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FAX COVER SHEET
To:
FAX No:
Location:
No of pages (including this sheet): 4
From: Sarah Graham
Date: 17 May 1999
Phone:
PED, Special Project
Room 535 North West
The Adelphi
1-11 John Adam Street
.London ©
WC2N 6HT
Message: PLEASE SEE ATTACHED
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To: Alan Mawdsley HMT From: Sarah Graham PFD Spec Proj ana
* Date: 17 May 1999
Copies: Steve Robson HMT
Peter Schofield HMT
Sarah Mullen HMT
David Sibbick DTI.
Paul Rich Post Office
‘Vince Gaskell BA Proj Dir
Ken Davenport BA/COBAP
Ron Powell DSS/Sol
Jeff Triggs Slaughter & May.
Hamish Sandison Bird & Bird
BA/POCL AUTOMATION PROJECT: REVISED COUNTER-OFFER TO IcL
1. I confirm that from a DSS perspective, we are broadly content with the terms of the
revised schedules, Our detailed comments are attached.
2. However, from a wider Government perspective, J think I should flag up a number
of concerns: ‘
© Schedule 2: revised proposals for ICL liability does leave the public sector
significantly exposed — as Steve Robson recognised; should the system crash half
way. through its roll-out (say after 8,000 offices had been rolled-out), ICL could still
qualify for nearly 50% of the sums due under the periodic payment arrangements,
with no obvious redress for POCL/the public sector;
© looking at the specific proposals on liability, we need to be clearer about the “fee
retention” arrangements, to ensure that we preserve some redress for POCL/public~
sector should the system fail to work in practice (as happened with NIRS 2) — see
more detailed comments attached; . .
© onvalue for money/PAC scrutiny, however good value this option can be made to
Jook in relation to termination, in practice we will be paying to ICL £817m for the
platform, EPOSS and OBCS — as compared with about £870m for a complete
system under the original contracts. This works out at about £20,000 per Post
Office terminal for a five year period and looks very expensive.’
ca Happy to discuss any of this further, if that would help. :
MRS SARAH V GRAHAM
PED Special Projects
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BA/POCL AUTOMATION PROJECT: REVISED OFFER TO PUT ICL
REVISED COUNTER-OFFER FOR HMG, 17 MAY 1999
A. Schedule 2 (Payment Schedule)
Agree to revised roll-out rate to be submitted by Paul Rich, to inform the number of
Post Offices to be rolled-out at each milestone stage, but:
© need to clarify the “fee retention” arrangements: what is meant by the “Core
System Completion Date”; and when is it? We would like to see some “fee
retention” arrangements until actual completion of roll-out - otherwise there is
insufficient protection for the public sector, if the system does not work as it is
rolled-out (a real risk, as we know well from NIRS 2).
B. Draft list of issues
« ‘Conditionality:. confirmed that we should not move away from public sector
position on conditionality: no way that we should accept unconditionality on a
contract of this size and where there are so many issues unresolved.
*. Milestones: accept changes; but share HMG’s concern to flag up the
additional risk that flows from limiting the milestones at which liquidated
damages could be imposed.
« BEScode; helpful to clarify at whose costs the BES cade will be stripped
out after NR2, if not POCL’s (ICL had originally claimed that it would cost in
the region £10m).
fi © Liguidated damages: content.
« Rights of Termination: retain ability to terminate if detailed contract not
I signed by agreed drop dead date,
e Transitional Arrangements: the DSS/BA assessment of the cost of
transitional arrangements, is £30 per Card which suggests a cap of £1m,
Helpful to clarify with ICL (a) this is what they intended to put in their proposal
(rather than £10m); or if not, whether what other costs they envisage under these
transitional arrangements.
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I e Other: just to confirm that, on the understanding that OBCS is included in the
I _ overall payments to be made to ICL, it is not an issue now for this schedule.
I But it remains an issue between POCL and ourselves ~ and also for KPMG
I costings, if in practice ICL have charged heavily for this service - which POCL
will then pass to DSS/BA: we have an obligation to pay for OBCS costs under
contract “B”, so we need to know what they will be!
svG
Dss
17 May 1999
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