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BA/POCL
DRAFT MEMORANDA FOR SECRETARY OF STATE
SUPPORTING PAPER 2 - CONTRACTS
The BA-POCL (Horizon) Project involves three contracts:-
Contract 1 (the Authorities’ Agreement) DSS (1) POCL (2) ICL Pathway (3)
Contract 2 (the DSS Agreement) DSS (1) ICL Pathway (2)
Contract 3. (the POCL Agreement) POCL (1) ICL Pathway (2)
and there are two other relevant contracts, each between the DSS and POCL:-
Contract A covering benefit transactions made by POCL, whether paper-based or
card-based
Contract B_ providing for services provided by ICL Pathway to support the benefit
Payment card encashment transactions.
CONTRACT 1 (the Authorities’ Agreement) DSS(1) POCL(2) ICL Pathway(3)
‘This contract is an umberella contract and deals with matters affecting both DSS and POCL
eg the joint operational trial and the charging mechanism.
ICL Pathway failed to complete operational trial under this agreement by the due date of 21
November 1997. They also failed to complete the operational trial by the end of the 13 week
cure notice period on 12 August 1998.
If failure to complete the operational trial is ICL. Pathway’s fault, the DSS is entitled to
terminate Contract 2 (the DSS Agreement) and doing so relieves the DSS of further rights
and obligations under Contract 1 (the Authorities’ Agreement). Similar: provisions apply to
POCL and Contract 3 (the POCL Agreement).
The Joint Programme Lawyer advises that there is sufficient evidence that the failure to
complete operational trial was ICL Pathway’s fault. This view is stipported by work
commissioned by him from Project Mentors, who are independant consultants.
It follows that the DSS is entitled to terminate Contract 2 (the DSS Agreement) with the
consequence that the DSS would have no further rights or obligations under Contract 1 (the
Authorities’ Agreement).
CONTRACT 2 (the DSS Agreement) DSS(1) ICL Pathway(2)
This contract covers cards services and benefit payment administration. Because of the
provisions in Contract 1 (the Authorities’ Agreement) described above, the DSS are now
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entitled to terminate this contract. But to take tat sep standing-what~ 4
}-to-Lerntis et the consent of POCL is
needed under Contract B, below.
CONTRACT 3 (the POCL Agreement) POCL(1) ICL Pathway(2)
This contract covers counter services and associated "back office” and data transmission
services. POCL may not terminate this contract without the consent of the DSS.
This has no particular relevance to the issues involved so far as the DSS is concerned.
CONTRACT A
This contract relates to the general benefit payment services which POCL provides to DSS.
This has no particular relevance to the issues involved so far as the DSS is concerned. It
curfenily lasts until 31 May 2008 and would remain in force if the DSS terminated Contract
CONTRACT B
‘This contract relates to the services provided by POCL to DSS which are in tur supported
by POCL’s contractual relationship with ICL Pathway.
Under this contract the DSS must obtain POCL’s consent before it terminates Contract 2 (the
DSS Agreement) and POCL must obtain the consent of the DSS before it terminates Contract
3 (tie POCL Agreement). There is no requirement that the consent shall not be unreasonably
withheld. The consent requirement survives the termination of Contract B.
FORMALITIES FOR TERMINATING CONTRACTS 1 and 2
Notice of termination of Contract 2 (the DSS Agreement) must be given in writing. Since
the obligations of the DSS under Contract 1 (the Authorities’ Agreement) end automatically
on termination of Contract 2 no further action is needed to terminate Contract 1.
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RESTRICTED - COMMERCIAL AND POLICY
BA/POCL
DRAFT MEMORANDA FOR SECRETARY OF STATE
SUPPORTING PAPER 1 - NEGOTIATION STRATEGY
By end of August
Bird&Bird to agree principle of Standstill Agreement with POCL.
SOL, Bird&Bird and POCL lawyers to agree counsel and SOL to obtain authorisation if
necessary from Law Officers.
Early September
Bird&Bird to propose Standstill Agreement to ICL Pathway, to run to mid October.
Mid September
After Standstill Agreement agreed, Peter Mathison to meet ICL Pathway to notify them of
the inter-Ministerial decision on Options 1-3. Negotiations to begin if decision not rejected
outright by ICL Pathway.
Bird&Bird and Project Mentors to continue gathering of evidence of ICL Pathway’s default
(to inform both negotiations and possible litigation). Further instructions to go to junior and
leading counsel; writ and statement of claim to be finalised.
Mid October
If negotiations successful, carry on in accordance with them.
If negotiations not successful, Bird&Bird to issue and serve writ on expiry of Standstill
Agreement. Serve Statement of Claim.