At its meeting in December 2005 the Commission gave outline approval to the NAO's proposed refurbishment of its headquarters building in Buckingham Palace Road, London, subject, however, to three conditions. First, that the NAO should produce a detailed, fully costed business case for the project. Second, that the NAO should carry out a cost-benefit analysis of an alternative approach to its accommodation requirements, namely moving its headquarters to a North of England location. And third, that the NAO should provide a fuller explanation of its decision to rule out the possibility of acquiring alternative accommodation in London as part of the Government estate.At its meeting on 4 July 2006, the Commission considered the NAO's response under each of those headings.The Business CaseThe business case produced by the NAO gives the total cost of the project as £77.44 million, spread over five years starting in 2006-07. In the longer term, there will be a small increase in annual resource costs to the NAO, resulting from higher business rates, capital charges and depreciation, partially offset by reduced running costs through greater building efficiency. Since submitting its original proposals the NAO has revised its approach to the decanting of staff which will be necessary while the building work is in progress. It is now hoped to carry this out in a single rather than a two or three stage process, depending on the availability of suitable decant accommodation. On the basis of the business case, the NAO made a persuasive argument in support of refurbishment as the most cost-effective way of avoiding what would otherwise be—because of the building's current deficiencies—an unacceptable risk to the Office's continued ability to function efficiently. The Commission was, however, conscious of the sensitivity surrounding the timing of the project, since, under the NAO's plans, the bulk of the expenditure would occur in the year's covered by the next, and potentially difficult, comprehensive spending review. We therefore pressed the NAO on the implications of deferring the project (which, because of the need to avoid coinciding with the competing demands on the construction industry from Olympics-related activity, would entail a delay until 2013). The NAO satisfied the Commission that, given the deteriorating condition of the current building, waiting a further seven years before undertaking remedial work would pose an unacceptable risk to the NAO's operations and therefore to the service it provides to Parliament.The Possibility of Relocating to the North of EnglandIn response to the Commission's request, the NAO examined Manchester as a possible location for a provincial headquarters building. Of a number of cities considered, Manchester was judged to come nearest to meeting the Office's principal requirements: good transport connections; and a sufficiently large local pool of qualified accountants to enable the NAO to recruit and retain key professional staff. On the latter count, the available pool in Manchester, though large in comparison with other provincial cities, is much smaller than London's and is insufficient to support the NAO's requirements. The cost-benefit analysis carried out by the NAO indicated that the basic costs associated with relocating would be broadly similar to those for the option of staying on in a refurbished Buckingham Palace Road. On the other hand, the analysis suggested that the uncertainty over the number of staff who would be willing to relocate posed a risk both of additional, but unquantifiable costs of redundancy and resettlement packages, and of disruption of core business activity. The Commission was satisfied that, for these reasons, relocation was not a realistic option. The NAO is, however, proposing to expand its presence in the North, concentrating on its existing team in Newcastle.Alternative Accommodation in LondonAs part of its consideration of alternative sites in London for its headquarters building, the NAO has examined the portfolio of vacant, or about to become vacant, properties maintained by the Office of Government Commerce. The NAO's assessment, which the Commission accepted, is that there is at present no building available of a size and configuration to meet the NAO's requirements on a long term basis, and at a cost competitive with the headquarters refurbishment option, taking account of the resultant loss of the current peppercorn rent. Taking all these factors into account, and having carefully considered the NAO's business case, the Commission gave its formal approval to the proposed refurbishment of the Buckingham Palace Road building. The Commission noted that, depending on how quickly the refurbishment work can begin, it may be necessary for the NAO to submit a supplementary estimate for the financial year 2006-07. The Commission will consider any such request if and when it is received. In the meantime, the Commission looks to the Treasury to make room within the public expenditure envelope for the relevant years for the resources needed for the refurbishment. For its part, the Commission will monitor carefully the progress of the project against both time and budget.