Spy chiefs criticised over GCHQ estimate




By Mark Huband, Security Correspondent

Financial Times, 2 December 2003

Security chiefs admitted serious errors in the financing of Britain’s electronic spy centre during the first public appearance of its director.

David Pepper, director of the Government Communications Headquarters (GCHQ) in Cheltenham, became the third head of Britain’s three secret intelligence organisations to appear in public in the past year.

Appearing before the House of Common’s public accounts committee yesterday, Mr Pepper and the government’s security and intelligence co-ordinator, Sir David Omand, were severely criticised for a seven-fold increase to £308m in the cost of relocating GCHQ’s computer systems to its new £1.62bn building.

A report by the National Audit Office in July recognised that construction of the building, which was completed seven weeks ahead of schedule, was well within budget.

MPs marked Mr Pepper’s first public appearance by lambasting the GCHQ head, as well as Sir David – who headed GCHQ when the government agreed what is now the largest private finance initiative in 1996 – and Treasury officials. Alan Williams, Labour MP for Swansea, told them: “The reality is that there’s been a major mess-up here and you’re all trying to duck for cover.”

The Treasury was accused of allowing GCHQ to fiddle the figures in early assessments of how much the project would cost.

Describing as a “fiddle factor” Treasury advice that GCHQ should incorporate a minimum 24 per cent increase in costs equivalent to £50m, Jon Trickett, Labour MP for Hemsworth, said: “The Treasury seems to me to be a co-conspirator. £50m is a lot of money and could buy a lot of spooks.”

Sir David hit back, saying: “There is no question of anything having been fiddled.”

He admitted that even with all the technical expertise within GCHQ’s 4,200 staff, the failure to anticipate both technological developments and the cost of installing them in the new building were a big error.

“I can’t excuse the failure to recognise these issues earlier,” he said. “I take responsibility for them . . . It seems obvious now [how the technology would develop] but it didn’t seem obvious at that time. It was quite difficult at the time to predict where all this [technology] was going to end up.”

Under criticism from other committee members, neither Sir David nor Mr Pepper sought to defend the failure to anticipate the cost overrun.

Mr Pepper admitted that “there was sloppiness and we shouldn’t have dealt with it as we did”, but denied the costing was deliberately underestimated to secure approval for the building.


© Copyright The Financial Times Ltd 2008