POL00028278
POL00028278
Benefits Agency and
Post Office Counters Ltd
Third Floor
Termina! House
52 Grosvenor Garde
don SWI W
agency
telephone
fucsmule
IN STRICTEST CONFIDENCE
Tony Oppenheim
Pathway
Forest Road
Feltham
Middx
TW13 7EJ 5 January 1996
Pathway Financing Structure
Thank you for your letter of 12 December enclosing the Pathway Risk Response. We
note that you are not proposing to provide joint and several guarantees from each of
Pathway’s shareholders for all of Pathway’s obligations under the automation
contract. Instead, we understand that you are offering several guarantees from each
shareholder for its sub-contractual performance obligations together with Pathwa
lodging a performance bond.
} I am afraid your response does not enable us to clear the category A risk
PWY000061. In particular your proposal is unclear as to
1.1 What categories of risk you envisage will not be covered by
shareholders’ several guarantees and wil! therefore be covered by the
bond.
1.2 How the performance bond will operate in relation to a failure in the
efficacy of the automation system, particularly in the circum:
where the failure is due to a problem with component integra’
than the failure of a specific sub-contractor to perform its obligations
For example, we envisage that the bond would make funds ave
Contracting Authorities in the event of a performance failure, but it is
not clear to us how this provision would ensure that Pathway are
enabled to resolve the problem.
1.3. How the amount of the performance bond can be established prior to
Post Oftice Counters te Regirerea in
direction Agency i No 2154540 Regiscersc Office Drury 4
Department uf Surat Security 1-16 Black*riare Rasd Lorden SE! UA
POL00028278
POL00028278
1.4 How we would be able to review and clear your sub-contract and
financing documents prior to ITT.
Whilst we remain open to any acceptable alternative to joint and sev
guarantees we find some difficulty in seeing how we could be satisfied v
them.
Tn addition we do not find acceptable y our proposal that in the event of
contract termination due to the fault of Pathway BA/POCL should be oblig
to purchase the counter hardware that is installed and is functional.
We are asking Charterhouse to pursue these matiers with you to see if we can
close the gap between us. I have asked them to do this urgently so that you
can let us have revised proposals by 17 January *96.
You must appreciate however that failure to satisfy us that your financia!
structure is sound will result in no ITT being issued to Pathway
Dave Miller
Dave Miller
Deputy Director BA/POCL Programme
Andrew Stott