Select Committee on Public Accounts Sixty-Fourth Report


The Committee of Public Accounts has agreed to the following Report:



. In February 2000, the Police Information Technology Organisation (PITO[1]) signed a framework arrangement with O2 (formerly the mobile communications arm of British Telecommunications plc) for a new radio service, known as Airwave, for police forces in England, Wales and Scotland. The framework arrangement was negotiated under the Private Finance Initiative. O2 will design, build, finance and operate the service and in return PITO and the police will pay charges over 19 years of some £1.5 billion. Roll-out of the new radio system started in 2001 and is expected to be completed by 2005, when all police forces will be using Airwave.

2. On the basis of a Report by the Comptroller and Auditor General[2] the Committee took evidence from the Home Office, PITO and O2 on three main issues: the costs and expected benefits to the police of the project; the negotiation of the deal with O2; and the extent to which the new radio system will provide for interoperability between the emergency services.

3. Our key conclusions are:

  • Airwave might be more sophisticated and expensive than it really needs to be. As a result of the procurement of Airwave, the police are acquiring a radio system which permits a very high degree of interoperability between forces throughout the country. Compared with a series of regional procurements which would have provided more limited interoperability but including interoperability with other emergency services, Airwave will cost an additional £300 million. It is significant that individual police authorities and the fire service cited the cost of Airwave as their reason for being unwilling to subscribe to it.

  • There is no substitute for full competitive tendering. But where full competitive tendering is impossible or fails, departments should follow the example set by PITO and seek to use appropriate mechanisms, such as should-cost models, to protect the taxpayer.

  • In negotiating a deal with O2, PITO and the Home Office failed to secure any clawback for the taxpayer of additional profits if other emergency services decide to join Airwave or if the system is sold by O2 to overseas governments. O2 was prepared to share the rewards from bringing extra users onto the system only if the Home Office was prepared to share the risk if extra users did not join. Failure to negotiate a clawback agreement was a product not just of O2 being in a powerful position as the only bidder but also the inability of the Home Office to bring the fire service and other safety organisations on board by demonstrating the real benefits that Airwave had to offer.

  • It is now nearly ten years since a Home Office review recommended a joint approach to the procurement of new radio systems for the police and fire services. But the emergency services within a particular area or region are still unable to communicate easily with each other during major incidents, and a solution is still a long way off.

4. Our detailed conclusions and recommendations are:

The costs and expected benefits to the police of Airwave

  (i)  The costs of introducing Airwave will more than double existing police expenditure on mobile communications. However, it is not certain that one of the key benefits expected from the new system - the ability of police officers to communicate with each other when operating outside their home force area - has not been rigorously evaluated. The Home Office and PITO did not give us any clear indication of the extent to which this facility would be taken up in practice. The Home Office and PITO should be able to demonstrate that each of the main facilities of the new system is in fact necessary for better policing.

  (ii)  Although some work had been undertaken to identify and value the potential benefits of Airwave, it is unlikely to provide an adequate framework for monitoring whether the benefits will in fact be achieved. We expect PITO to take forward the work of the Business Benefits Steering Group as a matter of priority and to be in a position to measure the benefits across police forces before Airwave is fully rolled out in 2005.

  (iii)  Throughout the procurement, police authorities expressed doubts about whether Airwave was affordable. To overcome these concerns, the Home Office decided at a late stage to pay police authorities some £500 million to finance the deal over the first three years. In seeking to secure additional benefits by procuring local services to a national plan, it is essential that users are convinced at an early stage in the procurement that a project is justified and affordable.

  (iv)  It was by no means clear to us who will bear the risk if concerns about the effects on health of using the Airwave system prove to be real. The Home Office should take early action as necessary to mitigate any risks once the outcome of current research is known.

Negotiating the deal

  (v)  A public sector comparator was not prepared until late in the procurement, and after a decision to use the PFI had already been made. It is therefore doubtful that the use of a comparator added anything significant to the decision making process. Departments need to think through what financial and other analyses are needed at each stage of a procurement and to determine and implement the most effective means of testing whether value for money is likely to be achieved.

