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73023, ta 13 20:10
Date 13th May, 1999 ‘Otat pages (inc this)
Our reterence JRT Winters telephone
From Jeff Triggs
To David Sibbick, DTI, London Receiving faxrumber I SSC~S
Copy to. Stuart Sweetman, POCL, London
John Roberts, The Post Office i i
Neville Bain, The Post Office ; G RO
Paul Rich, The Post Office
Mena Rego, POCL, London
Horizon
Privileged - in contemplation of litigation
“As agreed with Paul Rich this evening, I attach a suggested reply to Keith Todd's letter
to Stephen Byers. It is very much designed to be consistent with our recommended litigation
strategy which I am currently summarising for Steve Robson and which we will be discussing
at KEB first thing tomorrow morning. .
To enable you to put the draft reply into context, however, that termination strategy
broadly involves the following elements:-
(a) there is a considerable risk that if we were to seek to terminate the Related
Agreements today we would be held not to have a right to do so (as a result of
having effectively waived our earlier right);
I (b) the result of that is that we could be treated as having terminated “for
convenience” with the result that the public sector parties‘could be held liable
for around £350 million in compensation;
(c) if we were to hold Pathway strictly to the terms of the Related Agreements
there is every chance that they would be forced to down tools;
nat te a2ove address
Aust attra prtreci acd ner professors quirfcanors avaiiap e for szect
Tre porters are s.ther sal cttors or registered foreign k
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CA991330.266 2 13th May, 1999
(d) if they did down tools we would be able to argue that we had an immediate
right to terminate as a result of their repudiatory breach of contract (i.e. by
downing tools). .
None of this of course guarantees that we would win any resulting litigation. That
would depend on who was responsible for the fact that Pathway was unable to continue and
there would be a messy argument depending very much on the factual events which have
taken place over the last few months. I do think, however, that our case is stronger if we
terminate on the grounds of Pathway ceasing work on the Programme rather than on the
grounds of their breach eighteen months ago, which we have arguably waived by continuing
with the programme.
I should also add that Keith Todd’s contention - that in reality the Government has
simply changed its mind about wanting the Benefit Payment Card - is getting more and more
difficult to refute. The more BA presses to halt work on the card, the stronger Keith Todd’s
argument becomes and the greater the risk becomes that he will succeed in arguing that there
has been termination for convenience.
Uhope that helps to put the draft reply into context. The paper on termini
follow soon. Please call me if you have any queries. My home number is;
ation will
T expect to be in the office
GRO imost of the night.
Regards,
JR Triggs
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£7".
[DRAFT LETTER FROM STEPHEN BYERS TO KEITH TODD]
Dear [Keith]
Without Prejudice
Horizon
Many thanks for your letter of [yesterday].
As you know, the Related Agreements required completion of operational trial
to take place by November, 1997 and for the system to be rolled out shortly thereafter.
Substantial delays have occurred to that timetable. The public sector parties have
reserved all rights against Pathway in respect of its failure to meet that timetable.
Notwithstanding your breach we have together been exploring alternative ways
of proceeding with the project in the light of the delays that have been suffered.
Option B1 was one of these, but it proved too costly for the public sector.
I note your proposed timetable. However, in respect of your third and fifth
bullet points, I need to make it clear that the Government has made no decision to
scrap the Benefit Payment Card. If the current without prejudice negotiations fail to
reach an acceptable alternative solution then the public sector parties will continue
with the Related Agreements (including the basis of charging set out in them) and will
expect Pathway in turn to comply with its obligations under them. Should Pathway
cease work on the Benefit Payment Card this would be regarded as a further breach of
contract.
As for your final paragraph, all parties have been in agreement that the recent
negotiations have been on a without prejudice footing and on the basis that should
they fail to produce a satisfactory alternative, then the Related Agreements would
continue to apply. If you wish to bring the Related Agreements to a conclusion, then
this will be a new development on which we will need to take appropriate advice. We
would not expect you to issue a press announcement about this without the prior
approval of the public sector parties, in accordance with the agreed terms.
Yours sincerely,
297798/10862 CAGOD 130 270 SRT 130899:1948