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BETWEEN
POST OFFICE COUNTERS LTD whose registered office is at King Edward Building, King
Edward Street, London EC1A 1AA (“POCL”)
ICL PLC whose registered office is at 26 Finsbury Square London EC2A 1DS (“ICL”) ,
and
ICL PATHWAY LIMITED whose registered office is at 26 Finsbury Square, London EC2A
IDS (“Pathway”)
In May 1997 POCL and Pathway signed .a strategic partnership document (‘the Strategic
Partnership”). The aim of the Strategic Partnership was to implement the Pathway project (“the
Project”) and extend the range of services that will be used by the POCL Service Architecture
under the Agreement between POCL and Pathway ("POCL Agreement"). The Project has
involved the parties investing substantial financial and other resources. The parties have been in
recent discussions relating to the progress of the Project to work out how they can extend their
existing relationship.
This document (‘these Heads”) sets out in general terms the understanding shared between
POCL, ICL and Pathway of the manner in which the-Strategic Partnership can be taken further in
the form of a public private partnership to the commercial advantage of all parties (“the PPP”).
This document (other than paragraph 6) is not intended to be legally binding and neither company
will be legally committed to achieving the goals set out in this document unless agreed in a formal
contract entered into between them.
The ultimate end of commercial advantage will be achieved by pursuing through the PPP two
inter-related goals:
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Partnership Plus;
Future Additional Business Opportunities;
Partnership Plus
The parties will work together, using the existing Strategic Partnership infrastructure, -to
develop additional partnership approaches and identify possibilities for expanding the scope
of the existing relationship such that ICL and Pathway are identified as together the single
source for front end systems integration and service provision for POCL.' The precise
definition of “front end” is to be agreed and is currently identified by reference to the items
detailed in Attachment C.
The initiatives to be undertaken to achieve Partnership Plus, as agreed by the parties in their
recent discussions, are set out in. Attachment A and Attachment B. The decision making
process in respect of these are set out in paragraph 3:
Future Additional Business Opportunities
A preliminary review of some current and potential business opportunities has identified
those where POCL believes ICL and/or Pathway could offer value to POCL in
providing IT and systems services and in working with POCL to become POCL’s
systems integrator and service provider of its “front end” (but not “back end”) IT
systems and information architecture. Attachment C contains a list of services which:
@) the parties have agreed will initially be the subject of market research and business
case development by the PPP; and
(i) (if and to the extent that, as a result of such market research and business case
development, it becomes commercially desirable for the parties to commit to the
provision of such services by Pathway or ICL to POCL) shall initially be offered to
ICL on a single tender basis provided that:
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‘@ ~~ POCLiis reasonably satisfied that ICL or Pathway, as the case may be, has
sufficient financial and other resources to provide such services
satisfactorily; and
(b) the terms proposed by ICL or Pathway demonstrably offer quality of
service and value for money in terms of clause 2.3. Such quality and value
for money may be measured by comparison with other suppliers in the
market, by benchmarking, by open book accounting by ICL and Pathway or
otherwise, as agreed between the parties; and
(c) __ the PO Board shall have approved the same subject to and in accordance
with paragraph 3.2 and save where the relevant proposal falls within the
devolved powers of the Managing Director of POCL.
Where such services are to be offered to ICL and/or Pathway on a single tender basis,
POCL, ICL and Pathway will together, in consultation with the Executive, produce
-implementation plans for each of such services and will together determine how joint
working should apply to each service.
The parties will also examine the possibility of working together on further opportunities
from time to time as the PPP develops.
