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Sir John Bourn, head of the National Audit Office, reported to Parliament today that GCHQs new headquarter building, which will cost GCHQ about 46 million a year, and which was procured through a PFI deal, was on track to be delivered on time and within its finally determined budget; and it was handled well overall.

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During the 21 month gap between the appointment of the preferred bidder and contract signature in June 2000 the bid increased by 21%; most of this was negotiated in a competitive environment. The increase was mainly due to addressing omissions from the bid which would otherwise not have met GCHQs requirements but was also to cater for an increase in the number of staff to be accommodated.  GCHQ was able to satisfy itself that the increase was reasonable.

To sustain the flow of vital intelligence to the Government, 24 hours a day and under its own control, GCHQ retained responsibility for moving its technical capability into the new building. In doing so, GCHQ failed initially to consider all the implications of the move. As a result, before Ministerial approval or signing of any contract, estimates for the technical move increased more than ten fold from 40 million to 450 million (over and above the 1,247 million total cost of the 30 year PFI deal.) To reduce the cost of that move to 308 million, GCHQ is staging the process and keeping open part of one of its existing sites until 2012 which will involve extra running costs of 43 million.

GCHQ houses one of Europes largest computer complexes and the new accommodation exhibits radical differences from most office building projects. The New Accommodation Programme is a very complex change programme and GCHQ has introduced a sophisticated system of programme management from which other Government Departments might learn.

"When a Government Department is considering major investment in new accommodation, the full scope of the requirement really must be properly defined from the outset. In this case GCHQ failed to consider all the implications of the fact that it was relocating its entire business capability to a new building and that transition of its computer systems to the new premises was a major factor.

"However, other Government Departments might learn lessons from the way that GCHQ developed its programme management arrangements for this major hybrid change programme. Departments should follow best practice and should especially focus on introducing programme management procedures to identify, plan and then deliver all the benefits attainable from their PFI programmes."

Sir John Bourn


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