  (vi)  Although O2 assured us that the Airwave system was up and running in five forces, problems still have to be ironed out. The remedies available to the Home Office if the system does not work will not fully compensate police forces for the disruption and operational risks that would inevitably follow. In negotiating PFI deals, departments should consider carefully whether the taxpayer is fully protected before entering into such long-term contracts.

Interoperability between the emergency services

  (vii)  The planned procurements of new radio communications systems by the fire and ambulance services are now to go ahead on the basis of an enhanced capability for communications between all three emergency services. These procurements will need to take full account of the lessons learned by the Home Office and PITO in negotiating and implementing Airwave.


5. For many years police forces were responsible for procuring and maintaining their own radio communications systems. In 1993, following a review, the Home Office concluded that many of the existing systems were obsolete and needed to be replaced (Figure 1). The Home Office also decided that there would be substantial benefits from procuring the new system on a national rather than a local or regional basis. We looked at the following areas: the structure of the procurement; the benefits of the new system; its affordability at local level and the safety of the new technology involved.[3]

Figure 1: Problems with existing police radios
CongestionExisting radio channels are often very congested, with police officers unable to gain access when required. As a result there is a considerable level of suppressed demand because officers do not communicate on routine matters. More importantly, police officers sometimes lose the ability to call for rapid response when required.
FlexibilityAllied to the problem of congestion, current radio systems are inflexible. Capacity cannot be re-assigned quickly to overcome congestion, or, when necessary, provide command and working-level channels.
SecurityThe majority of police radio systems are unencrypted and messages can be intercepted with simple scanning receivers available cheaply (costing less than £100) from high street stores. This can result in police operations being called off, as suspects, monitoring police radio traffic, become aware of police surveillance.
Interference Interference from commercial continental radio users causes severe problems to police radio systems in the South and East of England and some way inland (to the extent that the West Midlands police told us that they too suffered from radio interference).
OperationalWith vehicle mounted radios operating on a different radio frequency to handheld radios, police officers in vehicles are frequently unable to communicate with police officers on foot, without the use of a second radio.
RoamingLack of support for regional and national roaming prevents police officers maintaining radio contact with their control rooms when outside their force areas. This is particularly relevant for organisations such as regional crime squads, which need to operate across force boundaries.
Management Information Lack of information on the status and location of police officers can inhibit the ability of commanders to make operational decisions on, for example, deployment of police officers.

Source: C&AG's Report

The structure of the procurement

6. As part of the business case for the project, PITO estimated that Airwave would cost some 2% of annual police budgets compared with a cost of slightly under 1% for existing systems. A review in 1999 concluded that Airwave would cost some £300 million more than a series of less ambitious, locally procured systems. The Home Office told us that it had opted for a national procurement for a number of reasons. First and foremost, a single system for the whole country would secure better co-ordination between police forces. Secondly, a national system would allow police officers from one area to assist another force and still use their own equipment. Thirdly, the system would concentrate expertise, especially in new technology as complicated as Airwave, and allow economies of scale to be achieved in the procurement and management of the system.[4]

Quantification of the expected benefits

7. Officers working in adjoining forces are often obliged to cross into each other's areas. Motorway patrol officers may have no choice but to do so because of the limited number of motorway exits. In cases of hot pursuit of a suspect, the pursuing officers need to notify the force into whose area they are crossing. Such notification is essential when the suspects are armed as the express authority of a Chief Police Officer of the host force is necessary before firearms can be deployed. The ability to operate and communicate across geographic boundaries is also important for police forces that operate across the country, such as the National Crime Squad and the British Transport Police. The Home Office was however unable to provide us with data on the numbers or proportions of police officers routinely operating outside their force boundaries.[5]

8. Interoperability between forces was only one of a number of features of the new system that had been designed to deliver an improved service. Police control rooms would be able to locate and talk to officers in areas where there is currently no radio reception. The new system would also allow officers to communicate with one another when responding to a major incident. Such communication is often difficult at present, particularly at airports and in rural areas.[6]

