Tuesday, May 13, 2014

New CSEC HQ: Taj Mahal or billion-dollar brain?

Many people have commented on the enormous cost of CSEC's soon to be completed new headquarters complex, pointing to its sky-high price tag as possible evidence of an agency out of control.

CSEC's Long-Term Accommodation (LTA) Project is without a doubt an extraordinarily expensive undertaking.

The total cost to construct the agency's new headquarters complex is currently projected to be $1.17 billion (see page 297). This total would be even higher—over $1.2 billion—if you included the cost of the high-performance computing centre built at the same site under the earlier Mid-Term Accommodation (MTA) Project. The MTA is now considered to be Pod 1 of the LTA.

[Update 22 May 2014: According to CSEC, the actual cost of design and construction of the building, however, is only $880 million, the remaining $290 million being accounted for primarily by the financing costs of the project. (Such costs are not normally counted as part of the cost of building projects, but they appear in the total shown in the Public Accounts because financing for the LTA was included in the public-private partnership arrangement through which the building was constructed.)

To ensure that the LTA costs are directly comparable to the costs reported for the other buildings discussed below, I have modified this post to use the $880 million figure.]

A comparison of the cost per square metre of the LTA with those of other construction projects demonstrates just how expensive CSEC's complex will be.

CSEC describes the size of the LTA as 72,000 "rentable" square metres (rentable refers to the space usable for CSEC personnel and equipment and does not include space used for utilities and building services), which means that its expected construction cost works out to be about $12,222 per square metre. Using the overall, gross size of the complex, which could be as much as 84,000 square metres, produces a slightly smaller figure of about $10,500 per square metre, which is the figure I propose to use here.

Let's have a look at how that price compares to other intelligence-related construction projects.

- In the early 1990s, CSEC added a 12,000-square-metre high-security extension to its current headquarters building, the Sir Leonard Tilley Building. The "annex", now known as C Wing of the Tilley Building, was built at a cost of $35.1 million, or about $2925 per square metre. In today's money, that would be about $4500 per square metre.

- In October 2011, the Canadian Security Intelligence Service (CSIS) completed a 16,350-square-metre expansion to its headquarters building, located adjacent to the new CSEC complex, that was budgeted at $69.5 million, or $4250 per square metre.

- The Bundesnachrichtendienst (BND), Germany's foreign intelligence agency, is currently building a huge new 260,000-square-metre headquarters complex expected to cost about 1 billion Euros ($1.5 billion Canadian), or about $5770 per square metre. The complex was originally budgeted at 720 million Euros ($1.08 billion), or $4150 per square metre.

- In 2003, the UK signals intelligence agency, GCHQ, built a new 140,000-square-metre headquarters building (known as the "Doughnut") for £330 million ($790 million Canadian), or about $5600 per square metre. In today's money, that would be about $7000 per square metre.

These comparisons suggest that CSEC's new complex will be about one-and-a-half to two-and-a-half times as expensive as other intelligence agency headquarters projects.

But does this mean that CSEC is building an intelligence "Taj Mahal", some sort of showcase of government waste?

Maybe CSEC's supposed parliamentary overseers—or, better yet, the Auditor General—might want to examine that question.

But I suspect the real explanation lies in information technology.

The LTA is not just a headquarters building; it will also serve as a massive data warehouse and processing facility, a smaller version of the NSA's Utah Data Center.

It costs a lot more to fill a building with computers and power distribution, cooling, and backup systems than it does to build a simple office building, even a high-security one.

The 93,000-square-metre Utah Data Center cost US$1.74 billion, or about US$18,700 per square metre.

Similarly, the NSA's new 65,000-square-metre high-performance computing centre at Fort Meade is expected to cost US$860 million, or about US$13,230 per square metre. (CSEC's new high-performance computing centre, the 6000-square-metre MTA, cost about $70 million, or about $11,700 per square metre.)

It seems likely to me that the higher cost per metre associated with computer-intensive facilities such as these provides most if not all of the explanation for the surprisingly large price tag for CSEC's new headquarters.

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