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treet London ECHA LAA
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Commercial: In Strictest Confidence
MINUTES FOR
Legal Contingency Planning Meeting
Attendees: Apologit Date of Meeting:
Paul Rich (POCL) Nick Grey (S&M) Sth February, 1998
Kevin Corrigan (POCL) Joe Ashton (Legal Services)
Jeff Triggs (SEM)
\ Trevor Barnes (S&M)
1.0 Action Points for previous meeting:
11 (Para 3.3) Noted copies of letters between Paul Rich and George
McCorkell of August 1997 had been copied to the team. i
12 (Para 3.54) Noted a quick and dirty analysis of CCN’s had been
undertaken giving the following figures:
Overall Since Replan
% % I
BA/CAP’s 43 36
POCL 21 18 I
PATHWAY 20 28 I
JOINT 7 18 ]
1.3 (Para 3.5.8) Agreed to carry foward sourcing a copy of the workload
brief issued at ITT.
Action: KC - Done
14 (Para 3.8) Agreed to carry forward the development of a positioning
paper of legal advice to date for the commercial workstream team. i
Action: JT/ JA/KC
15 (Para 6) Noted Legal Services were progressing the analysis of Fujitsu’s
standing behind ICL.
2.0. Noted DSS appeared keen to follow Bird & Bird’s advice to issue a full I
statement of the Authorities legal and Commercial Position to ICL Pathway. i
Noted Bird & Bird were not privy to POCL’s concerns about divergence and
consequential effects of Programme termination. Slaughters advice remained i
to issue a firm but simple rebuttal of Pathways request for a price rise/contract
extension. A more detailed response could muddy the water and may force
Pathway to respond likewise and answer each point made in detail. This
would change the Authorities “High Ground” position and raise the stakes
overall; it would also be more likely to escalate into full scale litigation. Should
the expected negotiation not prove fruitful, the option to set out our case out in
detail would remain.
3.0. Noted John Bennett had phoned Stuart Sweetman suggesting POCL and
Pathway discuss business post 2004. PR had advised that entering into any
such discussions might release the commercial pressure on DSS to overcome
the present problems facing the programme.
LM5.DOC PAGE 1 OF 3
I
1
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Commercial: In Strictest Confidence
MINUTES FOR
Legal Contingency Planning Meeting
4.0 Agreed the draft letters to John Bennett from Peter Crahan would be re- {
written, one on an open basis stating the Authorities did not believe Pathway I
had any rights to a price rise/contract extension and one on a without I
prejudice basis to keep any discussions on a without prejudice basis. Further, a I
covering letter to Peter Crahan would be drafted setting out POCL’s reaction to
Bird & Bird’s advice.
Action: TBAT - Done
5.0. —_ Noted at the meeting to discuss the Independent Review of the programme,
George McCorkell appeared keen to ask Pathway for detail on what grounds I
they thought the Authorities were to blame. However, the Independent I
Review would inform where the Authorities case was weak.
6.0. Noted recent Bird & Bird advice was in response to a meeting between Ian I
Magee (DSS ITSA Director) and Richard Cousteau (ICL Commercial Director
with responsibility for legal services). Bird & Bird were obviously in a difficult
position as they are to act for both sponsors, not one. Agreed to point out the
need for Bird & Bird only to act for both sponsors in relation to programme
matters. Joe Ashton would be the initial point of contact to discuss this with I
Bird & Bird, and Paul Rich’s covering note to Peter would emphasise this point I
and be copied to Hamish Sanderson (Bird & Bird). I
Action: PR/JJA - Done I
7.0 Agreed a copy of the Terms of Reference and confidentiality undertaking for
the Independent Review would be copied to the team.
Action: KC
8.0. Noted the Independent Review remit would be to establish the facts to date
and not deal in assertions. It would not attempt to suggest how the
programme could have been done better, it would establish who should have
done what, when and if they hadn’t whether this contributed to, or caused the
delay. DSS had indicated they wanted the review to concentrate on the period
since the last replan (CCN 105), however the consultants would go back to at
least the Award of Contract, if not to Invitation to Tender.
so
jo
Noted the PA report and the outputs from the Hedsor House workshops
would be available to the consultants as, although they were Restricted
documents, no confidentiality documents had been signed (other than the
confidentiality provisions of the Related Agreements) and Bird & Bird had
advised their use was okay. Noted the meeting with PFI task force had not
conclusively agreed to review the programme but if it did go ahead its remit
would be future focus, not blame attributable, nor a legal or commercial
examination. Its’ outputs would be seen by POCL.
ht
iS
>
Agreed a copy of the file notes of the meeting with PFI unit and the
Independent Consultant would be copied to the team.
Action: KC - Done
LMS.DOC PAGE 2 OF 3
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Commercial: In Strictest Confidence
MINUTES FOR
Legal Contingency Planning Meeting,
11.0 Noted DSS appeared to indicate (incorrectly) to the PFI unit that Pathway were
unwilling to co-operate with the PA Report - inferring that Pathway had
something to hide. Although DSS admitted to the PFI unit they had had
problems initially, they believed their slate had been clean since the replan.
DSS also appeared to indicate that PA had confided to DSS that they had found
areas they could not (would not?) put into writing (in their report).
i
I
12.0 Noted as POCL are not at fault, POCL does not have to agree in any future i
commercial negotiations. POCL should only enter discussions if there are
areas to trade between the parties.
