SINR 30 Lees RUT TO 961817304161 P.@2/03
Tony Oppenheirn
Finance and Commercial Director
ICL Pathway
Forest Road,
Feltham,
Middlesex,
TW13 7EI Post Office Counters Led
Dear Tony,
Post Office Estate/Space Issue
Thank you for your letter of 17" February. In advance of our meeting on $ March I
feel it would be helpful to clarify POCL’s position on a number of the contractual
issues that you raised.
1. We do not accept your interpretation of the position on implied warranties. Clause
707 makes it clear that there are no implied warranties, and specifically none as to
fitness for purpose. Moreover, this position was made perfectly clear during due
diligence in relation to POCL’s estate, Thus we cannot accept your assertion that
there was any “implication” that the POCL estate was “fit for automation”.
2. Clause 406 confirms that you were you were given an opportunity to inspect the
estate - not that you had inspected all post offices, This accords with our records
of the office visits which you made prior to tendering,
We strongly refute your argument that Pathway acquiesced to Clause 406 “under
duress” in the face of POCL’s “disproportionate negotiating strength”. Pathway
together with its holding company was a substantial company, was legally
represented, had previous experience of POCL and Government procurements,
including automation of post offices in London, and was well able to look after its
own interests. Pathway were under no obligation to accept Clause 206 - you were
free to bid or not bid. By bidding you chose to accept Clause 406, and we
therefore see no reason why this, or indeed any other provision of the Related
Agreements, should be set aside on this basis,
3. On the question of choice of keyboard:
Firstly, the Lift keyboard was the one included in your tender, and so formed part
of the basis on which POCL accepted your bid, In Functional Specification version
3, you changed this and asked POCL to choose between the Cherry and Lift
keyboards, The Functional Specification shows advantages for both keyboards.
The requirernent to select a single keyboard for all post offices was imposed by
Pathway, this was not a POCL requirement. However, faced with your demand
that we choose a single keyboard model; the Lift was considered on balance to be
the best option. In any case, the keyboard is but one component of the counter-top
configuration, and as you know, other components such as the screen size and
cabling that would be needed for separate card reader are also significant factors.
Post Office Councers Led
6 Eccletzon Street
London
SWIW as
Facsenile: 0171 730 2526
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Commercial - In Confidence
Secondly, as you are aware, Schedule B7 paragraph 2.2 states that in approving
the Functional Specification BA/POCL did not relieve Pathway of any of its
obligations to meet the Tequirements. Therefore, by approving the Lift keyboard in
the Functional Specification, POCL was not accepting any responsibility for Space
tisk and was not relieving Pathway of its obligation to manage that risk.
4. You refer in your letter to the distinction between “optimising” and “expanding”
counter space, This distinction was drawn in meetings discussing possible solutions
on a without prejudice basis, and has no Contractual status unless and until a
change to the contract is agreed. In any case, to the extent that there is any conflict
5, Clause 406.1 states that Pathway will install its equipment so as to comply with
Health and Safety legislation in its immediately surrounding environment,
Following the initial 205 installations, user feedback showed that some offices had
been installed in a way which was unsatisfactory from a Health and Safety
viewpoint; in particular equipment had been installed at unsuitable heights. The
guidelines which POCL then commissioned were produced because of these
failures, and could only be produced when POCL had had sight of Pathway
equipment and installation standards, The guidelines interpret but do not add to the
requirement to comply with Health and Safety legislation, in particular the
Management of Health and Safety at Work Regulations 1993 which were in effect
at award of contract.
6. Inote your comments on Pathway Light. However your proposal is still being
prepared and we cannot assume that Pathway Light will be accepted by Sponsors
In addition, as far as 1 am aware, Pathway Light will reduce, but not remove the
space problem. We will still be left with multi-position offices where your standard
solution will not easily fit, but where Pathway Light will not operate.
7. Your letter also raised a number of other issues which I regard as commercial
rather than contractual - i.e, network size, mobile configurations, changes to
solution such as flat screens etc. I will address these in our discussions on 5“
March.
Finally, your suggestion that POCL has to pay again for services which are already
included in the contracted Price is not acceptable. While I share your hope that the
discussions on S March will result in an agreed way forward, this will only be possible
if both parties are prepared to be flexible.
ee
David Milles
Horizon Programme Director
POCL
cc: Mike Coombs, Barrie Davies, Liam Foley
Mena Rego, Keith Baines
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