FUJ00079123
FUJ00079123
ICL Pathway Memorandum
To: ICL Pathway Senior Management Team
cc: Keith Todd, Sir Michael Butler, Richard Christou, George Hall
John Cheetham
From: John Bennett
Date: 29 July 1999
Re: Update and introduction to the new POCL/ICL Pathway
contract (the Codified Agreement)
e Back in May 1999 we announced that a change of Government policy had caused the
withdrawal of the Payment Card.
e Anamended contract between ICL Pathway and Post Office Counters Ltd has now been
agreed
« This note sets out the main points of the amended contract Please make sure that this
note is discussed at team meetings: the implications on future practices and the business
of ICL Pathway should be fully understood by all teams.
e This remains a service contract. We are paid for providing a service NOT for providing
resource. We continue to own the IPR.
« The CSR, RCD and SADD define what is required of us: if anything needs changing,
Change Control is the route — this must INCLUDE early evaluation via a paid study.
e Performance risk transfer is essentially unchanged from 1996. ICL bears the initial build
tisk and financing costs. POCL are not buying either products or assets. They have an
option to buy for a nominal £1 the service infrastructure, to acquire licences and to have
subcontract assigned to them at the end of the contract in March 2005. This option is
little changed from that in the original contract.
e The big structural change is that, with POCL business volumes less predictable without
the Payment Card, revenue is now based on milestone delivery and not on transaction
volumes.
e Milestones matter - they are related to payment and ICL Pathway’s ability to generate
revenue.
e If any questions arise on the new contract, Hilary Forrest or Tony Oppenheim are first
ports of call. Any common points of clarification may find their way into further bulletins
of this kind. Do not hesitate to ask. All feedback is welcome.
e Much progress has been made in dealing with A2ZAs, CCDs and CCNs generally as part
of the codification exercise. There are very few A2As left in the contract. The key task
now is to keep on top of CCNs.
The amended contract — general information
« The contract is shorter and reads better. It now comprises two lever arch binders
(excluding associated CCDs) in place of the original four.
Cont/..d
Certain Terms (Schedule A01) have become significant, particularly around the
definitions of CSR and CSR+. These now need to be well understood in terms of what
they say about our commitments.
A Table of Contents is included for the first time at the beginning of Volume 1. It lists all
the important Clauses by subject and all the Schedules with cross references to Clauses.
Key updates to the Letter Agreement and detail of the amended contract
1.
The Acceptance and Roll Out payment dates and amounts are confirmed
notwithstanding agreed changes to Roll Out run rate (item 5 below).
Key milestones for this year are:
Acceptance on 16" August [plan shows18"] Resulting in a payment amount
Roll Out to the first 1800 post offices by 1st November [plan shows 6"]. Resulting in a
payment amount.
Payment amounts are collected within 30 days of each event (note Schedule A10
payment terms).
The Core System is now defined by reference to Service Definitions for EPOSS, APS,
OBCS and POCL Infrastructure Services (Clause 201.3) but subject to the functional
limits set out in the CSR RCD (Clause 201.6). Likewise, Core System Plus is limited by
the CSR+ RCD. Notwithstanding Requirements for additional functionality (eg.
EFTPOS), the effect is that the RCD exclusions now have precedence over
Requirements. Any functionality above CSR+ is chargeable.
‘Further releases’ in relation to client re-engineering and ‘further use of the Core System’
in relation to network banking and (via smartcards) Modern Government are both
specifically provided for in the contract (Clauses 210 and 211). There is reference to the
intent of the parties to revive the Private Public Partnership. Clause 210 also introduces
the concept of maintenance releases. ICL Pathway will remain responsible for
maintenance releases for the life of the contract. This maps on to our SLA obligations.
POCL must pay for functional releases on either a time and materials or fixed price
basis. To the extent that we agree a release which is a mix of functional and
maintenance, we must also agree in advance the proportion which is chargeable.
The post office Roll Out run rate is reduced to 306 per week, extending the ‘tail’. As a
result, Roll Out is divided into two phases, A and B.
e ‘Part A’ runs to 12" February 2001 (17,797 post offices),
« after which the balance (Part B) is to be carried out under Operational Business
Change, albeit at no incremental charge.
e [The OBC mechanism, with charging structure, is introduced for work above the
limits set out in Schedule A12 (the new charging schedule)].
e The significance of the change is that the final Roll Out payment is payable when
95% of Roll Out is complete (not 99% as before).
The number of terminals to which POCL are entitled is now 39,750, up from the previous
38,750 but below the cap of 40,250. However, if ‘churning’ the terminal population under
OBC calls for more terminals, we are entitled to charge for such additional terminals.
Acceptance Specifications survive unchanged. ICL Pathway has warranted that if we
have missed any impacts of the BPC elimination or the new contract generally on either
the Specifications or regression tests, to the extent that it was reasonable for us to have
foreseen them we will put them right at our cost post Acceptance.
Cont/..d
8.
T & Mrates are added for Senior Consultants and for Senior Management. Out of pocket
expenses are chargeable.
FUJ00079123
FUJ00079123
10.
12.
13.
* These should be taken to include admin; overheads of managing the work
(programmes office, etc.).
* Correct designation and tracking these becomes very important from now on.
Change Control procedures are revised.
e There will be a fortnightly Joint CCB to progress issues. We are required to submit
CCNs in hard copy with ICL Pathway signatures (in parallel to electronic submission)
such that there is a clear offer on the table for POCL to accept.
e The ‘valid to’ date will mean that the offer expires on that date.
« The onus is on us to not start work before approval. The 5 day rule still applies and
we should stick to it. If in doubt, CRs with insufficient information to specify the work
fully should be rejected with reasons.
An Asset Register of data centre equipment now forms part of the contract. This
describes the hardware and software for the Core System at Acceptance, adjusted to
include committed changes around the NUMA-Qs etc (having taken out the PAS/CMS
processors). The significance is that we are required to maintain an equivalent data
centre ‘capability’ over the life of the contract. In addition, ICL Pathway remains
responsible for CSR+ additions required for KMS, VPN etc. and for any scaling of the
Core System required to meet SLAs post Roll Out. Beyond that, we additions required,
e.g.. for network banking, are chargeable.
. Transaction time targets for EPOSS have been relaxed by 0.9 second to allow for the
fact that we will no longer be eligible for BES ‘credits’. SLA aggregation as between
OBCS and EPOSS/APS no longer applies, although that between EPOSS and APS
continues as before.
The training implications of each service enhancement or change must be captured as
part of the impacting of that change and included in the T&M or fixed charge associated
with it. This applies to updating training course content and associated collateral, and
also to upgrading the training system builds.
The DSS is shown as a subcontractor in relation to the OBCS help desk. This relates to
the arrangement we have agreed with the DSS whereby they will handle calls in fallback
for the balance of this year pending re-implementation of the OBCS help desk under
HSHD.
John Bennett
FUJ00079123
FUJ00079123