13.0 Noted there remained “business as usual” negotiations between POCL and {
Pathway. E.g,, Current discussions focused on the Post Office estate where
Pathway were suggesting using flat screens to overcome space problems - I
however there was an additional cost of circa £300 per position for flat screens. I
Although POCL had accepted a 50/50 cost split on a no blame basis for I
alterations to the 200 pre-trial outlets such an approach would be very
expensive when scaled up. POCL believes Pathway are contracted to provide a i
service, the solution being Pathway’s responsibility. Noted Slaughters had I
cleared a letter from POCL to Pathway on this area. Advice remained to keep I
all discussions on a without prejudice basis, - though as with the letters to John I
Bennett on Price rise/ contract extension there was merit in placing on the
record in an open letter or open minutes a statement of POCL’s position.
Noted there appeared to be a year end opportunity for an investment purchase I
from POCL funds, however there were risks in “rushing” any deal without
properly addressing all risks and liabilities associated with it.
—
Ss
io
15.0 Agreed to arrange a short meeting between Stuart Sweetman and Jeff Triggs to
give a legal briefing. Noted Slaughters advised against sending a letter to Peter
Matheson to address/ refute suggestions around Whitehall that POCL
remained inflexible. Agreed to provide Stuart Sweetman with a speaking brief
to refute any such rumours.
Action: KC - Briefing Done
Meeting T.B.A.
Date of Next Meeting: To Be Advised.
LM5.DOC PAGE 3 OF 3
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COMMERCIAL IN CONFIDENCE i
File Note: Meeting with Independent Consultant (Not formal minutes)
At Offices of Bird & Bird, 90 Fetter Lane LONDON EC4A.
12.30pm
4 February 1998
Present: Paul Rich, George McCorkell, Pat Kelsey, Hamish Sandison,
Andrew Davies, Kevin Corrigan
1.
HS set the scene for the Independent review. Just because operational
trial had not completed on 21 November 1997 it does not follow that
Pathway are at fault. One needs to establish the causes of non completion
of operational trial before the Authorities can be confident of their rights.
HS continued, the Independent review would look at the evidence, not
the assertions. It would also not suggest “if you had done things
differently it would have turned out better”, it looks at what each party
said it would do (contracts) and attempt to establish where parties failed
to meet their obligations and whether such failure contributed to the non-
completion of operational trial.
GMc clarified this will establish where our case is. weak.
PR queried the ‘discoverability’ of this work. HS confirmed AD would
be under a duty of confidence. The report would be Bird & Birds advice
to the programme and is both privileged advice and safe from litigation
discovery. Pathway could not call on AD as everything he is doing is as
an agent for Bird & Bird. Bird & Bird will tell the Authorities of the
report's findings.
Note: If a copy of the report found its way to Pathway, Pathway could
use it.
Agreed: by all that AD would sign a confidentiality contract to protect the
Authorities.
PR queried the size of the task. AD indicated the 6-12 week timeframe
felt correct, the breadth of the report would be smaller by not
approaching Pathway but therefore easier to deliver.
Agreed: an interim/ progress check would be arranged for approximately
two weeks time (PK).
GMc noted that Pathway appeared to be raising the stakes - Keith Todd
lobbying hard around Whitehall - GMc is continually being asked how
strong the DSS case is. GMc indicated things may be taken out of the
Authorities’ hands.
GMc claimed his case was strong since the last replan with DSS
delivering all their obligations. PR wanted the report to go back to May
090298b
10.
11.
12.
13.
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1996 as the causes of non-completion of operational trial may be further
back than re-plan. AD said he would need to start with the Invitation to
Tender.
HS said it would be useful to get a steer from PDA where they thought
our case may be weak.
PR suggested reviewing Change Control Notes,
PK suggested the Agreement to Agree,
HS suggested the Contracting Authority Responsibilities,
GMc suggested Pathway will say we’ ve over specified and over
assured the services contracted.
PR clarified the review was about the Related Agreements, not Contracts
A and B, nor the respective business cases.
PR and GMc explained the Treasury PFI Taskforce may wish to review
the programme. However, if it went ahead it would be future focused on
the likelihood of the new delivery dates. The private finance initiative
taskforce activity would be separate from AD’s review.
Noted from an internal communications point of view, if staff questioned
the activities of AD, this exercise would be explained as understanding
who has/hasn’t done what by when - in order to inform the potential
commercial discussions. It is about assuring the future, and informing on
what basis (and whether) we enter commercial discussion.
AD would be assisted by Anderw Wing (not present) of the same
consultancy. AD would work via PK and when AD needed access to DSS.
or POCL points of contact would be established. AD would begin work 5
February 1998.
[Not discussed at meeting: need to ensure AD meets Andrew Stott (ex
Programme Director), (possibly Derek Selwood?) not just present
Programme Management Team.]
Although not part of the Independent Review, the meeting briefly
discussed HS advice regarding contacts with Pathway. GMc was keen to
reply to Pathway in detail on both legal and commercial areas. PR said
he agreed all contact should be without prejudice and subject to contract
but did not believe we needed more than rebuttals to Pathway at present.
PR also said all matters now going through Joe Ashton, PO Legal
Services, Head of Litigation and POCL would respond formally in next
day or two. PR pointed out that Bird & Bird needed to ensure they were
acting on behalf of both Authorities.
