Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 100 - 119)



  100. How are we protected against a lower cost competitor appearing who can provide these extra facilities at a considerably lower cost?
  (Mr Webb) If any new technology or new suppliers came onto the market we would always be constantly examining the arrival of those and benchmarking against them compared with our own costs.

  101. How is that protected in the contract? How is that allowed for in the contract?
  (Mr Webb) There is a benchmarking provision in the contract which allows our staff to address these issues with O2 and if we believe they are no longer competitive, it is something which O2 would have to review.

  102. Are there penalties in place if they fail to review, or do you have freedom in so far as the options are compatible technologically to go and use an alternative supplier if O2 were not able to compete?
  (Mr Webb) No, not within the current contract.

  103. So there is no real incentive on them.
  (Mr Webb) There is in the sense that, if they were proving to be uncompetitive in that area, we have the ability to apply some pressure to ensure that they bring their prices into line. Bear in mind that we are actually paying them for the core charge.

  104. What pressure can you bring in reality? They have the contract. We have been through this with the Passport Office and a contract was drawn up with them and their supplier left them with absolutely no legal armoury at all and no real penalty clauses. All they got back was one fifth of the total loss because of computer failure and that was given a couple of weeks before a hearing before this Committee and was done as a concession. It was not done as a legal requirement. How watertight do you think your contract is?
  (Mr Gieve) It is not completely exclusive. If Airwave falls down or cannot produce a good enough service, the police authorities can buy another one. There is that fallback position. Obviously Airwave have invested very, very heavily in this technology and we believe it is going to produce an exceptional service. We have not given away our rights ever to use anyone else.

  105. We can see all the advantages of interoperability and I am the last to knock them, but the opposite side of the coin is that if someone did find a way of jamming the system, they could do so throughout the country or anywhere in the country, could they not, because of the single operating system? What assurance do you have that current encryption will continue to be adequate against the attacks from organised well financed criminals?
  (Mr Asque) On encryption, the basic system which is being provided has a level of encryption which will mean that the casual listener cannot listen to the system which is in itself a big step forward from the current systems where people can directly listen to them. That is one aspect. Also, for certain specialist users who require an additional level of encryption that can also be provided on an end-to-end basis. So there is more than one level of encryption, depending on the type of user. That can be developed as scenarios develop over the years. This is a bearer and you can change parameters over time to provide different facilities. Encryption is something which can be developed to meet any threat which may come along. It is flexible enough.
  (Mr Parris) We are required to ensure that our security and our encryption are accredited by the CESG which is the Government's approved body in this regard. We have an obligation to meet their stringent levels of security and encryption.

  106. Mr Gieve, this is specifically to you because of Home Office responsibilities in relation to terrorism. You did say that since 11 September you have become increasingly conscious of a need for interoperability between the emergency services, but the fact is that your department, like your counterparts in the United States and probably in the other Western countries, has been conscious of the risk of biological and of chemical attack for some years. Why is it only after 11 September, which was an attack of neither form, that you became so conscious of the need for interoperability between the services, whereas it is quite clear from this report that no priority has so far been given to it?
  (Mr Gieve) On 11 September, you are quite right that we have known there was a risk of major terrorist attack for some time, but this was the first one of that scale or of that nature in America or indeed elsewhere in the Western world. Yes, we have thought it right to take time off after that and think whether this means that the previous requirement which we had set out for a degree of interoperability between the Fire Service and so on is right or whether we want more. That is what we are doing. It may be we could have set different criteria a few years back than we did; absolutely. But life goes on and you have to review constantly in the light of experience whether your past judgements were right and that is what we are doing now.[7]

  107. Way before 11 September, the Secretary of State was saying that there was a danger not just of a single but multiple terrorist attacks using sophisticated modes of attack. We were aware of that as well, so why is interoperability between the services only now emerging as a priority?
  (Mr Gieve) It is not emerging as a new issue.

  108. But it was not provided for in this.
  (Mr Gieve) We have been aware of this issue and in most emergencies the emergency services have to communicate with each other. Something like the King's Cross fire was an example which brought that home because the communications did not work well under that. We had a report which set down conditions which we are trying to meet. It is not a brand new subject, but nonetheless experience in New York and the scale of that disaster has caused us to look again at it. You say that this has not ensured it. I take it what you mean is that we could have locked the Fire Service in to the same national procurement as we launched for the police. I do not think we could. It is a local service where we pay no specific grants for technology to the fire authorities.

  109. You could have done with the Ambulance Service.
  (Mr Gieve) We could have done for the ambulances but we could not for fire. Secondly, we had to take a judgement at the time whether we should insist that only one procurement was done for all emergency services and Ministers back in the mid-1990s took the view that they were not so confident that that was the only solution that they should do so. We are looking at that again. I do not think we are likely to conclude that everyone must take Airwave. We may conclude that whoever does provide some technology for the ambulances and fire has to make it meet interoperability requirements.

