18 July 2003
The cost of transferring the Government Communications Headquarters' computer systems increased more than 20-fold during its move to a new building in Cheltenham, a National Audit Office report has found.
The GCHQ board was told the cost of 'technical transition' would only be £20m but that figure subsequently rocketed to £450m.
The NAO report, published on July 16, found the procurement of the GCHQ's new headquarters under the Private Finance Initiative was itself well handled.
The net present cost of the new building, known locally as 'the Doughnut', is £489m, which will be covered by annual payments of £46m. GCHQ's present site in Cheltenham will be sold after the staged move is completed in 2012.
But the NAO found that GCHQ had not properly planned for the continuity of intelligence services while computer systems were moved. It said: 'GCHQ failed to consider all the implications of the fact that it was relocating its entire business capability to new accommodation and that technical transition was a major factor.'
Technical transition was originally estimated at £41m, but this was reported to GCHQ's board in 1997 as £20m for reasons GCHQ was unable to explain to the NAO.
The full underestimate became apparent in 1999, when specialists found that moving the computers over two years while maintaining services would cost £450m. Subsequently, GCHQ has agreed to phase the move, thus bringing the cost down to £308m.
A report for the Cabinet secretary found that GCHQ management had viewed the project as a building procurement and not as a strategic move of its entire operation.
The report 'identified high level planning and management weaknesses…the failure to co-ordinate the development of the PFI deal and the transition process at a strategic level was a symptom of such weaknesses,' the NAO said.
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