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@ I
BY FAX I
Peter Crahan Post Office Counters Ltd i
PDA Development Director I
Terminal House i
George McCorkell
BA
Holborn House 6 February 1998
060298b
Structure of Letter regarding Horizon
When I met George, Pat and Hamish on another matter on Wednesday, I
promised I would give urgent consideration to the two pieces of legal work
received from the PDA this week, with back up advice from Bird & Bird.
Though I am away from the office today this note has my full authority as I
have now taken the appropriate advice internally; I have also briefed Stuart
Sweetman of our conclusions.
You will see from what is set out below that we are proposing in summary:
* a joint response to Pathway now to set the right context and proper legal
protection against any previous claims by them, and for any further
“without prejudice” meetings between, for example, our PSC members and
Pathway.
* anew way of achieving this that would cover both pieces of advice from
PDA this week, including parallel ‘open’ and ‘without prejudice’ letters to I
Pathway from the PDA on our joint behalves, to be issued urgently.
+ a different timing in our contractual strategy for revealing any fuller
commercial or legal response at this stage, given both the business issues
prevailing and, legally, the positioning we should adopt as that of
confidence in our position.
/The
Post Office Counters Led i
King Edward Building '
King Edward Streec
London
ECIA IAA
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i
(On BA/POCL Programme notepaper)
Draft letter to ICL Pathway
John Bennett
Managing Director
ICL Pathway Limited
Forest Road
FELTHAM I
Middlesex February 1998 I
TW13 7EJ
Without prejudice and subject to contract
Dear John
Planning Dates for ICL Pathway New Release 2
Thank you for your letter of 12 January 1998 concerning the planning dates for H
ICL Pathway New Release. We will obviously treat it as being without I
prejudice since it was in response to our letter of 23 December 1997, in which i
we had reminded you that all communications on this topic were henceforth I
without prejudice and subject to contract. I
We would remind you once again that the Programme has already given you
notice of the breach of Related Agreements by our letter of 24 November 1997.
We continue to reserve our position on our rights and remedies resulting from I
ICL Pathway’s breach. I
As regards planning dates, we have considered your arguments and remain of
the view expressed in my previous letter dated 23 December 1997. Indeed, the
ongoing discussions on migration and implementation activity, following the
planned delivery of Release 2 software from Pathway, reinforce our view. I
A you know, it has been suggested that the BA/POCL Programme might enter I
into discussions with ICL Pathway on a without prejudice basis to consider I
certain proposals from ICL Pathway. The suggestion is being considered. Were
any negotiations to take place, they would for the most part be concerned with
ICL Pathway’s requests for an increase in prices and an extension of time to
carry out its obligations under Related Agreements and/or an extension of time
to carry out its obligations under the Related Agreements themselves. I
While the proposal to enter discussion is being considered, the Programme
wishes to make clear its understanding of ICL Pathway’s rights with regard to I
these matters. I attach an open letter setting out our position. i
Yours sincerely
PETER CRAHAN
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benefits I
WORKLOAD BRIEF al i
agency I
Authors: Keith Baines, Martin Gill, and Ian Robertson
Authority: Dave Miller and Tony Johnson
Version: Version 5.3
INTRODUCTION I
1.1 This workload brief is issued to you as a commercially
confidential document. It may not be disclosed to any person
(other than the employees and authorised agents of your own I
company) and must be used only for the purposes of participation i
in this procurement. You are reminded that this Workload Brief
does not bind the Contracting Authorities to award a contract to I
any bidder and nothing in this document may be taken to constitute i
an agreement, offer, or representation that a contract will be i
awarded on the basis of this document or at all.
1:2 The purpose of this document is to define the volumetrics to
be used by Service Providers in preparing tenders and by the I
Programme in the Financial Evaluation of those tenders. Please I
note that the workload volumes and other information contained in
the document represent current estimates only, and do not I
guarantee future volumes. The workload volumes and other I
information contained in this document are not legally binding, I
and the contracting authorities accept no responsibility for any
estimates of workload volumes or other assumptions that you may I
have drawn or will draw from this Workload Brief or any i
discussions relating to it.
1.3 The Workload Brief does not update all the information which
was supplied in the SSR, only information which is of primary
relevance to charging structures. The data in the Workload Brief
will supersede the information in the SSR, but in the absence of
an update the SSR should remain the primary source (unless updated
from elsewhere in the programme).
1.4 This Workload Brief has two main sections. Section I
comprises of data upon which Service Provider proposals are
expected to be evaluated. Section II is provided as background
material for the Service Providers.
Workload Brief Version 5.3 -1- ITT Version 2.0
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Evaluation Sensitivities
1.5 In evaluating Service Providers’ proposals, the Authorities
will consider sensitivities to variations from the best view
forecasts of key parameters. These will include, but not
necessarily be limited to, sensitivities relating to volume
forecasts, timing of rollout, timing of subsequent product re-
engineering, performance against service levels, and customer
behaviour. In addition the Authorities will test the sensitivity
to any assumptions which are highlighted by their examination of
Service Providers’ responses.
1.6 It is recognised that some of the volume sensitivities may i
result in capacity limits being exceeded which would result in a i
price review through the change control mechanism. Therefore,
Service Providers should, wherever applicable, include indicative
values (which will not be contractual) for their score-card column I
weightings beyond any such capacity limits to allow for the
evaluation of variations of up to at least +50% from the best view i
forecasts. i
1.7 As part of their tender, Service Providers should submit a
spreadsheet model which the Authorities can use to calculate the
Service Provider's charges at any level of volumes in any year
within a range of at least +50% of the best view forecasts for that
year.