  110. The feature of 11 September in a way was that it was simpler in one respect in that it was a focused mass attack. You as a department, like your counterparts have been preparing for years for types of attack which are spread inevitably with bacteriological or chemical weapons. Therefore the problems of confusion in the emergency service would actually have been greater if an attack of that sort had taken place, yet you still do not seem to have addressed it and not even at this stage do you seem to be very seriously addressing it.
  (Mr Gieve) We are seriously addressing it and we have before. You are absolutely right, we do contingency exercises in government involving all the emergency services on a range of scenarios and we set up contingency planning arrangements to deal with a wide range of emergencies and terrorist attacks of different sorts. I was engaged in one just a month ago. We do take this very seriously and we do set up command arrangements which allow us to co-ordinate the various services concerned. That is going on. We take it very seriously and we did not start on 11 September. Even there we do have to review whether the experience of something as big as 11 September has caused us to revise our earlier opinions and in some respects I am sure it will, because it was a very big and unexpected event. In terms of this contract, saying that you need to have co-ordination of the emergency services and indeed the army and other things as well in emergencies is not the same as saying we have to insist that every fire authority buys the same radio system as every police authority. That was a decision that we were taking in 1996.

  111. Or the ambulances.
  (Mr Gieve) Or the ambulances. It is not the same. To say we have to co-ordinate the Ambulance Service, the Police Service and the Fire Service does not lead automatically to the view that all the ambulances and the police and the fire should all operate off exactly the same technology. That is an option and we started with the option that we do fire and police together; in fact in the end we have done police. That is still a massive contract and a massive risk because we still do not have Airwave to the police. People have talked about the degree of risk in this contract. There is still risk. PITO and O2 have it working in five forces, but we still have not shown that it can work as expected in major metropolitan areas. We think we are going to do that over the next two years. There are still risks involved and all of that is part of the decision-making on how many eggs to put in the basket. I am aware that on the one hand I am being accused of putting in too many by getting all the police force into the contract. What you are saying is that we do not have enough because we should have foreseen terrorist attacks and put fire and ambulance in. It is a subtler judgement than all or nothing. It was a reasonable judgement in 1996 not to put fire in, but we are reviewing again, as we shall continue to do, what degree of interoperability is genuinely required.

Mr Rendel

  112. May I start by asking what systems are in use for communications between emergency services in other countries in Europe?
  (Mr Gieve) I do not know the answer to that in terms of the existing systems. I do know that TETRA is the agreed European standard and agreed by the EU. Over a period I am expecting many of those countries to adopt TETRA-based technology for their emergency services. There are other standards. The French have one called TETRAPOL, which also meets that standard.

  113. Had the other countries decided to go with TETRA before us? Was that taken into account when we decided to go in for the TETRA system?
  (Mr Gieve) I do not know.
  (Mr Webb) There were examples, not on such a large scale by any means, in Europe before we finally placed the order. They were all doing that in parallel to us at the time but nothing as large as us, no.

  114. It was not therefore one of the factors in choosing TETRA that there were other countries.
  (Mr Webb) No, it was not a major factor but it was the technology which was emerging and was beginning to be taken up by other people so that did influence us at the time.
  (Mr Gieve) It was a factor in that it was the European standard for emergency radio systems, but I think you are asking whether successful experience abroad was a factor in adopting Airwave.

  115. Either successful experience or the fact that you might be able to come in line with other countries' systems in some way. That might be useful.
  (Mr Gieve) Yes; absolutely.
  (Mr Webb) Interoperability is an issue and in fact there are more people taking up TETRA than there are the French standard of TETRAPOL.

  116. Does this mean there is some chance some other countries might buy into our way?
  (Mr Parris) The approach I am taking with Airwave and indeed O2 is taking with Airwave is to deliver the service here in the UK and to establish our credibility and track record and then look to expand our geographies into other areas. A number of countries in Europe have committed to the TETRA standard but have not yet chosen a particular service provider and indeed that is also the case in other geographies further afield, Africa and Australasia included. From my perspective, it is a possibility but only once we have successfully delivered here in the UK.

  117. Figure 9 on page 23 shows the consortia which were considered in the first instance before two of them sadly dropped out. There do not seem to be any foreign suppliers here. Were people not supplying similar systems in Europe which could have been considered as potential suppliers in this country?
  (Mr Webb) Ericsson, Nokia and Philips are all foreign companies.

  118. But producing in this country, are they not, or are they not?
  (Mr Webb) Yes, they have manufacturing plants here.

  119. I was assuming that the systems we have been talking about here were being developed in this country. Is that wrong?
  (Mr Webb) Some of them are being developed abroad. Motorola for instance is an American company.

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