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To: ci: Sir Michael Scholar
SECRETARY OF STATE _} separate Mr Macdonald
MR MCCARTNEY }copies Mr Baker CGBPS
Mrs Britton PORT
Mr Fraser IBB
From: Mr Sklaroff COM
DAVID SIBBICK Mr Hosker FRM
DIRECTOR POSTS Dr Hopkins cll
"GRO Mr Osborne Legal C
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; G RO I Mr Leese PORT
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12 April 1999 a Mr Corry SpAdv
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3. Me 0 ; Uf Ms Moore
BA/POCL AUTOMATION onde [A (HORIZON) : MEETING WITH
KEITH TODD, CHIEF EXECUTIVE, ICL AT 5.00PM TUESDAY 13 APRIL
Issue
1. My submission of 9 April promised an update in the light of the continuing
negotiations between POCL and ICL over the weekend, and of the meeting between
the Prime Minister and Mr Naruto, Chairman of ICL and Vice Chairman of Fujitsu this
afternoon, as background to your meeting with Keith Todd tomorrow. CII have
briefed separately on other issues for the meeting.
Update
Ze The ICL/POCL negotiations over the weekend made good progress in a
constructive atmosphere with a number of key elements of the draft Heads of
Agreement, including acceptance criteria, a high level service specification, the
financial aspects of the commercial proposals, and a revised version of “golden cloud”
(the ICL/POCL partnership for exploiting the commercial potential of the Horizon
infrastructure). But much remains to be done if Ministers are to be in a position to
take a clear decision on the future of the project before the key Fujitsu Board
meeting on 23 April. In particular there remain major areas of risk to be costed and
allocated, and much uncertainty still about many of the numbers. A key concern is
that the emerging figures are increasingly showing Option B to be substantially
more expensive than Option A (the benefit payment card, to which DSS/BA remain
implacably opposed, and from which ICL are increasingly distancing themselves).
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DTI/DSS/Treasury officials have this afternoon asked KPMG to carry out urgent
further work on the figures. Officials are also working urgently on funding options
for Ministers, since without some reassurance on funding, the Post Office will be
unable to take decisions on the commercial acceptability of Option B.
3. The read-out we have been given of this afternoon’s meeting between the
Prime Minister and Mr Naruto is that the meeting produced no developments of
any substance. It would however be very helpful to elicit from Mr Todd ICL’s
interpretation of the meeting.
Meeting with Mr Todd
4. I attach suggested lines to take, based heavily on those provided for the Prime
Minister’s meeting this afternoon, and which seek principally to reassure ICL that the
public sector side is working hard to achieve a solution which is in everyone’s
interests. Lawyers stress the importance of formally noting the legal preamble as a
preface to your discussion with ICL. You may find it helpful if I join CII colleagues in
accompanying you at the meeting.
DAVID SIBBICK
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