Workload Brief Version 5.3 ~2- ITT Version 2.0
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SECTION I
SERVICE PROVIDER EVALUATION KEY INFORMATION & VARIABLES
Post Offices
2.1 The following table provides physical information about the
network of post offices, based on a “snapshot” as at 19/2/96.
Parameter Value Status I
Total number of Post Offices 19,403 I Snapshot 19/2/96 I
Total number of counter service 39,507 I Snapshot 19/2/96 :
positions in use J
2.2 The following table provides information about the POCL
staff, including a breakdown of staff, and also the turnover rate
of such staff (note that the following figures include part time,
and full time staff).
Staff Breakdown Number of [Turnover (% i
Staff per annum) I
Counter Managers 763) 6.05% I
Postal Officers (counter clerks) 7,719} 9.77% I
Retail assistants 729) 13.53%
Sub Post Masters 18,872 9.51%
Sub Post Office Assistants 38,938; No data
available
Total 67,021
Benefit Payment Volumes
3.1 The following table shows various volumetrics relating to the
payment of benefits through post offices.
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Parameter Value Status
Number of immediate payments 7.75M I Based on I
issued per year 94/5 I
figures I
Number of Customers BA 21.76M I September I
“this figure allows for a 20% reduction in the SSA 0.63M 1995
number of customers as a result of benefit iq
overlaps War Pensions 0.18M I
Total 22.57M I
*Revised to 18.06M
Number of alternative payees 5.05M I 15/2/96 I
Loss rate of order books 0.5% I Based on I
(see information section for more ee I
detail relating to nature of losses) igures I
Forecast new enrolment of 10% I Current i
customers. Estimate I
Percentage of benefits encashed at a *Nov 93: 5.97% I Sample I
post office other than the nominated Jun 93: 3.78% I estimates
office shown on the order book. Jan 95: 2.16% I
*This figure will be used as the main line (London area within i
assumption in the financial evaluation M25 only) i
Percentage of Order Books which 95% I Current I
are bar-coded (0% for SSA) I Figures I
‘7
Number of ESNS stops per year 2.4M I 1994/95 I
figures I
ESNS stop list alterations 30,000 entry changes I Current j
per day on average I Figures I
The frequency of the ESNS stop list I changes to list issued I Current i
production daily I Figures I
Customer changes of name Average of 104,000 I Based on I
per month I Apr - Nov
1995
Customer changes of nominated 5% per annum I Current
office Figures
Number of help desk enquiries from 7,500 per annum I Current
BA staff Estimate
Number of receipts to be retrieved 60,000 per annum I Feasibility I
from storage Study H
I
I
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Future benefit payment volumes forecast
3.2 An indicative profile for future benefit payment volumes is
as follows. These planning figures represent the current best
view. The following table represents the total number of times
individuals go into post offices to collect benefit.
All figures in millions of transactions
I
96/7 I 97/8 I 98/9 I 99/00 I 00/01 I 01/02 I 02/03 I 03/04
BA 905 I 864 I 823 I 772 I 772 I 775 I 779 I 784 i
SSA 38 37 32 32 31 31 31 31
Total benefit 943 I 901 I 855 I 804 I 803 I 806 I 810 I 815
payments I
This table does not constitute any guarantee of future volumes.
Status of forecasts: revised 20/2/96
I
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Other POCL Business Volumes
3.3 These are based on 1994/95 Report and Accounts
Client/Transaction Type Number of Transactions (1994/95)
Girobank deposits 161M I
Girobank withdrawals 28M I
Vehicle licences issued 33M
NSB deposits 14M I
NSB withdrawals om I
Other NSB services 1M
Telephone bills paid 39M
Postal Orders (sales and redemptions) 38M i
TV licences issued 13.4M I
Retail items 18.7M I
Phonecards 2.3M i
Travel schemes 2M I
Automated bill payments 48M i
BVPs/BEDs 2M I
Letter packets posted 238M
Letter premium services 48M
Ordinary parcels 7.5M
International parcels 1.1M
Datapost 0.4M
Mail order return parcels 35M I
Ministry of Defence 0.9M I
Department of Health I
¢ prescription refunds 0.1M I
e E1tis 1.9M
Total Transactions in 1994/95 742M
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Value of Average
Sales Value per
(Annual) Transaction
(1994/95) (Sample
Estimate)
Home help savings stamps, not redeemable at post £33M £3.01
offices
Other saving stamps (Motor Vehicle Licences, British £832M £2.95
Telecom, Water, and Northern Ireland Electricity
bills) redeemable at post offices
Postage stamps sold £1207M £2.51
Total Volume of Stamps (based on average values) 774M
This table does not constitute any guarantee of future volumes.
Notes:
¢ this is not a list of all POCL transactions, rather a
categorisation of transactions from the Report and Accounts I
e latest information on the number of automated bill payments
gives a figure of 68M for Jan - Sep 1995.
Future Volumes
4.1 The following table shows the forecast transaction volumes
for POCL products other than benefit encashment. These represent
potential demand, and the actual levels will depend, inter alia,
on the price at which automated transaction services can be
offered to POCL’s clients. The eventual level of demand will also
be influenced by the speed and other characteristics of the
rollout of equipment to post offices.