9. Prior to the development of a full business case for Airwave, police forces were asked to examine the potential impact of a new radio system on their efficiency. Work by Thames Valley Police Force suggested that around 37% of a uniformed officer's time was spent in the police station. If Airwave could help bring about a 10% reduction in the time spent by officers in police stations, a saving of approximately £37 million a year could be achieved, allowing an extra 1200 officers to be deployed on the streets. In 2001, PITO established a Business Benefits Steering Group to oversee work to determine what functions of Airwave have the potential to deliver benefits and how to measure these benefits.[7]

10. The Home Office told us that the Airwave system would help to secure direct savings in officer time. For instance, officers would be able to make and receive telephone calls rather than having to return to the station to pick up a message on an answering machine. The suggested saving of £37 million a year was only an illustrative figure and it was also important to recognise that the benefits of the new system were not just to make extra police officers available for operational duties. The system would also make officers more effective by providing them with up-to-date equipment. There had been a choice about how far to go, but the Home Office viewed Airwave as a key part of equipping the police properly and therefore making them more effective. PITO was now putting in place measures to identify how police operations were being conducted prior to implementation of Airwave and the benefits that will arise after implementation. Some areas where Airwave is expected to improve police performance are listed in Figure 2 below.[8]

Figure 2: Examples of areas where Airwave is expected have a benefit
FeatureBenefit to the police
High Quality Transmission Ease and speed of communication, reliable and understandable voice messages. Less need for messages to be repeated.
EncryptionGreater security of information, criminals unable to use scanners in order to intercept police communications and greater privacy for personal information potentially transmitted over the radio.
Talk GroupsEnables everyone on a particular operation to hear radio messages intended purely for them and no-one else. Relevance of information received is therefore higher with less distracting background information.
Data ServicesAccess to Police National computer and other data checking services while on the beat. Expected to lead to greater detection of crime as checks are made more rapidly and more frequently.
Management Information Enables senior officers to have a greater understanding of the deployment of their officers and so improves command and control.
Emergency ButtonImproved officer safety and improved officer morale.

Source: C&AG's Report

11. The Home Office hoped that Airwave would improve the quality of communications within police forces, and improvement was evident from the early implementations of the system in Lancashire and North Yorkshire. There had been some valuation of other benefits expected from the new system, but the greatest benefit would be the additional functionality and capability of the new system in terms of operational policing. Although the benefits of a national system had not been priced before the decision was taken to go ahead, a benefits realisation exercise was now underway. PITO was putting in place measures to identify current practices and to measure the benefits achieved once Airwave was operational across police forces.[9]


12. Although there was widespread support for a new radio system, the cost of Airwave was thought by many police authorities to be prohibitive. In July 2000, the Government announced the allocation of £500 million to pay for the first three years of the contract.[10]

13. The Home Office told us that, after the decision was taken in 1993 to procure a national system, it had spent some time trying to create a co-operative basis on which the project could proceed. The specification for the system had been drawn up following a major consultation with police authorities. The preferred technology was cutting edge and some police authorities had voiced misgivings as to whether it would work. In the Home Office's view, if police authorities had been required to use their own budgets to fund Airwave, they would have preferred a system with less risk and less functionality. It was therefore possible that the sum of police authorities' local priorities would not have added up to a coherent and satisfactory total picture.[11]


14. There has been concern over recent years about whether mobile communications masts and handsets could be dangerous to health. A number of reviews have been carried out and further research is underway. We asked how far this research had progressed and how matters now stood. The Home Office told us that it was addressing all of the recommendations made by previous reviews and monitoring the outcome of current research. Initial results had indicated that the rate of absorption by the human body of the radio frequencies used by Airwave terminals was well within international safety guidelines. As Airwave was only now being rolled out, the research had been limited to experimental work in the laboratory prior to a final trial that would be part of a much wider programme of research on mobile phones.[12]

15. The Home Office also told us that police authorities, as employers, would have to meet their obligations to protect the health of police officers under health and safety legislation. O2, as suppliers of the technology, would have to meet all health standards. If the outcome of the research led to changes to those health standards, then changes would have to be made to the Airwave system. Where the cost of any changes would fall would depend on the circumstances. If international health standards changed, the Home Office's first response would be to approach O2 to see whether the system could be changed to be consistent with those standards. The main danger from mobile phones appeared to arise more from existing analogue systems than with digital systems, such as Airwave. Nonetheless, if new health standards were set, changes to the Airwave contract might need to be negotiated.[13]