POCL, ICL and Pathway will seek to position POCL as HM Goverment’s supplier of
choice for the supply of Better Government Initiatives to the extent that this can be done
consistent with the requirements of the public procurement regime and other legal
constraints. In particular POCL will seek access-to the Invest to Save initiative so as to
obtain seed-com funding to develop initiatives. No member of the ICL Group will
compete with POCL for front end customer services. The precise ambit of this restriction
is to be agreed,
POCL, ICL and Pathway, will work together with a view to demonstrating that the future
additional business offers value for money (“VEM”) and excellent service to POCL and to
its customers. Future additional business proposed by ICL will be govemed by the
following parameters, subject to the same being consistent with VFM:
- functionality to be agreed by POCL
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the design must fit with Post Office IS/IT architecture, which is subject to PO
Group IT/S design standards and concurrence processes and fit with POCL’s end-
to-end operating processes ("PO Standards"), such fit to be achieved by an
alignment of standards between the parties and on the basis of best industry
practice
open standards are to be deployed, consistent with ICL’s commitment to accessing
“best of breed’ technologies, including the use of solutions and components sourced
from suppliers other than ICL or other members of the Fujitsu group, where
required ; :
the design and development of applications needs to drive towards solutions
designed for best in class time-to-market cycles
existing contracts with third parties must be respected
acustomer-centric ethos will need to be applied in designing solutions -
it is important that best practice systems design is so far as feasible progressively
implemented throughout the Horizon architecture, including:
- separation of applications from infrastructure
- coherent systems management with consistently applied security standards
- compatibility with the logical data model within POCL’s system
architecture,
Jn pursuing such opportunities, POCL will have transparency in ICL’s technical approach
and design and benefit from ICL’s research and technological capability including
capability derived from ICL’s relationship with Fujitsu and ICL’s other technical alliances
and resources. ICL will have transparency in PO technical approach and design and PO
Standards. All parties will hold regular technical meetings to review and enable
achievement of these objectives. These arrangements. shall be subject to appropriate
confidentiality agreements.
The provisions of this paragraph 2.3 insofar as they affect the Project as it currently stands,
shall be without prejudice to the Related Agreements (including all documents incorporated
therein, such as specifications or programme plans).
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2.4
2.5
2.6
3.1
3.2
Future work upon existing solutions and services will also be driven by the principles set
out in paragraph 2.3 but shall be subject to the Related Agreements (including all
documents incorporated therein, such as specifications or programme plans) as from time
to time agreed.
Where as part of the provision of any solution any task or service has to be subcontracted
and a member of the Post Office Group has the competence to carry out that task or
provide that service then that member of the Post Office Group will be the first choice to
carry out that task or service, provided to do so offers VFM.
Where ‘the Post Office already has strategies or plans in place, the services and plans
.envisaged ‘under these Heads will need to respect them. For example the technical
approach needs to create systems that are flexible:
@ in customer and key process terms;
Gi) _ in terms of future organisational changes; and
(ii) in relation to core Post Office competencies and market developments, such as
developing call centres or certification and authorisation of ‘Trusted Third Party’
services on tokens such as smartcards, .
Implementation of the PPP —
In order to implement the PPP, POCL, ICL and Pathway will establish a marketing and
sales committee (“the Executive”) to oversee the identification, development and
implementation of future additional business discussed in paragraph 2 as well as any
other initiatives identified by the PPP. Each of the parties (for this purpose ICL and
Pathway being deemed one party) will be entitled to appoint three members to the
Executive and one of POCL’s nominees shall be the chairman of the Executive, with a
casting vote.
Pathway or ICL shall be entitled to appoint one representative to attend at any meeting of
the Counters Executive Committee (or any sub-committee thereof) where matters relevant
to the PPP are to be discussed, in order to take part in the discussion and represent the view
of ICL and/or Pathway on the matter in question. Each of the parties acknowledges that the
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3.4
3.5
PPP is not intended to remove from POCL and the Post Office control over POCL’s
commercial decisions. However, POCL acknowledges (with the approval of the Post
Office) that the Post Office Board fully endorses POCL’s fully automated future. The Post
Office ‘Board will use its best endeavours to support and approve any proposals put
forward to it for the purposes of paragraph 2. 1({i)(c) subject to:
@ availability of financial resources;
(ii) such proposals being consistent with the strategic-direction of POCL (as approved
by the Post Office Board); and
(ii) such proposals having been demonstrated to the reasonable satisfaction of the Post
Office Board to be commercially desirable.
POCL currently intends to submit proposals to the Post Office Board (prior to the signing
of the Binding Agreement) for the approval by the Post Office Board of its strategic
direction in relation to the objectives referred to in these Heads and ICL and Pathway will
help to strengthen such submission.
Subject to the approval of the Post Office Board, ICL and POCL will investigate in due
course the possibility of having each one's nominee appointed to the board of directors of
the other. Such nominee would serve in a non-executive capacity.
The parties will investigate together the most appropriate methods of obtaining the
benefit of greater financial retail experience such as, for example, recruiting a new
partner with financial retail experience to participate in the PPP. The parties will work
together to identify suitable candidates and to agree on the best partner or partners.