I
I
I
4.2 Because of these dependencies, forecasts are presented as
mid, high and low line figures for the number of transactions. A
wider range of sensitivities may be taken into account in the
evaluation. I
4.3 During the rollout period, these forecasts should be reduced
pro-rata to the number and sizes of post offices automated.
Forecasts are only prepared five years ahead. For evaluation
purposes, it will be assumed that subsequent years have the same
transaction volume as the last forecast year (2000/01).
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Forecasts for Other POCL Transactions Hl
Volumes in 000s
Status: Planning Scenarios
1996/97 1997/98 1998/99 1999/00 2000/01
low-line I 1,573,947 I 1,476,689 I 1,510,293 I 1,527,375 I 1,536,423
mid-line I 1,648,904 I 1,593,010 I 1,660,894 I 1,704,975 I 1,728,523
high-line I 1,739,951 I 1,693,147 I 1,790,877 I 1,852,230 I 1,871,176
This table does not constitute any guarantee of future volumes.
4.4 Service Providers’ charges will depend on the use of
chargeable service components by transactions as well as the
transaction volumes per se. The following tables show planning
assumptions for future requirements for generic automated
facilities corresponding to the mid-line transaction volumes. For
evaluation purposes, these will be re-allocated to the
corresponding service component columns in the score-cards which
Service Providers return with their tenders.
4.5 Some transactions could be delivered by more than one
technical option, especially alternative data capture I
technologies; in these cases the product is included under the
option which is considered to be the client’s first choice and the
evaluation will be carried out on this basis, The row “Machine
Readable Code-line” indicates transactions that may be implemented
as either OCR or Bar Code transactions. For evaluation purposes,
the lower cost option will be assumed, with the alternative option
examined as a sensitivity.
4.6 The data are not additive, since a single business
transaction may include more than one generic function, and since
a transaction may require more than one facility.
4,7 For communications requirements the following three
definitions apply:
Real Time Where authorisations, etc. are required from a
remote source in real time (i.e. during the
course of the transaction)
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On line links
Stop lists
Mid-line forecast usage of generic service components for POCL
transactions other than Benefit Payment.
Where transaction information is required to
be sent to a remote destination soon after the
transaction
Where transactions are validated against a
stop list which may be held locally.
Volumes in 000s
Status: Planning Scenarios I
FUNCTION 1996/97 1997/98 1998/99 1999/00 2000/01
Basic EPOS 1,648,904] 1,593,010] 1,660,894] 1,704,975I 1,728,523 }
Inpay 334,769 555,747 612,381 645,407 655,885 I
Outpay 3,861 14,890 37,205 41,234 40,278 ;
i
Personal 56,163 92,649 146,730 143,567 141,818 I
Details I
Capture I
Token 1,453 7,586 10,833 10,399 10,020 i
Management I
Signed 186 808 1,047 997 7,955 I
Receipt I
Endorse 19,581 55,476 80,178 79,494 79,300 I
Token I
I
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i
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I
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EQUIPMENT 1996/97 1997/98 1998/99 1999/00 2000/01
Mag. Stripe 130,276 321,146 372,664 385,017 396,833 I
Reader I
Smart Card 19,347 21,320 23,923 26,358 45,785 I
Reader I
Smart Key 2,639 10,509 14,432 17,470 19,843 I
Reader I
Bar Code 172,973 229,056 277,886 274,676 255,257 i
Reader I
OCR 257 3,603 9,949 15,178 15,178 I
Pin Pad ie} 8 17,010 17,010 17,010 I
Scales 261,615 245,459 282,838 283,748 284,314 i
Machine 38,987 155,933 170,079 185,264 186,240 i
Readable i
Codeline I
Laser Printer 220 330 770 1,370 2,170 I
i
Receipt 140,321 241,765 345,248 375,600 411,043 I
Printer I
Passbook ) 19,756 19,178 18,009 () I
Printer i
Slip Printer 45,514 66,078 84,094 82,104 80,526 ;
Communications I 1996/97 I 1997/98 I 1998/99 1999/00 2000/01 I
& Reference Data i
Stop List oI 7,962 0 0 0
Links to System 257 2,853 21,199 26,428 26,428 I
Real Time 29,357 50,899 78,223 79,432 77,070 I
This table does not constitute any guarantee of future volumes. I
4.8 For future EFTPOS transactions, as defined in Requirement 692
of the Requirements Register. The following will be assumed for I
the evaluation:
e 40 million EFTPOS payments per annum
e 70% above the floor limit and so needing authorisation.
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Evaluation Rollout Assumptions
5.1 The assumptions to be used in the evaluation with regard to }
rollout are as follows:
e an initial pilot - September to December 1996, followed by a 24
month rollout to December 1998 based on conurbations
e the area within the M25 motorway and Northern Ireland will be
subject to separate parallel rollout plans with the M25 rollout
taking place during 1998
e the key drivers for volumes during the rollout period are
benefits systems being made card ready, and the automation
schedule for the post offices
I
e it is assumed for evaluation purposes that the rollout of post :
offices automated will be linear, i.e. that equal 24ths of post
offices and counter positions in each month of the rollout
period
e the best view volumes for potential card based benefit payments
during rollout are as follows: (Note these are scaled down to
reflect the number of post offices automated in each month)
5.2 In preparing the BA rollout volume estimates, the following
assumptions have been made:
© Operational Trials will be completed by January 1997.
e Rollout will begin in January 1997
e There will be a four week lead-in for each claimant in relation
to:
- post office card-ready
- CAPS notification to CMS to issue card
- card production and distribution
- card receipt by customer on last (or penultimate) order
book payments.