16. Although three consortia were formed to bid for the Airwave contract, the competition quickly collapsed, leaving the O2-led consortium as the sole bidder. The market for providing a national radio service for public safety organisations was relatively small because only a few companies possessed the financial strength to take on such a large project. The size of the market was further reduced by the decision to adopt the TETRA standard, which required potential bidding consortia to include companies committed to the development of what was, at the time, an emerging technology.[14]

17. PITO realised that, in the absence of competition, it would be difficult to demonstrate that any offer from O2 would represent value for money. As existing radio systems were not meeting operational requirements, there was effectively no do-nothing option and any delay in implementing a new radio service had to be avoided.[15] In PITO's view, the option that posed the least risk of delay was to continue with O2 as a single bidder and to protect the taxpayer's interest by comparing O2's projected costs against two models:

(a)  a financial model to estimate what O2's technical solution should cost ("the should-cost model");

(b)  a public sector comparator—based on the estimated cost of a conventionally financed public sector project delivering the same benefits as Airwave.

The should-cost model

18. When the procurement went down to a single bidder, O2 had recognised that there was a need to change its approach and proposed the concept of a "should-cost" model. In effect, the model would describe the components that make up the system, O2 would make its own estimate of what it would cost and PITO could check whether it felt the estimates were appropriate. However, completion of the model took longer than expected, mainly because the design of the system had taken time to develop to a level where O2 could provide all the detail required.[16]

19. PITO had taken advice from technical and financial experts in reviewing the model and considered that the level of risk transferred to O2 justified a 17% return on the project. It was argued that there was no precedent for such a large system in previous procurements, the technology was new and a large number of stakeholders were involved. The acquisition of sites by O2 for new masts for Airwave transmissions was also subject to considerable uncertainty.[17]

The public sector comparator

20. Although it is usual practice in PFI deals for a public sector comparator to be prepared, the validity of such a calculation is questionable if it would not be practicable for the public sector to develop the project conventionally. It was on just such grounds that PITO had originally decided not to use a comparator. Later on, however, PITO considered that a comparator would supplement output from the should-cost model in the assessment of value for money. PITO told us that the comparator had been used towards the end of the project to comply with Treasury guidelines and as an extra confidence check. Having gone through that process and having had it rigorously reviewed by financial and technical advisers, the public sector option had looked considerably more expensive than the PFI deal on offer from O2.[18]

21. The comparator included a £170 million provision for risks, which were identified and quantified in terms of likelihood and impact. PITO told us that it had been advised that it was a regular practice in major projects to include a separate estimate for contingency. An extra £70 million had therefore been included to allow for unforeseen requirements. The comparator estimated the cost of a conventional procurement at £1,610 million, compared with a cost for Airwave of £1,470 million (Figure 3).[19]

Figure 3: Public Sector Comparator compared with the PFI deal
Public Sector
Comparator (£m)
PFI deal (£m)
Base cost
Add risk allowances
Add cost contingency

Source: C&AG's Report

Risk management

22. Unlike any other radio system or mobile phone system, Airwave will provide guaranteed access and coverage. Under the contract O2 agreed to conduct a pilot project in Lancashire. PITO's acceptance of the pilot was a condition precedent to the start of the roll-out of the service. The two most critical problems encountered during the pilot were the difficulty of demonstrating that coverage met requirements in all the key areas, particularly major roads, and the persistent dropping of users from the system. Attempts to resolve these problems led to an extension of the pilot period, but they were still not fully resolved before PITO accepted Airwave, albeit on a conditional basis. O2 explained that the purpose of the pilot had been to examine in great detail all the issues associated with the implementation of Airwave so that lessons could be learned. A number of problems had been encountered and these had now been resolved to the extent that the service was now operating in five police forces. Some issues were still outstanding on the implementation of the new system for the Greater Manchester Police and O2 had not yet shown that Airwave could work as expected in major metropolitan areas, something that had to be done over the next two years.[20]

