Transparency data

August 2024: Emergency Services Mobile Communications Programme (ESMCP) Accounting Officer Memorandum

Updated 6 December 2024

August 2024

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 guidance. 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 Emergency Services Mobile Communications Programme’s (ESMCP) position as of the 15th August 2024, based on an updated Programme Business Case (PBC) and Home Office Investment Committee’s (InvestCo) views on the PBC.

The Accounting Officer for the Home Office has considered the below assessment against the four accounting officer standards of regularity, propriety, value for money and feasibility and is satisfied that the programme continues to demonstrate a good use of public resources.

Background and context

The ESMCP was formed in 2011 with the objective of establishing an Emergency Service Network (ESN) to replace the existing Airwave network. After a strategic review of the market and technology, consensus settled on the preferred option of seeking a solution that ran over 4G technology on a commercial network.

The technology for Airwave, TETRA, is supplied by Motorola. TETRA is now over 25 years old, and its technology is not capable of delivering the high quality, secure voice and data communications that our emergency services require. The ESN vision is to deliver improved voice and data services to the emergency services at a significantly lower cost by sharing an existing commercial 4G network, unlike Airwave, which is fully dedicated to its users. Although shared with the wider public, emergency services will be given priority over other users of the network, particularly at times of urgent need, such as major events or in crises. In addition to replacing the core critical voice functionality, ESN will transform emergency service’s mobile network, especially in remote areas and at times of network congestion. It will create a network for sharing data, enabling faster adoption of mobile applications that will provide our emergency services with the tools they need and help keep the public and emergency service workers safe.

ESN is jointly funded by the Home Office, Department of Health & Social Care, the Scottish and Welsh Governments, and by the emergency services that will ultimately use it. ESMCP has multiple delivery partners contracted through over 40 different contracts. The 2 principal contracts are User Services (to build the core mission critical communications systems) and Mobile Services (to provide the necessary 4G/5G coverage). These were originally let to Motorola and EE respectively in 2015.

Following the reset of the ESMCP in May 2019, a Full Business Case (FBC) was approved by the Home Office Finance and Investment Committee on the 17th June 2021 and the Government’s Major Projects Review Group (MPRG) on the 23rd July 2021. A supporting Accounting Officer Assessment was published in October 2021, which outlined ongoing work to develop detailed and comprehensive plans for deployment to ESN user organisations and Airwave shutdown. During 2021, delays in the delivery of the Motorola’s User Services contract have meant that full transition was no longer possible before the end of December 2022. Consequently, in 2021, ESMCP extended the Airwave contracts from the scheduled National Shutdown Target Date (NSDTD) of December 2022 to a target date of December 2026. At the time, it was believed that this extension would ensure continuity of services and enable sufficient time to transition from Airwave to ESN.

Following concerns about Motorola’s dual role as the owner of the company providing the current mobile radio network (Airwave Solutions) and as a key supplier in the rollout of the planned new Emergency Services Network (ESN), the Competition and Markets Authority (CMA) conducted a market investigation into the supply of communications network services for public safety and ancillary services in Great Britain. On the 5th April 2023, the CMA published its decision. The CMA final report estimated that Airwave Solutions, and Motorola, can be expected to make total supernormal profits from the operation of the Airwave Network of around £1.27 billion (real value) between the 1st January 2020 and 31st December 2029. The CMA imposed a charge control to mitigate Motorola’s ability to price above a competitive level, which is equivalent to an estimated saving to the taxpayer of £200 million per year. In February 2024 Motorola applied to the Court of Appeal (CoA) for permission to appeal the CMA’s decision and a “rolled up” hearing of the application for permission of the appeal has been fixed for November 2024.

In addition to the CMA market investigation, a termination agreement was concluded with Motorola to terminate the User Services contract early. The termination of Motorola’s User Services contract resulted in delay to the deployment of ESN. To enable continuity of services whilst ESN is delivered, the National Shut Down Target Date for Airwave has been deferred by 36 months to December 2029 pursuant to the contractual rights under the existing Airwave contract.

In handling potential legal challenges, the ESMCP team is minded to ensure balanced decisions, taking into account both financial and wider strategic costs, benefits and risks. This will include the worst case scenarios of detriment to the public that may be caused by Motorola’s actions and the wider impact on the UK supply chain, as considered in further detail within the Feasibility section below. HM Treasury (HMT) and Cabinet Office are consulted as necessary.

Looking ahead, the top priorities are to conclude the ongoing tender of the User Services contract to replace Motorola and the direct award of the Mobile Services contract re-procurement, following issuance of a Voluntary Ex-Ante Transparency (VEAT) Notice to the market on the 31st July 2024. We are also considering the strategy to handle potential ongoing legal challenges, to ensure we have the appropriate financial provision and capability ready.

Assessment against the Accounting Officer standards

Regularity

Our procurement approach across the programme does not require new or amended legislation to progress.