* Order books will continue to be issued for 20/26 week periods if
the beneficiary’s nominated post office is not card-ready four
weeks before the next order book is due. (A notification from
the Service Provider to DSS that a PO is card-ready must be
based on the actual position; i.e. a planning assumption is not
sufficient.
« Ons and offs to the CAPS system do not reduce volumes available
to cards
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e Rollout of benefits will be completed by the end of January
1999. i.e. no more than 3 months slippage to the current CAPS
timetable providing that the post office rollout is completed by
the end of December 1998.
¢ Cards are 100% customer acceptable. i
e¢ CAPS data for the volumes of each benefit available are
calculated as:
~ 1/12th annual transactions divided by 6 for month 1 rollout
- 1/12th annual transactions divided by 2/6ths month 2 I
rollout
- all data is then moved forward (e.g. May to June) by
+ 1 month to take account of average volumes and
difficulties in take up
+ 1 month to take account of PO card ready notifications
(see 3 above)
® Account has also been made of limited roll out in months 1-3 for
some of the benefits.
e Planning data are available from the Service Provider to enable
CAPS to plan for the growth in volumes.
i
I
:
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Period Best View of I Percentage of I Adjusted For I Best View of
Potential Card} Post Offices I Conversion to} Automated I
Based BA Automated Automated Transaction I
Payments (Month End) Benefit Volumes t
(millions) Payments {millions) i
1997 ;
January 0.146 4.17% 0.00% 0.00 I
February 1.171 8.33% 0.00% 0.00 I
March 2.34 12.50% 0.60% 0.01 I
April 4,53 16.67% 1.79% 0.08 :
May 73 20.83% 3.57% 0.26 I
June 10.5 25.00% 5.95% 0.63 i
July 16.04 29.17% 8.93% 1.43
August 22 33.33% 12.50% 2.75 I
September 27.62 37.50% 16.67% 4.60 I
October 33.33 41.67% 20.83% 6.94 i
November 39 45.83% 25.00% 9.75
December 43.44 50.00% 29.17% 12.67
1998
January 47.92 54.17% 33.33% 15.97 I
February 49.7 58.33% 37.50% 18.64
March $1.72 62.50% 41.67% 21.55 i
April 52.78 66.67% 45.83% 24.19 I
May 56.94 70.83% 50.00% 28.47 i
June 60.98 75.00% 54.17% 33.03 ;
July 65.25 79.17% 58.33% 38.06 I
August 69.51 83.33% 62.50% 43.44 I
September 70.07 87.50% 66.67% 46.71 I
October 70.3 91.67% 70.83% 49.80 I
November 71.13 95.83% 75.00% 53.35 I
December 71.41 100.00% 79.17% 56.53
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Period Best View of I Percentage of I Adjusted For I Best View of
Potential CardI Post Offices I Conversion to} Automated
Based BA Automated Automated Transaction Hl
Payments (Month End) Benefit Volumes I
(millions) Payments (millions) i
1999 i
January 71.42 100.00% 83.33% 59.52 I
February 71.44 100.00% 87.50% 62.51 I
March 71.45 100.00% 91.07% 65.07 I
April 71.45 100.00% 94.05% 67.20 I
May 71.45 100.00% 96.43% 68.90 I
June 71.45 100.00% 98.21% 70.17 i
July 71.45 100.00% 99.40% 71.02 I
August 71.45 100.00% 100.00% 71.45 I
The above table does not constitute any offer or guarantee of
volumes.
5.3 OBCS volumes will be applied to all BA order book based
benefit payments where the post office is automated and the order
book has a bar-code. As the card rollout proceeds the number of
available transactions will reduce.
5.4 For evaluation of tenders, POCL transaction volumes during (I
the rollout period will be calculated for each month by I
multiplying one twelfth of the relevant annual volume by the Hl
percentage of post offices automated. For the mid-line
transaction forecast, as set out in the table in section 4.3, the
calculation is as follows:
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Period Best View of mid- Percentage of Best View of
line forecast POCL Post Offices Automated
transactions Automated Transaction
(millions) (Mid Month) Volumes (millions)
1997
January 137.4 2.08% 2.9 I
February 137.4 6.25% 8.6 I
March 137.4 10.42% 14.3
April 132.8 14,59% 19.4
May 132.8 18.76% 24.9 I
June 132.8 22.93% 30.5
July 132.8 27.10% 36.0 i
August 132.8 31.27% 15 i
September 132.8 35.44% 47.1 I
October 132.8 39.61% 52.6 i
November 132.8 43.78% 58.1
December 132.8 47.95% 63.7 :
1998 I
January 132.8 52.12% 69.2 I
February 132.8 56.29% 74.8 i
March 132.8 60.46% 80.3
April 138.4 64.63% 89.4 ij
May 138.4 68.80% 95.2 I
June 138.4 72.97% 101.0 I
July 138.4 77.14% 106.8 i
August 138.4 81.31% 112.5 i
September 138.4 85.48% 118.3 I
October 138.4 89.65% 124.1 I
November 138.4 93.82% 129.8
December 138.4 97.99% 135.6
1999
January 138.4 100.00% 138.4
February 138.4 100.00% 138.4
March 138.4 100.00% 138.4
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SECTION II
ITEMS OF INFORMATION
This section is included in order to provide Service Providers
with background information.
