Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 60 - 79)



Mr Jenkins

  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, what is?
  (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 been clear.

  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 procurement.

  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 they wished.

  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 paying?
  (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 handsets?[5]

  Chairman: It is a fairly easy question. You need to get an answer on that.

Mr Jenkins

  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.[6]

  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 18.

  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 or whatever.

  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

6   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

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