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Met Office Supercomputing 2020+ Programme: Accounting officer assessment 2022 (HTML)

Updated 12 June 2023

Department for which the accounting officer who made the assessment is responsible: Met Office

Project title: Met Office Supercomputing 2020+ Programme

Main scheme project stage:

• FBC stage, Business Case approved by BEIS PIC on 11 February 2021 and by HMT TAP on 3 March 2021
• implementation stage of programme commenced on 9 April 2021

Introduction

It is normal practice for Accounting Officers to scrutinise significant policy proposals or plans to start or vary major projects, and then assess whether they measure up to the standards set out in Managing Public Money. From April 2017, the government has committed to make a summary of the key points from these assessments available to Parliament when an Accounting Officer has agreed an assessment of projects within the Government’s Major Projects Portfolio (GMPP). This Accounting Officer Assessment considers the Met Office Supercomputing 2020+ Programme.

This Accounting Officer Assessment was made of the Met Office Supercomputing 2020+ Programme, following its FBC stage. I have made the assessment as the Principal Accounting Officer for the Department for Business, Energy, and Industrial Strategy charged with oversight of the Met Office.

Background

The current Met Office supercomputing infrastructure is reaching its end of life. Delivering the future supercomputing capability is one of the Met Office’s strategic priorities and the Supercomputing 2020+ Programme is responsible for the successful procurement, implementation, and commissioning of the Met Office’s next-generation supercomputing capability. This is a £1.2 billion investment across the period 2021 to 2032. The Met Office is responsible for tracking and reporting of the benefits of the existing and next-generation supercomputing capabilities, which it does so through quarterly GMPP reporting.

The vision is to have increased supercomputing capacity from delivery implementation outset in 2021 through to 2032 that sustains the delivery of exceptional weather and climate prediction services and supports extraordinary impact through the exploitation of world leading​​​​​​​ science and technology.

The investment will help the UK continue to lead the field in weather and climate science and services, providing an edge in weather and climate resilience, helping the UK to build back greener, reach net zero emissions by 2050 and deliver multi-billion pounds of socio-economic benefits over 10 years.

In March 2021 the Met Office completed the multi-year government Green Book investment approvals processes and signed a 10-year managed service contract with its new supplier, Microsoft, after a comprehensive procurement exercise. This contract will provide a 10-year hosted supercomputing service including:

• 2 generations of supercomputing:​​​​​​​
  • Generation 1: replacement supercomputing in 2023/24 with 6-times the current capacity
  • Generation 2: replacement supercomputing in 2027/28 with a further capacity increase through to 2032, targeted at 3-times generation 1 capacity
• data centre hosting: mechanical, electrical, and cooling services, networking, and security capability management
• replacement and increased storage and scientific compute capabilities
• 24*7 operational support services throughout the investment lifetime

In addition to the Microsoft commercial contract, the programme also encompasses investment to exploit the new supercomputing capability through; expansion of the Met Office’s UK observations network and enhancement to all relevant Met Office’s internal systems to support the significant increase in weather and climate simulation model data created through increased supercomputing capacity.

Assessment against the Accounting Officer standards

Regularity

The Met Office’s Supercomputing 2020+ Programme is within the Department’s legal powers under the Science & Technology Act. Sufficient budget has been allocated through the current Spending Review period from BEIS and the legal commitment will be prioritised within the future R&D settlements.

I have assessed the programme in view of relevant public law and procurement regulation and found it be compliant. The programme is supported through scrutiny from external and BEIS legal advisers to ensure best practice has been applied across the programme development. A specialist independent procurement and commercial legal firm was commissioned to support the Met Office through market assessment, procurement, and implementation.

Overall assessment: My assessment is that the regularity test is satisfied.

Propriety

The Met Office Supercomputing 2020+ Programme has been approved at Strategic, Outline and Full Business Case stages by the BEIS Project Investment Committee (including BEIS Commercial Assurance Board), the Cabinet Office Commercial Spend Control function, and the Treasury Approval Point process.

Overall assessment: My assessment is that the propriety test is satisfied.

Value for money

The investment is considered critical to the continued advancement of weather and climate science and service delivery, ensuring the safety of life for UK citizens and home and overseas, continued support to the UK security and defence service as well as support to global aviation and other markets. The replacement and increased supercomputing capabilities will enhance the UK’s weather and climate scientific research and innovation capabilities through the delivery of a 6-times (6x) increase in supercomputing capacity through years 1-5 and a further 3-times (3x) increase during years 6-10.

Economic appraisal through all business case stages was undertaken in accordance with guidance from BEIS / HMT and followed the provisions of the HM Treasury Green Book. The OBC appraised a short list of 5 options, with 2 options considered at FBC stage with the preferred option being approved.

