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ANNEX D
GENERAL BACKGROUND
SUMMARY OF THE OPTIONS
Option 1
Option 1 involves continuing with the contract with some limited extension of its
duration:
- the project continues, including the benefit payment card, with roll out
projected to start in January 2000;
- this would require implementation of the Panel’s recommendations, a
renewed commitment by the parties and agreement with ICL on funding.
We do not favour any increase in charges, but some extension of the
contracts to provide for five years of steady state operation after full
implementation of the system should be considered. (Even this will
probably leave ICL with a loss on the project overall.)
- for this analysis we assume contracts are extended to allow a three year
transition from the BPC to ACT starting early in 2005; DSS’s preferred
variant is to start in 2003. In any event there must be a firm date for ending
the contract and DSS would want to present it as part of a phased transition
to ACT;
- the BPC would be introduced as the system is rolled out, steadily replacing
paper based payment methods;
- POCL would agree with ICL on building banking services into Horizon
and seek partnerships with the banks with a view to at least some partners
being in place by October 2001 and full facilities two years later.
Option 2
Option 2 involves restructuring the project without the BPC to allow an earlier
move to ACT and parallel provision for banking services in post offices:
- BA withdraws from all contracts with ICL for development of the benefit
payment card on grounds of failure to perform;
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- POCL works with ICL to implement the Horizon technology which is
tolled out between January 2000 and September 2001 and builds on it the
capacity to offer banking services with at least some partner banks by
October 2001;
- BA draws up plans to migrate to ACT over three years from October 2001.
In the meantime paper based methods of payment continue and BA
strengthens anti-fraud mechanisms;
- BA negotiates a new contract with POCL which leaves current
arrangements in place until the migration to ACT is complete;
- the Government continues to fund POCL for the equivalent to the ‘floor’
level in the current contracts with BA (£370 million, declining over time) at
least until 2005/6.
Option 3
Option 3 involves cancelling the whole project on the basis of ICL’s breach of
contract for failure to meet agreed timetable:
- POCL seeks to put in place a separate integrated technology platform to
enable it to offer banking and other services as soon as possible. We assume
some basic technology could be put in place by October 2001 (perhaps
based on simple swipe card terminals) with more comprehensive facilities to
provide full banking services by 2003.
- BA draws up plans to migrate to ACT over three years from October 2001.
In the meantime paper based methods of payment continue and BA
strengthens anti-fraud mechanisms, perhaps building on the current
electronic stop notice system (ESNS).
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