Spooks roasted over £450m cost of moving spy systems

The government's intelligence agency has been slammed for the poor planning of a move to new headquarters after the cost of moving IT systems soared from £40m to £450m.

The tenfold increase was only discovered as IT staff at GCHQ in Cheltenham underwent Y2K compliance and realised the original technical transition plan would cause "unacceptable" damage to the continuity of services and leave the spy centre with only basic intelligence functions for the first two years.

The National Audit Office report 'Government Communications Headquarters (GCHQ): New Accommodation Programme' found that work on ensuring Y2K compliance for GCHQ's systems left few resources left for proper planning and estimation of the costs of moving computer systems to the agency's new headquarters.

The report said: "GCHQ's original options appraisal had been made with little knowledge of the real costs of the technical transition."

When a technical team from GCHQ estimated the cost of transition without causing damage to the continuity and availability of intelligence systems at £450m in late 1999 the Treasury said the cost was too high.

GCHQ was forced to revise its plans and spread the technical transition over 12 years, bringing the cost down to £308m. However part of that plan means keeping one of GCHQ's existing sites open until 2012 at an extra cost of £43m.

By January 2002 GCHQ had devised the architecture for the systems. Some 60 individual projects from 2000 to 2005 are in progress to effect the move.

Management had focused entirely on the PFI building and associated services and failed to look at it strategically as a move of GCHQ's complete business.

GCHQ signed a 30-year £1.24bn PFI contract for the building of its new 'doughnut' headquarters in 2000 for the relocation of 4,000 Cheltenham-based staff. The secrecy and sensitivity of the agency's IT systems was deemed too important, however, to be handed to a private sector supplier and the move of its infrastructure to the new accommodation was kept in-house and separate from the PFI deal.

As a result, management had focused entirely on the PFI building and associated services and failed to look at it strategically as a move of GCHQ's complete business, said the report.

Sir John Bourne, head of the NAO, said in a statement: "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."

The NAO also raised the question of whether the new headquarters would have been given the go-ahead if the final costs had been known from the outset.

The report said: "It is only possible to speculate whether ministers would have approved the wholesale redevelopment of the Cheltenham sites had they known the full cost of the technical transition when they considered GCHQ's original option appraisal."