The government has awarded EE a £220 million contract extension for its work on the UK’s massively delayed and over-budget emergency services network (ESN), attaching tougher contractual terms and threatening “payment abatement” for non-delivery.
“The need for these changes is because the ESN project is delayed”, the Home Office said today, referring to the contract extension and changes to contractual terms. The contract, first awarded in 2015, is now worth £895 million to EE.
The ESN project was already a staggering £3.1 billion over-budget in 2017, oral evidence to Parliament’s Public Accounts Committee (PAC) revealed in May. It is now estimated to cost an eye-watering £9.3 billion.
Home Office: Have it Ready in a Year
EE is providing the network for planned push-to-talk and data services that will form part of the new ESN, which is replacing Motorola’s Airwave system.
The so-called “Lot 3” contract taps EE’s existing mobile network, but also includes bespoke services like coverage in tunnels and remote locations, and specific services (e.g. priority over other network traffic, high availability, security protections and integration with existing infrastructure and end-user devices.)
The Lot 3 contract was originally valued at £735 million and was expected to conclude by December 2021.
Due to serious project-wide delays, EE has seen its contract extended to 2024, netting the company the additional £220 million.
EE is expected by the Home Office to have the service fully functional by 2020 and ready to start rollout to end-users by September of that year. The contract extension also toughens up requirements of the network provider.
A new payment structure whereby EE will be paid for delivery of the network on the basis that it is materially completed; “but any infrastructure which is not completed by the milestone date results in payment abatements”
A new methodology which sets out the process and approach to identification of any ‘gaps’ in the network and EE’s obligation to fix gaps,
An amended testing timetable, that will “now be incremental rather than ‘big bang’ to align with the delivery of the ‘Kodiak’ push-to-talk application”
“Not a Very Happy Episode”
Many of the delays and cost overruns have been attributed to a failure by government officials to identify that EE and Motorola, two of the main contractors, were working to different – and conflicting – technical standards, meaning the systems they were developing were not interoperable.
Oversight also appears to have been minimal, as the exchange below between a PAC member and civil servants Sir Philip Rutnam and Stephen Webb captures.
Sir Philip Rutnam was also scathing about the performance of contractor KBR, the former Halliburton subsidiary, telling MPs: “The resource supplied directly by KBR proved to be less experienced and less valuable than we needed, and that is one of the reasons why we have, in practice, replaced some of the resource they provided with our
own staff. It has not been a very happy episode, and it is definitely one that we are bringing to an end shortly.”
Gov’t Defends Extension
Defending the contract extension the Home Office stated in the contract notice: [without extension] there would be a change of network provider during the critical rollout period, or a high risk of a change of provider during the critical rollout period.”
The total cost of the ESN is estimated by the Public Accounts Committee to be £9.3 billion. The Home Office says it costs £1.7 million daily to run the Airwave network while ESN will cost £700,000. Break-even point is now expected in July 2029.
It says Airwave is not just too expensive, but too slow to transfer the data needed for modern applications (e.g. video streaming).
Commercial Structure in Disarray
The rollout of the new service has come under scrutiny from the Public Accounts Committee (PAC) numerous times.
Recently they detailed that only: “2 out of 292″ mobile phone masts promised for rural areas have been finished and “it [Home Office] could not say when the rest would be going live.”
PAC also noted that the emergency service responders who will be required to use the technology have not been sufficiently convinced that it will be ready to replace the current system by December 2022. The first initial test of the ESN Direct system will only be used by 120 users, far short of the 300,000 potential responders that will rely on the service.
EE Emergency Service Network
The Home Office has admitted to the PAC that the commercial structure for ESN is: ‘highly disaggregated and adds complexity to an already difficult task.’
PAC was also critical of EE’s work in the project stating that: “EE has also been slower than expected in rolling out the physical infrastructure needed to support ESN, including coverage for regional metros, which is now expected to be completed in 2020 rather than September 2017 as originally planned.
“The Department (Home Office) told us that EE had been over-optimistic about the time needed to build coverage into underground railways, such as those in Glasgow and Tyne and Wear, but that in other areas EE would have been able to deliver quickly if it had needed to, but delays elsewhere in the programme meant that it had deliberately spread out its investment over a longer period.”
PAC chair Meg Hillier commented that: “The Home Office’s reset of the Emergency Services Network programme has failed to deliver any more certainty. The financial benefits originally predicted for this programme are rapidly evaporating and it will not now realise cost savings, on the most optimistic forecasts, for at least a decade.”
“The key technology behind the ESN is not yet fully proven and we were not convinced that the Home Office has the capability and plans to deliver a coherent single system that provides the functionality and dependability the emergency services demand.”
The Home Office said in an emailed statement: “This ambitious project has not been without its challenges, but following our thorough review and decision to roll ESN out in stages, our approach has gone to plan, with the network already live and devices and software being tested.
“The contract with EE has been extended to December 2024 to provide a network capable of supporting the new technology throughout the rollout of ESN and for a relatively short period thereafter to enable stabilisation.”