ESMCP has continued to operate within its Spending Round 2021 (SR21) spending limits, regular InvestCo reviews and in line with principles and controls set out in Managing Public Money guidance and the HMT Green Book. There are systems in place to strictly manage the programme’s budget, including a regular review of the programme’s Medium Term Financial Plan and monthly review meetings with budget holders and Subject Matter Experts. For the forthcoming 2024 Spending Review, the programme team will determine and agree resource allocation and funding commitment with HMT, the Funding Sponsor Bodies and the Home Office to prioritise work without putting this programme’s critical path in jeopardy.

Approval of the updated PBC and approval to proceed with contract awards have been obtained from the InvestCo on the 15th August 2024, with further approval from the MPRG expected around the end of September 2024. I therefore consider ESMCP to conform to the regularity standard.

Propriety

The case for replacing Airwave with a new critical mobile voice and data service for the emergency services of Great Britain continues to be clear. The most recent Public Accounts Committee report published on the 14th July 2023, outlined that the Airwave system, which although reliable, is expensive, does not provide modern data services, and will eventually become obsolete. In addition, the Independent Technical Assurance Panel who work to independently test and assure the programme, said that to maintain Airwave’s performance, Airwave would need ongoing investment to: replace obsolete components, retain skills for managing the network and to maintain the steel and concrete in some 4,000 masts.

The programme is delivering the new ESN in accordance with Managing Public Money and to a standard that meets public expectations on public safety. ESN will enhance coverage benefits for the general public, for example, extending mobile coverage enabling 17,275km of roads to receive 4G coverage and enabling members of the public to make 999 calls from these locations for the first time.

Geographic coverage for ESN users is to achieve increased coverage across the landmass of Great Britain, when compared to the current Airwave coverage.

The programme has made proper progress:

• Regularly engaging stakeholders in an inclusive and transparent manner, including programme board meetings with Funding Sponsor Bodies and Senior Users, HMT and Cabinet Office to provide updates every two months. A series of special workshops were conducted, upon their request in June 2024, to explain changes to the economic and financial cases since the 2021 FBC.

• Regularly engaging with the National Audit Office (NAO), enacting recommendations in a timely manner, and continuously improving to enhance the programme’s management information e.g., reporting progress on delivery.

• Following well-established governance arrangements to seek approval of the PBC and authority to conclude procurement for User Services and Mobile Services; ensure robust handling of potential legal challenges; safe and successful delivery of the ESN; and manage any emerging risks and issues in line with the government functional standard for project delivery.

• A recent project assurance review (PAR) which examined key programme artefacts and interviewed programme, supplier and senior user representatives, was undertaken in June 2024. The PAR recommendations included an action to mitigate the risk of legal challenge against the planned direct award of the Mobile Services contract. We have responded to the recommendation, as detailed further in the Feasibility section below.

Given the programme’s robust governance framework and compliance with required standards and Parliamentary expectations, I consider that the funding for the ESMCP constitutes proper and effective use of public funds and conforms to the propriety standard.

Value for money

As outlined in the updated PBC, the preferred option of delivering ESN continues to represent better value for money than the baseline option of retaining Airwave.

The delivery of ESN has estimated discounted total costs, all in present values, of £9.5 billion (inclusive of optimism bias and quantified risk) and will deliver total benefits of £2.4 billion. Compared to the baseline option, the preferred option has a net cost of £0.2 billion and net benefits of £1.5 billion. This gives a positive Net Present Social Value relative to the baseline of £1.3 billion over 20 years.

The business case indicates that the preferred option was better value for money for the taxpayer, comparing to the baseline, in terms of economy, efficiency and effectiveness.

Additional identified benefits of connecting ESN 999 calls to police in England and all emergency services in Scotland and Wales, will add considerably to the programme’s future monetisable benefits. The strategic case around providing a prompt and high quality 999 service, the obsolescence risk of TETRA and other significant non-monetised benefits, further enhance the value for money assessment.

Since the 2021 FBC, due to Motorola’s decision to leave the programme, ESMCP’s delivery strategy has been revised. This has resulted in an extension of the evaluation period from FY2036/37 to FY2043/44, equating to an additional £2.0 billion in costs over this period (associated benefits have been captured separately). The run period for the legacy Airwave systems has also been extended by approximately three years, equating to an additional cost of £1.1 billion (net of expected savings from the CMA Charge Control).

As delivery of the User Services and Mobile Services contracts lies on the critical path of ESMCP, any delay to the appointment of suppliers is likely to directly impact the timing for completion of transition activity to ESN and delay the cost savings associated with the transfer to ESN. Each day of delay to NSDTD, is likely to incur in excess of £1 million (nominal terms) in cost. The delivery team has been proactive in applying lessons learned, such as supporting the CMA Charge Control investigation, tightening contract management, and applying rigorous financial discipline with the help of our central finance team and HMT.