23. O2 had invested very heavily in the technology and PITO believed that Airwave would provide an exceptional service. If Airwave failed or could not produce a good enough service, PITO would endeavour to ensure that O2 delivered its obligations under the contract. The police had not given away the right to use someone else. But as most of the old analogue radio systems would have been replaced by Airwave, it would be difficult to return to an analogue system and PITO would have to procure an alternative system, probably on a local basis. The Home Office told us that O2 would be required to deliver under the contract and if it did not deliver, there would be severe consequences. There was, however, a residual risk that a new supplier might have to be found because police operations depended on effective radio communications.[21]

Clawback of additional revenue from sharers

24. In offering a price for Airwave, O2 assumed that other organisations would join the service and modelled the probable additional income. O2's financial modelling had indicated additional revenues of between £1.8 million and £5.5 million a year, which had been taken into account in the negotiations with PITO. Nevertheless, under the contract with O2, the Home Office will not get anything back if higher than expected numbers of sharers join the system. The deal with O2 was that it would take the risk if sharers fell below what it was expecting and would take all the gain from a higher than expected number of extra users. The size of any gains would depend on the deals struck with the sharers, most of whom were likely to be publicly funded services (Figure 4).[22]

Figure 4: Potential extra users of Airwave
Civilian Emergency Services Ministry of Defence Organisations
British Transport Police MOD Police
Ports PoliceNavy Police
UK Atomic Energy Authority Constabulary Royal Parks Constabulary
Borough Parks Police RAF Police
Waterway, Tunnel and Airport police Royal Marines Police
Fire BrigadesRoyal Military Police
Airport Fire Brigade Adjutant Generals' Corps - Provost Branch
Air AmbulanceDefence Fire Service
NHS Community Trust Staff Army Fire
NHS Hospital Trust Staff RAF Fire
Private Ambulance Services Navy, Army and RAF Ambulances
Donor organ and transplant team transport Firing Range Security
Patient Transport Services Armed forces bomb disposal teams
Coastguard Service HQ London (Army regional Brigade)
Air and Land Search and Rescue Services Intelligence Corps
RAF Nuclear Accident Response Organisation
Security Services
Special Forces
Other public safety and emergency response services
CCTV control rooms (under certain circumstances) Traffic Wardens
Prison ServiceNuclear Accident Authority
Private Prisoner Transport On Site Fire Services (Magnox and BNFL sites)
Privatised Police Patrols (including stadia and complexes) Volunteer First responders
Post Office Security and Investigation Service Fraud Investigation Section of Department of Social Security
Customs and Excise enforcement branch and National Investigation Service Home Office Fire and Emergency Planning fire appliances and assigned personnel
EA Environmental Crime Unit Immediate Care Schemes (eg. BASICS)
Environment Agency Enforcement Officers Inland Revenue Special Compliance Office
UK Immigration Service - Ports and Enforcement Directorate Local Authority Emergency Planning Departments
National Nuclear Accident Response communications System

Source: C&AG's Report

25. In response to a question on whether Airwave would generate further income from sales to other countries, O2 explained that its approach was to deliver the service in the UK, establish a track record and then look to expand into other areas. A number of countries in Europe had committed to the TETRA standard but had not yet chosen a particular service provider. The same was true in other parts of the world, such as Africa and Australasia. From O2's perspective, overseas sales were a possibility but only once Airwave had been successfully delivered in the UK. O2 had been prepared to discuss sharing the rewards from other parties if the Home Office could bring those other organisations on board. For its part, the Home Office would have liked to have achieved a better deal on sharing the rewards from the wider use of Airwave, but was unable to move O2 during the commercial negotiations.[23]


26. From an early stage the Home Office had seen the Fire Service as a likely participant in the Airwave procurement. But the Fire Service considered that some features of Airwave, such as encryption, were not needed and were likely to add significantly to the cost. As a result, the Fire Service decided in 1996 in consultation with the Home Office that it would not be part of the initial procurement but should be included, with other emergency services, as a potential sharer of the new system.[24]

