Examination of Witnesses (Questions 60
MONDAY 22 APRIL 2002
60. It is always interesting to follow because
then you have heard some of the answers and realise you had not
thought of something. One of the things I did not think about
was the reason for the non-use of local radio. Living outside
the West Midlands, I am aware that they have to stop and use a
telephone box to call our local police headquarters to say the
villains have just gone over the border and could they catch them.
It would be much better if we had this national system and get
economies of scale. Then in another answer you said you should
not put all your eggs in one basket. I feel that maybe we did.
In looking through the report, it says we had one bidder, that
is we were tying ourselves to one supplier only, and we had no
fallback position. If that is not putting your eggs in one basket,
(Mr Gieve) I was answering the question the Chairman
asked that either we should have gone local or we should have
had one deal which covered everyone: fire, ambulance and police
at one time. I was saying that being somewhere in the middle,
which is where we are, was a defensible place. On the answer to
you about there being only one bidder, clearly that was not what
we had hoped for. When we started off putting this out to tender
we had three consortia but two dropped out. The question for us
then was whether to proceed, to junk the competition and start
again and for a number of reasons which are set out in the report,
we decided to press ahead. On the fallback position, we did do
work on it and we were confident that if it looked as though the
national procurement was not going to come up with the goods,
we could then have moved quickly to a local fallback. It was always
possible that we would not proceed with this. That has always
61. The equipment we had in place at that time
in 1993 was rapidly running out of life. It was falling over,
the radios were failing, we had difficulty getting space, there
was no fallback position apart from the locally supplied radios.
That was your fallback.
(Mr Gieve) The fallback was not to proceed with this
62. So on this procurement, this was untried,
in fact it did not exist, we were going to go ahead with one supplier
with a technology which was untried. You must have done some rather
smart mathematical modelling or risk assessment on this one.
(Mr Webb) We did a lot of work on assessing risk.
It is worth saying that the technology was emerging at that time
and during the process of the procurement it actually became far
more solid; in fact by the time we got to procurement, a number
of TETRA systems were in use in Europe and other places which
were providing for a big service radio. It was a risk but quite
frankly we did not want to be backward looking, we wanted to be
forward looking. We knew the procurement was going to take some
time, therefore we were looking at new technology and we were
endeavouring to deliver for the police force the sort of service
they would want and they would be able to use effectively over
a long period. There were many risks associated with that and
we and our advisers in fact assessed the technology we had chosen
consistently through the project, and it kept coming out that
TETRA was the most reliable product emerging on the market and
was the source of the future. That has been borne out by virtue
of the fact that it is now a very strong technology, is offered
by a number of organisations and is being taken up by other organisations
in terms of their service supplier. Quite frankly the risk we
took has been well borne out, but we constantly reviewed that
situation as the procurement went forward.
63. When I go to my local police station I know
that they have radios but not every police officer has one. They
leave the radios on charge or they come on shift, go to pick them
up and one is in a car. We have many, many more police on the
beat now; we know by next year or the year after we are getting
up to 130,000 police officers, but how many radios did this deal
include for our police force?
(Mr Webb) It is up to the force how many they buy,
whether they want one per policeman. The arrangement is that every
policeman will be able to have his individual radio.
64. Every police officer who goes on duty will
have an individual radio which they will leave at the station
when they are not on duty. We have a five-shift system in my local
police station so four will be standing there because one will
be in use and four will be standing.
(Mr Webb) If that is how the force want to operate
it, yes; every police officer could have an individual radio if
65. Could have.
(Mr Webb) Yes.
66. Does it cost the force an amount of money
for every radio they take out?
(Mr Webb) Yes.
67. I suggest that if the force has anything
like an aspiration to get value for money they will minimise the
number of radios in use, will they not?
(Mr Webb) That may well be the case. May I just step
back slightly? Airwave provides a service at operational level.
The decision on how they invest that money in terms of the hand-held
equipment and radio equipment in cars is totally down to a decision
made by the local police service. If the police authority wants
to ensure that they are gaining value for money and the level
of service they require by reducing those numbers, it is entirely
up to them.
68. Let us get back to basics then. What is
the cost per radio under this deal?
(Mr Gieve) There is no charge from Airwave for providing
this service to extra radios, but the handsets have to be bought
separately by the police service. I do not know what it costs.
69. So they are additional to the costs we are
(Mr Webb) The cost is actually being borne. It works
out at about £1,000 per person with a radio.
70. Per year.
(Mr Webb) Per radio.
71. Per year for 20 years.
(Mr Webb) For 20 years.
72. That is £20,000 over a 20-year period
for a radio.
(Mr Webb) No; no.
73. Come back on that.
(Mr Gieve) Can we come back on the cost of the individual
Chairman: It is a fairly easy question.
You need to get an answer on that.
74. I am not sure that "all your eggs in
one basket" is looking too good, but perhaps "a pig
in a poke" is.
(Mr Gieve) Why do you say that?
75. Unless we know the cost and how these things
are operated. I should like the details of how much it costs.
(Mr Gieve) The costs in this report, which are shown
as around £1.5 billion over 20 years, include an estimate
of the costs of the handsets and so on. It is not additional to
those costs. In the beginning of this report it has a costing.
76. If we have sharers who want to join in later
on, what sort of cost do they face? The same sort of cost?
(Mr Gieve) There is a tariff in the report on page
77. Yes; it is lower.
(Mr Gieve) That tariff does have a charge for each
radio which is on a different basis from the charging for the
Police Service so it is not possible to make an exact read-across.
If, for example, the Department of Health decide to buy Airwave
for the whole of the Ambulance Service, say, they will negotiate
a price from O2 which reflects the costs to O2.
78. If I have a lot of people who want to join
O2 now, since you are the purchaser of this system in effect,
you funded this development, you funded the setting up of this
system, the taxpayer has funded it, how much does the taxpayer
get back? What percentage does the taxpayer get back for every
additional user of the system?
(Mr Gieve) Under the contract we have at the moment
we do not get anything back for extra users. The deal we have
done with O2 is that they will take the risk from not getting
extra users and they will take the gain from getting extra users.
What those gains will be depends on the deals they do with other
users. Those are also likely to be taxpayers, the Fire Service
79. If the Fire Service, as part of the original
deal, decided that it was going to cost, say, £2,000 per
radio, but if they did not go into the original deal but came
in as a sharer later on it was going to cost £500 per radio,
for instance, they would save £1,500 per radio. They are
not stupid, are they?
(Mr Gieve) The Fire Service left the procurement process
in 1996 before any of these numbers were available. They were
not doing it on the basis of that. Secondly, they are engaged
at the moment in a series of regional procurements, but they have
not yet done a deal, so I do not know what the costs will be.
Yes, it may be a good deal for them, it is possible, but they
have not yet done it.
5 Ev 24. Back
Note by witness: The costs in this report are shown as
£1.47 billion over 19 years for the core service and the
`Menu Exclusive' services. This excludes the cost of handsets
and control room equipment which are estimated at £280 million
over 19 years and will be purchased by each police force to meet
their needs. Back