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FS DIRIS:MAY:1999 17:28 [EDT SECRETARY OF STATE OFFICE1S May ‘99 1INO.S48N0 .1P.2/3? UZ
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u oe TIN
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13 May 1999 (u
Mr Sibbek. CObPS
‘The Rt. Hon. Stephen Byers MP
Sccretary of State
Depurtment of Trade and Industry
1 Victoria Strect
London
SWI1H OET
By fax (2 pages)
BA/POCT. AUTOMATION PROJECT (“HORIZON”)
Thank you for sccing me yesterday.
now understand that the Government has reconsidered its position with regard to
Horizon and that, instead of wanting us to proceed with the national roll-out of the
computerised nctwork based on the Payment Card ~ which we have been planning to do
this summer — the Government wishes us to contract simply for the supply of the core
Horizon platform as a tumkey contract (with on-going operational support) rather than a
PFI. Furthermore, it has been suggested that the existing PPP between ICL and The
Post Office might be developed to look at the business case (and downstream
opportunitics) for network banking and Modern Government services.
1 cannot pretend that 1 am not disappointed that you were unable to proceed with Option
Bl. However, as a businessman, I have to accept that my customers’ requirement has
changed. As Chief Executive of ICL, I have a duty to my Board, my shareholder
(Fujitsu Limited) and to my people to try to work out a solution with the Government to
protect ICL's (and Fujitsu's) interests.
However, I am not prepared to be party to living a lic. I cannot pretend any longer that
it is “business as usual” with regard to this project; not least to the onc thousand or so
people in ICL, and our subcontractors, who have becn working flat out to deliver
Horizon.
Therefore, T am setting out a timetable with the intention of resolving this once and for
all. I have discussed this with Steve Robson at the Treasury, but it is important that
Ministers give him the support and authority necessary to reach aconelusion in the
time-scale. I am also recommending this timetable of action to my Board this
aflermmoon:-
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Richard Christou (ICI) and Stuart Sweetman (POCL) are meeting today to work out
ajoint ICL/PO position.
Richard Christou and I are meeting Steve Robsan later today to consider the terms
of a legally binding Heads of Agreement to settle the current and future financial
conditions which must be in place by Friday (tomorrow).
T am seeking a meeting with the Prime Minister tomorrow so that the Chairman and
Vice-Chairman of Fujitsu can confirm the arrangements for proceeding with the
revised project and for them to understand at first hand the rationalc behind the
Government’s decision to scrap the Payment Card. I think it would be appropriate if
you und Mr Robson could also be at this meeting.
If, as 1 hope, it is possible to reach an acceptable legally binding Heads of
Agreement, there should be a joint ICL/PO/DTI press bricfing on Monday 17 May
(at which you, John Roberts and I will be present) to countcr-act the negative
publicity which has been gencrated to dato.
Ifnegoliations are not successful within this time-frame, then the activity rolated to
the Payment Card aspect of Horizon should cease to avoid further wasted costs for
all parties, and the taxpayer, in continuing with something which the Govemment no
longer requires. Incvitably, this will become public knowledge, so we shall need to
issuc u press statement and briefing to set the record straight.
T trust that you and your colleagues will ensure that Steve Robson is fully empowered to
work with ICL to find a solution in the time-scale. The time-scale is tight, but all of the
basic elements, including the costs, have been known to the Treasury for some time.
Furthermore, it secms to me that the Government has known for months that the project
— in particular the futurc use of the Payment Card — was going to be changed. Wo,
meanwhile, were left to rack up heavy costs in Pathway (some £50 million since 1 wrote
to you as Chicf Secretary on 18 December 1998) and a heavy further invesiment in
senior management opportunity costs across the ICL Group. It is now time to bring
maiters to a conclusion.
Yours sincerely
Kelth Todd
Chief Executive
Keith Todd
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