- Massive, multi-billion, multi-year Emergency Services Network project overrun creates concertina effect in first responder network supply chain.
- Current exclusive supplier of in-vehicle terminals needed 2019 contract to be modified to retain ongoing support.
- Official attention remains on prime contractor Motorola, and potential conflict of interest, but network partner EE not entirely escaping scrutiny.
[Updated with Motorola Solutions comment]
The UK government has been forced to hand a refreshed contract to the in-vehicle device vendor for its Emergency Services Network to head off the prospect that support arrangements unravel because of ongoing project delays.
Handsfree Group, a Manchester-based supplier, in late-2019 secured an up-to-£130m (€148m) framework contract to provide LTE-enabled fixed devices and accessories, as well as extended warranty and support services, for ESN users.
However, earlier this month, the Home Office said it had modified the agreement, with a £4m add-on for further services, in light of the programme’s “successive and incremental delays”.
With the ESN project now not expected to be finished until at least 2026 — seven years later than originally planned — there was a need to ensure the terminals “continue to be supported during the ESN network development, test, and trial phases”, a contract modification notice from the department said.
It added that the ESN’s delay had created “unforeseeable consequences” — one of which was that Handsfree had been unable to sell terminals to end-user organisations. This has deprived the supplier of a revenue stream it had anticipated when the original deal was handed out, and left Handsfree in a position where it would be “unable to support the devices” without an alternative line of income from ESN payments, the notice indicated.
With Handsfree the sole supplier to have an available, “ESN-accredited” fixed vehicle device, sourcing of alternatives would introduce (further) “delay and duplication of costs”, it added. The vendor’s R5 ESN solution, developed with the Home Office and Taiwanese hardware partner Advantech, is “already in production”, the department noted.
As such, the deal modification means the programme will “continue to have access to an ESN compliant fixed vehicle device which will be used for ESN test and trial purposes by user organisations, which will help in building confidence in the ESN service — including coverage, functionality, and devices”, said the notice.
The contract change covers additional security accreditation, device storage, and core unit replacement services — the latter being to ensure Handsfree’s device remains supported beyond the end of 2024.
Sunk costs
When originally revealed, Handsfree’s deal was described as “ground-breaking for the UK”, anticipating delivery of 40,000 units to the emergency services over a “number of years”. However, the Home Office’s latest notice indicated only 2,625 devices have been procured to date.
Previously, the agreement was expected to enable mission critical push-to-talk voice and high-speed data services for first responders from the first quarter of 2021, offering a “significant” improvement on quality to the emergency services’ legacy Airwave system, run by Motorola Solutions.
Handsfree also set up a dedicated ESN division to support ambulance, fire, and police clients in adoption and usage of the new tech, and flagged tie-ups with infrastructure group Telent and commercial vehicle installation specialist Maple on implementation of the kit.
Motorola and the price of delay
The move adds to the spotlight on how the ESN’s problems have made early procurement decisions obsolete, adding to the programme’s spiralling cost and complexity.
In 2019, after a major rework to the ESN plan, the National Audit Office estimated the project would end up costing £9.3bn in the period to 2037, 49% more than projected when it commenced in 2015 (BTwatch, #305).
The UK’s Competition & Markets Authority (CMA) has since last year been investigating how Motorola has benefited from the project’s delay in its role as operator of the existing Airwave system, while at the same time being the enabler of ESN software. It acquired Airwave Solutions in February 2016, two months after entering into the ESN software relationship.
Earlier this month, in a provisional assessment, the CMA indicated the vendor is in line to make £1.1bn in “excess profit” from the Airwave deal, across 2020–2026, and could reap about £160m more per year for any further delays beyond that.
Noting how the Home Office and emergency services appeared “locked in” to a monopoly provider, with prices “well above competitive levels”, the Authority proposed placing limits on Airwave fees.
Somewhat ominously, the CMA recommended that the Home Office put in place a plan to “ensure that a new, upgraded network, or more competitive arrangements, replace the existing set-up by the end of 2029”.
A spokesperson for Motorola Solutions said the vendor ”entirely rejects the CMA’s unfounded and incorrect calculation of ‘excess’ profits, which is based on an arbitrary time period of the Airwave project. The fact is that Airwave, over its life, is a much better deal for the UK taxpayer than the Home Office originally agreed”.
“In 2016, both the CMA itself and the Home Office approved all of the Airwave contracts that remain in place today. Airwave has been relied upon by the UK emergency services for the past 22 years. Despite the CMA finding no shortcomings in Airwave’s exceptional service, or any material change in the cost to run this mission-critical network, the CMA is proposing to forcibly reduce the contractually agreed price for the remaining years of the contract.
“Such unprecedented intervention would severely undermine confidence in long-term infrastructure investment and contracting with the UK government.
“As this is a provisional decision, Motorola Solutions will continue to work with the CMA to demonstrate the excellent value for money the Airwave network provides to the UK taxpayer. At the same time, Motorola Solutions will pursue all legal avenues to protect its contractual position for the benefit of the 300,000 emergency services personnel who rely on the Airwave network — and the people they protect — every day.”
Motorola Solutions.
EE, the ESN’s network partner, has largely managed to stay above the fray on the ongoing ESN postponements, but may not be entirely blameless. As the extent to which the project would be delayed became apparent, it was noted that the operator was behind schedule on its 4G mast rollout commitments, although this was arguably the least of the programme’s problems. It was also noted in the CMA’s review of Motorola’s market power in emergency mobile services provision that EE had raised no significant objections to the timetables put forward for delivery of a fully working ESN that ended up proving entirely unrealistic.
The watchdog did not attribute blame for the huge delays to deployment but did note that EE highlighted that Motorola had no experience of delivering public safety communications over a commercial network. EE had also itself never previously embarked on a comparably large-scale public sector contract, or integrated such dedicated software on its commercial network. This had not prevented EE from assuring the Home Office that the project could be completed within 21 months of signing contracts.
EE is now calling for the software that forms the basis of push‑to‑talk over ESN to be made available to Motorola’s competitors to speed up the process of readying the ESN, although the CMA does not appear to consider this necessary.
Perhaps one upside of the delay of ESN until 2026 is the avoidance of any concerns regarding the presence of infrastructure equipment from ‘high risk vendor’ Huawei Technologies. EE’s core still features the vendor’s technology, but this should be removed by the time services are live, even with the government’s recent deadline extension until the end of 2023 for doing so (BTwatch, #339).
