these forces to be able to communicate through digital technology, a compatible national system is required. A single system is cheaper than four or six incompatible systems pocketed around the country where communications equipment has to be stockpiled in the event of major incident or cross-border incident. There will be other savings. Special facilities provided for police communications, such as at the motorway control centre for the M25 situated in Surrey, will be rendered unnecessary when Airwave is installed in those forces.

Questions 216-221: What do you anticipate to be the total cash you would pay out over the 19 years?

  The Airwave contract payments are spread over 15 years for each force starting at the Ready for Service date. There was a planned progressive roll out starting in 2001 and the total life of the programme, including the roll-out and decommissioning phases, will be 19 years. When the system is fully rolled out the total annual charge at 1999-2000 prices will be around £180 million per year for core and menu service charges. This comprises £146 million for the core service and an estimated £34 million for menu exclusive services. As forces have local discretion for the amount of optional menu exclusive service they procure, their contract value can only be an informed estimate. On this basis, the total value of contract payments over 15 years at 1999-2000 prices is £2.7 billion. O2 may have a more optimistic estimate of the revenue they will receive from menu services provided to forces and have published a total contract value figure of £2.9 billion.

  The start up including the provision of radios from third party suppliers is at an additional estimated cost of £280 million.

  The net present cost (NPC) of the contract is derived from the contract payments and applying the Treasury recommended discount factor of 6 per cent. The NPC of the contract (excluding radios) is £1.47 billion.

  The contract includes a complex indexation formula which takes account of RPI and the Electrical & Optical Equipment Earning Index and protects the public sector against any unregulated change in prices.

Question 251: Health and Safety

  Two notes on Health and Safety submitted by the Home Office and by Airwave mmO2 are provided at Annex A and Annex B respectively.

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