On the above basis, I consider ESMCP, based on the preferred option, conforms to the value for money standard.

Feasibility

The ESN is based on proven 4G/5G technology with additional standardised features to provide mission critical functionality. Since the first contracts were let in 2015, the technical standards have evolved, and the market has matured with many other countries implementing a 4G/5G solution for their emergency communications requirements. This also means we now have a mature and reasonably competitive supply chain to support ESN delivery through contract awards, as demonstrated through the comprehensive market engagement exercises carried out as part of the User Services re-procurement.

Whilst there have been delays to the programme due to Motorola’s reaction to the CMA market investigation into the supply of communications network services for public safety and ancillary services in Great Britain, delivery confidence in the ESN technology remains high and progress with the ESN technical solution since the programme reset in 2019 has been made. However, since the programme reset, a termination agreement was also concluded with Motorola to terminate the User Services contract early. The steps required to procure a replacement User Services supplier have impacted overall programme delivery plans and necessitated a comprehensive review of the programme’s commercial strategy.

In addition, on 12th February 2024 Motorola applied to the CoA for permission to appeal the CMA’s decision and a “rolled up” hearing of the application for permission and of the appeal, has been fixed for 11th November 2024. If the appeal is successful, it will not affect the future delivery of ESMCP, but would have a financial impact regarding the cost of Airwave.

All procurements carry a risk of legal challenge, which ESMCP actively monitors and manages through a mitigation strategy, to limit programme impacts. For example, a successful challenge to the direct award of the ESMCP Mobile Services contract, could require the programme to restart new procurement activity and which in turn, could result in delays and additional cost. ESMCP have responded to a recent PAR recommendation regarding the Mobile Services direct award, by publishing a VEAT to provide transparency to the market and better understand the probability of legal challenge. The VEAT 10-day standstill period has concluded without challenge which has strengthened the feasibility of delivery to plan.

ESMCP is regularly assured by the Cabinet Office, HMT, NAO, the programme’s own Independent Assurance Panel (chaired by my independent advisor on ESMCP), as well as subject to internal review within the Home Office. These processes provide independent assurance, and where necessary, approval, of ESMCP as a major government programme. They also hold the programme to account to ensure that it is acting within defined parameters of performance, spend and legislation.

The process of estimating and assessing risks and opportunities have been fully assured. Risk and uncertainty are dealt with by using sensitivity analysis, quantified risk analysis (QRA) and optimism bias (OB). QRA is based upon specific risks identified by the programme, their likelihood of crystallisation and the range of potential impact, both in terms of delay to completion of the programme and additional costs. Where mitigations are planned, these have been accounted for in the analysis. OB has been estimated based upon the HMT Green Book methodology and includes additional risk weighting to key contributing factors to reflect uncertainties. Subject to approval of the PBC and the funding allocation from the forthcoming Spending Review, ESMCP is financially feasible.

The programme also works alongside the emergency services, and specifically Senior Users. National Police Chiefs’ Council (NPCC) operates on behalf of the Police, the National Fire Chiefs’ Council (NFCC) on behalf of Fire, and Association of Ambulance Chief Executives (AACE) on behalf of ambulance services. Their role within the context of the programme is to provide assurance of operational viability of the technical solution as well as to lead deployment and transition activities for their organisations. They act as the voice of the end user and make recommendations on the adoption of ESN, ensuring solutions are robust and fit for purpose.

We expect delivery confidence in ESMCP amongst user communities to continue to improve, due to ongoing programmes that enhance capability and strengthen collaboration with delivery and funding partners. For example:

• The 2024 PAR final report referenced that ESMCP have strong and respected leadership, who have made good progress with inflight delivery, contributing to sound programme delivery foundations.

• Recent real world radio field testing of ESN at scale, at events such as King Charles III’s Coronation, has significantly improved confidence.

• Increased user involvement in recent delivery procurements, notably for User Services.

• The Transformation and Mobilisation efforts by the programme’s new Technical Delivery Partner, focusing on preparing and planning for the onboarding of the User Services Supplier, ensuring an integrated delivery and deployment approach from the start.

I do not underestimate the challenges for Home Office and our delivery partners in light of the legal, supply chain management and financial risks. On balance, I consider that the programme conforms to the feasibility standard.

Conclusion

As the Accounting Officer for the Home Office, I have considered this assessment of the Emergency Services Mobile Communications Programme and approved it on 25 September 2024.

I have prepared this document 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 version, setting out my assessment of them.

This document will be published on the government’s website (GOV.UK). Copies will be deposited in the Library of the House of Commons, and sent to the Comptroller and Auditor General, Treasury Officer of Accounts and Chair of the Public Accounts Committee.

Sir Matthew Rycroft KCMG CBE

Home Office Permanent Secretary and Accounting Officer for ESMCP

25 September 2024