Post Offices
1.1 Major metrics and data relating to post offices include the
following:
Parameter Value Status I
Post Offices relocated per year 1.2% Based on 1994 I
Post Offices opened per year 0.4% Based on 94/5
Post Offices closed per year 1.0% Based on 94/5 I
Average number of days on 305 days Estimate i
which service is required per
year in Post Offices.
A small number of offices (approximately 100) currently open on
Sundays and Bank Holidays.
Parameter Value Status 1
Number of foils and Giro cheques cashed in I BA 933.3M Based on I
Post Offices per year (includes immediate SSA 37.1M 94/5 I
payments) Total 970.4M figures i
Percentage of payments collected by an 12.6% Based on I
agent 1993 /
surveys I
i
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Specific information regarding order book losses is as follows:
Loss_ I Category % of Total Losses
Group
4 In transit to post office 27.90
2 In transit to BA district 0.05 I
3 In transit to Payee 2.37 I
4 In transit from Payee to BA District 2.82
5 Lost / destroyed in Payee’s possession 38.58 I
6 Stolen from Payee 14.44 i
7 Bulk theft from BA District / PO 1.00 I
8 Not returned after entitlement ceased 12.81
9 Others 0.03 I
Total 100% I
Office opening details are as below:
Parameter Value Status I
Average weekly opening hours —_I 37-46.5 Estimate I
hours I
SPSOs 37 I
Directly Operated Offices 46.5
At individual Post Offices there are currently no service I
availability restrictions on customers during opening times. The i
current range of opening hours spans 05.00 - 00.00 Mon-Sat and I
07.00 - 22.00 Sunday and Bank Holidays and the following table I
shows the average number of offices open before 08.00, after 18.00 I
and on Sunday and Bank Holidays.
Opening times vary by outlet and are subject to change with the
approval of the appropriate POCL region. There are no nationally I
agreed minimum opening hours.
i
i
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Support services may be required outside opening times; for
example, accounting facilities. Number of Post Offices Open
Within the Ranges:
Monday to Saturday Hour Number of Post Offices
05.00 - 06.00 3
06.00 - 07.00 16
07.00 - 08.00 48
18.00 - 19.00 119 I
49.00-20.00 I66 /
20.00 - 21.00 19
21.00 - 22.00
22.00 - 23.00
23,00 - 00.00
Sunday and Bank Holidays 07.00 - 22.00 415 (across the range)
Note:
the figure of 115 cited above will gradually increase to
approximately 200 over 2 years
these times vary slightly from Mon-Sat.
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1.2 Profile of BA transactions across 12 sample offices:
08 09 «11017 I42—s13 14115 1617s I Total
Mon \0.47% I6.68% I5.39% I4.25% I3.15% I2.64% I2.29% I1.75% I1.27% I0.43% I28.32%
Tue 10.27% I4.72% I3.97% I3.41% I2.70% I2.29% I2.26% I1.52% I1.22% I0.30% I22.67%
Wed I0.13% I3.39% I2.53% I2.16% I1.61% I1.37% I1.29% I1.01% I0.93% I0.32% I14.76%
Thu I0.66% I5.56% I4.52% I4.02% I2.54% I2.07% I1.86% I1.48% I0.93% I0.31% I23.95%
Fri 10.23% 11.16% I1.42% I1.21% I0.92% I0.94% I0.81% I0.66% I0.56% I0.16% I8.09%
Sat 10.03% {0.44% 10.60% I0.68% 0.24% I0.06% I0.04% I0.05% I0.04% I0.03% I2.21%
Profile of all transactions across 12 sample offices:
08 j09 I10 I11 12 I13 I14 I18 I16 I17 ITotal
Mon I0.24% I4.04% I3.67% I3.29% I2.78% I2.49% I2.31% I1.93% I1.66% 0.67% I23.07%
Tue I0.15% I3.18% I3.07% I2.83% I2.45% I2.22% I2.08% I1.71% I1.48% 0.54% I19.72% i
Wed I0.09% I2.36% I2.17% I2.08% I1.88% I1.68% I1.62% I1.47% I1.41% I0.62% I15.37%
Thu I0.29% I3.53% I3.28% I3.05% I2.40% I2.13% I1.96% I1.66% I1.37% I0.54% I20.23%
Fri 10.11% I1.58% I2.08% I2.00% I1.84% I1.88% I1.72% I1.59% I1.34% I0.49% I14.63%
Sat I0.03% I1.27% I1.77% I1.96% I0.93% I0.30% I0.26% I0.22% 10.16% I0.09% I6.99%
The above two tables were compiled from a sample which was:
e taken from 12 Crown offices over a period of 5 non consecutive I
weeks in April and May 1995 {
* compiled from ECCO+ transaction logs (which means that each
product line sold is defined as a transaction. For example,
selling two first class stamps is one transaction whereas
selling a first class stamp and a second class stamp is two
transactions)
e influenced by bank holidays with the effect that the Monday
percentages, especially of benefit payment, are inflated.
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1.3 The following table provides an indication of the seasonal I
variations in benefit payment volumes. It is based on the weekly
volumes for all Benefits Agency products during the financial year
1994/95, The largest increases in this particular year are; week
1 of April which shows the effect of double payments at Easter,
week 5 of April showing the effect of Mayday Bank Holiday, week 4
of May showing the effect of the Bank Holiday at the end of May, I
week 4 of August showing the effect of the August Bank Holiday, }
and week 4 of December showing the effect of early payment of
benefit before Christmas.