To implement the activities of market research and business case development in terms
of clause 2.1 and 3.1, ICL shall contribute in the two year period ending 31 March
2001 an aggregate amount of £5m in money or money’s worth and POCL shall
contribute an equal amount. For later years ICL and POCL shall contribute in amounts
to be agreed. The timing of contributions and the detailed purpose of expenditure, as
well as relevant administrative and financial arrangements, shall be agreed between the
parties.
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4.2
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5.1
5.2
Consequential Amendments
The parties agree that the contracts entered into in connection with the Project (“the
Related Agreements”) are to be amended to the extent necessary so as to encompass the
future additional business. Such amendment will reflect the provisions of paragraph 2.1(ii)
and subject thereto will include the following:
. Transition of services by Pathway to include smart-cards, kiosks, HM Government
Direct Services and the other matters which are identified in Attachment C. Prices
for these services will require the addition of new. columns to the existing
Scorecard. The revised Scorecard will require any Servicepoints used for the
pricing of these service elements to be calculated on the basis of new pricing rules
¢ " . Extension of the term of the POCL Agreement to March 2010, and such that, as
from September 2008, the contract term will continue subject to not less than 18
months termination notice
POCL, ICL and Pathway believe it desirable that POCL should be given commercial
freedom by the DTI to enable proper competitive business development of the POCL
network/infrastructure including the Pathway system (e.g. freedom to sell railway
tickets/theatre tickets etc) and the parties agree to work together to give effect to that belief.
Looking Forward
The parties acknowledge that these Heads are subject to HM Government consent
(including any requirements of the DTI). In addition, these Heads are subject to, inter alia,
any relevant legal and regulatory constraints (including competition and public procurement
issues), consideration of their impact on existing contractual relationships with the Post
Office or POCL and any relevant limitations on the Post Office’s powers. The parties agree
to work together with a view to entering into a definitive, legally binding agreement ("the
Binding Agreement") as expeditiously as possible and in any event by 31 December 1998
(or such other date as the parties may subsequently agree).
The matters set out in these Heads have to be viewed in the context of the discussions
which the parties have had with HM Treasury's Independent Advisor in relation to the
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possible restructuring of the Related Agreements and they are subject to a satisfactory
resolution of all of the issues arising as part of those discussions (including any issues
arising with the Department of Social Security).
It is acknowledged that in any decision by POCL to invest in new projects described in
these Heads with ICL or Pathway, the timely achievement of Acceptance in accordance
with the restructured Related Agreements will be a major influence.
These Heads will lapse if any of the Related Agreements is terminated.
If the parties do not enter into the Binding Agreement by 31 December, 1998 (or such
other date as the parties may subsequently agree) these Heads will lapse.
General
Each party agrees to keep confidential and not to disclose to anyone else the existence or
the terms of this document or the negotiations or exchanges of information relating thereto
(together “Confidential Information”).
Notwithstanding the above, any party may disclose Confidential Information:
@ if and to the extent required by law;
ii) __ if and to the extent that the other parties have given prior written consent to the
disclosure;
. Gii) to its professional advisers; _
_ (iv) to the extent requested by H.M. Government;
(vy) to any other party or to the Post Office; or
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(vi) to the extent that such Confidential Information shall have become public
knowledge other than by reason of breach of any applicable confidentiality
restriction by the party disclosing the same (or, in the case of disclosure by ICL
or Pathway, by reason of breach of any applicable confidentiality restriction by
the other).
In the event that Confidential Information is disclosed by any party to its professional
advisers, that party shall procure that its professional advisers comply with the
restrictions contained in this clause, mutatis mutandis. In the event that Confidential
Information is disclosed by POCL to the Post Office, POCL shall procure that the Post
Office complies with the restrictions contained in this clause mutatis mutandis.
Each party acknowledges that, in entering into these Heads or any other agreement or
arrangement in the future, it is not relying on any representation, warranty, promise,
assurance or other statement, whether or not-in writing, which any party may have
given or made in discussions between the parties prior to signing these Heads and will
ensure that any information contained in any such representation, warranty, promise,
assurance or other statement which is communicated by it or. on its behalf to a third
party shall be so communicated upon the basis that such information is solely the
responsibility of the party by whom or on whose behalf it shall have been disclosed and
with no responsibility or liability on the part of the party which originated the same.
