12 December 2002
The deal for the police's new national radio system poses some complex procurement issues about private finance and national or local deals. David Arminas reports
Even before Airwave, the new radio system for Britain's police forces, has gone live, recriminations over what it won't do and how much it will eventually cost are starting to fly. The House of Commons' spending watchdog, the cross-party Public Accounts Committee (PAC), has criticised the deal as more sophisticated and expensive than it need be.
In its report, Public Private Partnership: Airwave, the PAC noted that the deal is a private finance initiative contract where O2, formerly the mobile communications arm of BT, will design, build, finance and operate the system. In return, police forces and the Police Information Technology Organisation (Pito) will pay around £1.5 billion over the next 19 years.
The Home Office, in charge of police affairs, has vigorously questioned the PAC's calculations on costs and defended the need for a sophisticated system to allow police to communicate by radio wherever they are in the UK, unlike the present system.
The key question raised by the PAC is simple: will this deal work and be value for the public? The nuts and bolts of the deal may be complicated, but the two procurement issues the contract raises are just as complex.
One issue is the value of PFI contracts, particularly outside the construction sector that has seen the majority of such projects so far. The other issue is regional versus national contracts.
As with all PFI projects, it will be several years before answers to how well the contract is performing and cost and benefit analysis can be based on hard facts.
Regardless, Airwave should be watched closely because it is essentially a high-tech contract similar to other government long-term IT deals, which have had mixed results.
In the summer of 1999, the Passport Agency's new IT system couldn't cope and had a backlog of more than half a million passport applications with delays of nearly two months.
In August 2000, a National Audit Office (NAO) report said that up to £1 billion of taxpayers' money had been wasted on a swipe card system designed to tackle benefit fraud. This year's NAO report on the troubled IT upgrade for the Probation Service suggested there are still major problems with project management.Signalling problems
However, each stage of Airwave will be going through the Office of Government Commerce (OGC) review process. The OGC's professional procurement advisers cast an objective eye over procedures to flag up problems before they become insurmountable and costly.
The OGC scrutiny appears to be working, as a review of the NHS IT project for an integrated care records service across health and social services providers showed. OGC advisers raised questions over the project's funding and whether it would be done on time.
As a result, Richard Granger, the NHS's new IT head, is reviewing the plans and there is also a question over whether the project will be purchased nationally or locally.
Like the NHS, the police faced a similar decision on who handles the project - regional authorities or a national authority? The Home Office opted for a national authority - Pito.
A lot of procurement's professional image and credibility in the police force is riding on this contract. Failure can strain relations within a sector's purchasers at national, regional and local levels.
The NHS experienced this first hand earlier this year when trusts vented their anger at the Purchasing and Supply Agency (Pasa), the body that handles national contracts for the sector. Failure of a national contract for maintenance of vital diagnostic imaging equipment such as x-ray machines left local purchasers to do the work they believed was being handled at national level.
The education sector, which has strong regional purchasing consortia, wrestled with the national versus regional question two years ago. Attempts to move towards more national contracts met resistance and scepticism by the heads of the consortia.
Airwave is being built after lengthy consultation with police forces and credit must be given to a sector with a tradition of much purchasing happening at force level. A national contract for a product and service that can save officers' lives is an important test of the police purchasers' ability to work together.
The PAC questioned the need for police officers to be able to communicate nationally. But by buying a communications service capable of operating across the country, purchasers have left the door open for other services, such as ambulance and fire, to join when they need a similar capability.