At OBC stage, the 5 options were identified as:

• Do-Minimum – this replacing the do-nothing option as a BAU benchmark consistent with Green Book – this to implement a like-for-like replacement supercomputing capability over a 5 year term
• Do-Minimum-Commitment – this to implement a 10 year supercomputing capability with 6x and 3x increments in capacity during each 5 year period
• Do-Likely-Requirement – this to implement a 10 year supercomputing capability with 6x and 4x increments in capacity during each 5 year period
• D-More – this to implement a 10 year supercomputing capability with 6x and 8x increments in capacity during each 5 year period

The Do-Minimum-Commitment option was selected forward to FBC stage as it:

(a) achieved the minimum capability needed to support the agreed BEIS and Met Office strategic goals and
(b) minimised investment to match likely market competition.

These criteria identified the Do-Minimum-Commitment option provided a stronger VfM NPV of 7.69:1 against the DO-Minimum option of 3.67:1.

At FBC stage, 2 options were shortlisted. These were 2 competitive tender bids submitted by Microsoft and Atos; however, Atos’s tender was deselected through the commercial procurement stage as non-compliant to the tender requirements, thus the service contract was awarded to Microsoft as the remaining compliant option.

The approved option is a 10-year hosted supercomputing as a service investment at a value of £1.2 billion which includes optimism bias of 1% (£12 million). The managed service delivery contracted to Microsoft is valued at £1.034 billion, and is a fixed price, fixed outcome agreement that is protected from general economic variances as such risk has been fully accepted by the supplier. The investment includes £192 million to support the delivery of the capabilities, enhance the UK weather observations network and expand the Met Office’s existing post-processing systems to support the increase in weather and climate simulation model data over the 10-year investment.

The benefits of the investment are created through the delivery of improved weather and climate accuracy and guidance to government, defence industry and private sector partners utilising the services provided to influence decisions to control the impact of rapidly change weather conditions and climate change. Socio-economic models have been developed with government and industry experts to measure and evaluate the establishment and continuation of benefit delivery through the 10-year investment.

The selected option demonstrated a cost benefit ratio of 9:1 against the do-nothing option. The Net Present Social Value is £13.74 billion with a 25% optimism bias.

In addition, the winning tenderer Microsoft commits to deliver more than £45 million of Social Value over the 10-year contract term. All procurement contracts now must encompass supplier obligation to provide value to the UK citizens beyond the contracted obligations as a responsible key supplier to UKPLC, this terms as ‘Social Value’ commitment. In this instance, Microsoft is committing to investment more than £45 million over the 10-year term into both UK skills development and reducing the UK’s carbon impacts. Microsoft advises on an annual basis where their additional Social Value commitments will be applied, this monitored and measured by the Met Office, this reported publicly on an annual basis.

The supplier is delivering their managed service capabilities including all supercomputing infrastructure using clean energy sources fully supporting HMG’s NetZero strategy.

VfM is sensitive to supplier performance, which has recently been impacted by global manufacturing supply chain issues caused by the pandemic impacting Asia based silicon manufacturing capacity, this a global market failure. Through Met Office, BEIS, Cabinet Office and Crown Commercial interventions, such impacts are being appropriately managed.

Overall assessment: My assessment is that the value for money test is satisfied.

Feasibility

The Met Office Supercomputing 2020+ Programme is a GMPP Programme and has been reporting quarterly since September 2019.

The programme has undergone:

• an OGC Gateway 0/1 assurance assessment in 2018
• an OGC Gateway 2 assurance assessment in August 2019 with follow-up Assurance of Action Plan (AAP) in March 2020
• an OGC Gateway 3 assurance assessment in December 2020

These were undertaken in collaboration with the Infrastructure and Project Authority (IPA) which has provided confidence in delivery with strong programme governance and organisational delivery capability experience verified.

There is an ongoing risk around delivery timescales due to supply chain challenges through and post the pandemic, this communicated through GMPP and BEIS reporting channels. The Met Office is actively managing these delivery challenges. Despite this, I do not judge this as a sufficient reason not to proceed with current agreed plans and I consider that the Met Office are appropriately managing delivery implications. A previous legal challenge that was being managed as a risk to the programme was concluded in June 2022.

In, light of the assessments and recommendations received, I have considered the relevant risks and found that the correct mitigations are in place to allow for the Met Office and the contracted supplier to deliver against the agreed requirements.

In addition, an OGC Gateway 4 review is planned for Autumn 2023 with a focus on the operational readiness for service of the programme. There will be a series of IPA led reviews that will take place over the life of the investment to provide ongoing assurance on the Met Office’s ability to deliver the intended benefits and outcomes.

Overall assessment: My assessment is that the feasibility test is satisfied.

Conclusion

As the BEIS Principal Accounting Officer, I have considered this assessment of the Met Office Supercomputing 2020+ Programme and approved it on 02/09/2022

I have prepared this summary to set out the key points which informed my decision. If any of these factors change materially during the lifetime of this project, I undertake to prepare a revised summary, setting out my assessment of them.

This summary will be published on the government’s website (GOV.UK). Copies will be deposited in the Libraries of the House and sent to the Comptroller and Auditor General and Treasury Officer of Accounts.

Sarah Munby
Permanent Secretary, BEIS