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ATTACHMENT A .
PARTNERSHIP
. PREVIOUSLY AGREED POSSIBLE NEW ENHANCEMENTS
THE “EXECUTIVE” IN OVERSEEING THE IDENTIFICATION,
DEVELOPMENT AND IMPLEMENTATION OF FUTURE ADDITIONAL
BUSINESSES WILL DEVELOP AND PROPOSE:
JOINT OBJECTIVES FOR PARTNERSHIP JOINT STRATEGIC PLANS
SHARING OF INFORMATION As JOINT BUSINESS PLANNING .
JOINT NBD PROCESS _ JOINT TARGETS/INCENTIVES (NB REVIEW CONTRACT PAYMENT
PROCESS) ;
JOINT SCOPING OF OPPORTUNITIES JOINT VIRTUAL TEAMS e.g. NBD PROJECTS
JOINT-BUSINESS CASES cf JOINT ACCOUNT PLANNING AND REVIEWS
JOINT IMPLEMENTATION PLANS, JOINT E2E ARCHITECTURE REVIEWS
SHARE RESOURCES & SKILLS JOINT INTERNAL COMMS RE PARTNERSHIP d
PREFERRED SUPPLIER STATUS JOINT EXTERNAL COMMS/LOBBYING (WHERE APPROPRIATE)
PARTNERSHIP MANAGERS . JOINT PARTNERSHIP DEVELOPMENT BUDGET
REGULAR FORUM - JOINT TOP TEN SECONDMENTS (e.g. ACCOUNT MANAGEMENT)
- 1:2:1s . .
- BUSINESS DEVELOPMENT : a
JOINT PERFORMANCE REVIEW JOINT HR/CAPABILITY REVIEW & plan (e.g. BUSINESS ANALYSTS)
INDEPENDENT REVIEW & FACILITATION: NB ~- MISSING ECONOMIC IMPERATIVES
: ite, HARD LEVERAGE
FROM BANKER’S CRITERIA
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ATTACHMENT B Fs
PARTNERSHIP
NEXT STEPS
1, APPOINT SENIOR; DEDICATED PARTNERSHIP MANAGERS (inc. MARKETING & COMMUNICATING PARTNERSHIP WITHIN
PO& ICL GROUPS AND EXTERNALLY)
2. APPOINT GROUP LEVEL SPONSORS/CHAMPIONS
3, RECREATE & RELAUNCH PARTNERSHIP (NB - SIGNED BY MESSRS ROBERTS & =
4. AGREE JOINT PARTNERSHIP BUDGET
5. AGREE OBJECTIVES, MEASURES & INCENTIVES (e.g. PARTNERSHIP PERFORMANCE OF THE MONTH AWARD)
6. ALL SENIOR MANAGERS TO HAVE PARTNERSHIP OBJECTIVE
7. REVIEW EXISTING STRUCTURES & SET UP KEY JOINT TEAMS (e.g. BUS. DEV., PROJECT TEAMS, PRODUCT MANAGEMENT)
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ATTACHMENT C
SCHEDULE OF FUTURE ADDITIONAL BUSINESS OPPORTUNITIES
AREA
1. GOVERNMENT GATEWAY
2. _ SMARTCARDS
3. KIOSKS
4, INTERNET
5. INTRANET
Connections to post offices
6. Customer Loyalty Schemes
7. Consultancy Services for
exploitation of customer
data/information
8. Extending PO services to private
side of post offices e.g. longer
opening hours
OPPORTUNITIES TO BE ADDRESSED
Provision of a service for delivery of Government
information and completion and printing of forms
Development of web engine for interfacing with
Government bodies (potentially through GSI) using
electronic interfaces as available. Also to include
TMS development as required
Multi-channel web applications to cover:
- Over the counter
- Kiosks
-- Internet
- Call centre support
Solution provided with open standards as required
- ° including:
-. Card issue service
- - Personalisation of card
- Application loading
- Authentication services using PO Trusted
Third Party (Entrust) as appropriate
- Operational use in post offices & PO kiosks
- Card management services
Government Gateway service to kiosks within/without
Post Office estate
Other commercial applications as agreed consistent
with counter applications
Government Gateway services as above delivered
through Intemet .
Integrated with and complementary to (but not
replacing) existing PO Intranet
- Software application and scheme management
As required
Solution required