Week 1 I Week 2 I Week 3 I Week 4 I Week 5
April 94 2.38% I 1.48% 1.97% 1.97% I 2.38% I
May 94 1.63% I 1.96% 1.97% 2.34% '
June 94 1.58% I 1.92% 1.92% 1.95%
July 94 1.93% I 1.92% 1.93% 1.92% I 1.93%
August 94 1.91% I 1.91% 1.93% 2.29%
September 94 I 1.61% I 1.93% 1.90% 1.93%
October 94 1.90% I 1.91% 1.91% 1.90% I 1.92%
November 94 I 1.92% I 1.90% 1.91% 1.91%
December 94 I 1.92% I 1.92% 1.93% 2.77%
January 95 1.04% 11.77% 1.99% 1.90% I 1.90%
February 95 I 1.89% I 1.90% 1.89% 1.90%
March 95 1.91% I 1.88% 1.90% 1.90% i
Annex I contains a summary of the allocated day for availability
of encashment by benefit type.
1.4 POCL'’s operating costs are highly dependent on the time to
serve customers at the counter. Increased times would require
additional staff time, and at some offices would require
additional service positions to be opened and equipped. However,
large increases would be operationally unacceptable. The effect
varies between offices but Service Providers should note that a
one second increase in the transaction time for benefit payment
would have an effect in the order of several millions of pounds
per annum.
i
1.5 The following table shows the number of post offices of
different sizes, measured in terms of the maximum number of
service positions that are in use simultaneously. (For some
offices this is less than the physical number of positions, but it
is expected that this is a better indication of the number of
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positions which would require equipment.) The table also shows the
percentages of transactions done in each office size category for
benefit payments and for other POCL business, excluding those
transactions (such as stamp sales) that require basic EPOS only.
Office level summary data for Benefit Payment and other POCL
business is included as Access 2.0 database WB_5. This contains
the following data fields for each post office:
* all benefit agency transactions
all automated payment transactions
e transactions with an on line requirement :
* basic EPOS only
e more than basic EPOS
Note transactions are only recorded in one category. These
volumes are based on operational MIS data, and are classified
according to how transactions are expected to be re-engineered on
the final platform. As such they carry no guarantee. The benefit
data in this database is an update on the previous database
WB 1 2.
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Counter I Number of Total Percentage of I Percentage of other
Positions Post Counter benefit POCL transactions
Offices I Positions I transactions (excluding basic
(in Use) EPOS)
Status ISnapshot asISnapshot as} Outturn for Outturn for 1994/95 i
at 19/2/96 I at 19/2/96 1994/95 H
41 8,784 8,784 11.55% 9.83% I
2 6,379 12,758 34.86% 30.09% I
3 2,397 7,191 23.51% 21.35% i
4 772 3,088 10.20% 10.14% I
I
5 306 41,530 4.74% 5.32% I
6 221 1,326 3.40% 4.51% I
7 164 1,148 3.07% 4.49% i
8 136 1,088 2.75% 4.32% ;
9 82 738 1.75% 2.92%
t
10+ 162 1,856 4.18% 7.03% I
I
TOTALS 19,403 39,507 100% 100%
NB tail end of distribution is one 18, one 19 and one 20 position
Post Office
1.6 Included in the 1-position category are a number of Post
Offices which are:
e Satellite Offices, 89 offices which are operated remotely by a
sub postmaster at a different location to his main business and
with restricted hours. Often these use temporary premises such
as a corner of a village hall.
* Non Cash Account Offices, 1,185 offices for which no cash
account is recorded and the benefit and other POCL transactions
are recorded against the parent office.
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Annex I
Allocated day for availability of encashment by benefit type
1. Retirement Pension is now payable on a Monday, unless Income
Support (IS) is also in payment, in which case it is aligned to
their pay-day (this is determined by the day of original claim).
This was changed from a Thursday for all new claims from 28/9/84
(schedule 6 - Claims and Payments Regulations).
2. Widow's Pension is paid on a Tuesday, unless IS is in payment,
in which case the pay-day is determined as in 1.
3. Child Benefit and One Parent Benefit is usually paid on a
Monday, four weekly in arrears.
4, Incapacity Benefit is paid on a pay-day determined by the
claimants’ National Insurance Number (the last two characters).
The exact split is determined by local workload.
5. Unemployment Benefit pay-days are as in 4, unless a claimant
is personal issue, in which case the pay-day is normally a
Thursday. f
H
6. Income Support pay-days depend on a number of factors. If a
claimant is a lone parent and their only other income is ChB, the
pay-day is linked to the day of the week that their current claim
was made. If they have any additional income, the pay-day should
be aligned to the day that they receive this income. Unemployed
claimants will receive their benefit via the Employment Services
office and the pay-day will depend on the National Insurance
Number and local arrangements. Pensioners in receipt of IS will
have their pay-day determined as in 1.
7. Data is available to give an indication of the probability of
the length of time taken for benefit entitlement to be cashed -
99.5% within 48 hours of the due date.
8. The above applies to N. Ireland with the exception of:
° Unemployment Benefit pay-days are determined by customers
surname, and not National Insurance Number
¢ Unemployed claimants will receive Income Support with their
Unemployment Benefit from their local office since Employment
Services do not operate in N. Ireland. I
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