27. The Home Office and the Ambulance Service had discussed the project in the early 1990s, but at that stage the Ambulance Service had no requirement for a new radio system. There was now such a requirement and the Ambulance Service was planning a national procurement which would have interoperability with the other emergency services as part of the specification. We were told that from a government point of view, it was not necessarily a bad thing that the emergency services had independent views. Nevertheless, if all the emergency services had been able to join together at the beginning, it would have been possible to achieve greater economies of scale.[25]

28. In the Home Office's view there were still questions over whether individual police superintendents needed to talk directly to fire officers on the ground. In the case of emergencies there were well established procedures to bring the commands of the Fire Service and the Police Service together so that they could communicate and co-operate closely. A clear chain of command was required, as confusion could arise if officers were communicating directly with one another rather than through a central control point. Nevertheless there had been problems with the police communicating with the other emergency services.[26]

29. Communications between individual police and fire officers was not something the Fire Service had said they wanted, but it is desired in some cases by the Police Service, particularly for incidents at airports. Whether or not direct communications between individual officers were actually required, the Home Office told us that no estimate had been made of how much would be gained by the police and fire services in having such interoperability. But the Home Office accepted that the emergency services had to be able to communicate easily with each other when responding to major incidents. This requirement had been pointed up by the King's Cross fire in 1987, when communications had not worked well. Interoperability between the emergency services was not, therefore, a new issue, but the scale of recent terrorist incidents in New York and elsewhere had caused the Government to look again at the matter afresh. Airwave would for the first time enable PITO and the Home Office to provide a national service for the police.[27]

30. The C&AG's Report noted that the Department of Health is planning to procure a new national network for ambulance services which will include interoperability with the police and fire services as a key requirement. The Report also noted that local fire services were being encouraged to form consortia, based on geographical proximity, to determine local needs and a degree of interoperability between neighbouring fire brigades. Since the terrorist incidents of 11 September 2001, the Government had been reviewing the requirements on interoperability which underlie these planned procurements. In a note provided after the hearing, the Home Office told us that agreement had been reached between the police, fire and ambulance services on the need for enhanced radio communications interoperability in the light of the events of 11 September. A new specification reflecting this requirement was being prepared and would be included in the fire and ambulance service procurements. Furthermore, with Government support, management and funding, the planned fire service procurement would now go ahead on a national rather than regional basis. The current timetable envisaged award of a contract by 2004 and full implementation of the new system by the end of 2007.[28]

1   A Non-Departmental Public Body established by the Home Office in 1998 to provide a procurement, contract management and advisory service for communications and information technology used by police forces. Back

2   C&AG's Report, Public Private Partnerships: Airwave (HC 730, Session 2001-02) Back

3   C&AG's Report, paras 1.1-1.9 Back

4   C&AG's Report, paras 1.19, 2.40; Qq 2, 177, 191 Back

5   Q 181; Ev 24-25 Back

6   Qq 158, 164 Back

7   C&AG's Report, paras 3.27-3.28, 3.30 Back

8   Qq 55, 59, 142 Back

9   Qq 47, 142 Back

10   C&AG's Report, paras 1.21-1.22 Back

11   Qq 14, 22, 190, 194, 196, 198 Back

12   C&AG's Report, paras 3.23-3.25; Qq 236-250, 251; Ev 25-27 Back

13   Qq 264-265 Back

14   C&AG's Report, paras 2.9-2.11 Back

15   Ibid, para 2.15 Back

16   Q 202 Back

17   Qq 7-8, 93 Back

18   C&AG's Report, paras 2.24, 2.27: Qq 9-10 Back

19   Qq 49-52 Back

20   C&AG's Report, paras 3.3, 3.7-3.18; Qq 15-16, 111 Back

21   Qq 104, 128-132 Back

22   C&AG's Report, para 1.35; Qq 78, 80 Back

23   Qq 116, 205-209 Back

24   C&AG's Report, para 1.28 Back

25   Qq 3-6 Back

26   Qq 38-43, 151, 154-155 Back

27   Qq 108-110, 152-153, 187-188, 260-263 Back

28   C&AG's Report, paras 1.40-1.44; Q 37; Ev 30 Back

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