POL00069066
POL00069066
@2/83-88 15:24 FROM:PEP. TEAM HI TREASURY!
PAGE:@2
RESTRICTED - COMMERCIAL
Parfiament Strcet
@ HM Treasury { . : Londan SW1P 3AG
Steve Rohson
I Sccond Permanent Sccretary
Keith Todd Esq
Chief Executive
j ICL ple
i 26 Finsbury Square
LONDON
FC2A IDS : 8 March 1999
BA/POCL AUTOMATION PROJECT: THE WAY FORWARD
Lam writing to confirm that, following our exploratory discussions ‘over the past weeks. the
Prime Minister has now indicated that he shares other Ministers’ enthusiasm for finding a route
forward building on the proposals set out in the attached annex. The proposed alternative for
achieving the project's objectives is premised on our view - which we accept you dispute ~ that
ICL Pathway has placed itself in breach of contract for failure to deliver on time. On this basis.
Ministers have authorised a further set of discussions to explore whether there is x commercial
deal acceptable to Government around which we can find a way forward.
All are anxious now to reach a conclusion as a matter of urgency. The timetable to which we
will need to work - and which we believe to be practicable - must ensure that we are in a
position to reach non-binding heads of agreement ideally by the end of’March but certainly by
mid-Aprii. If approved by Ministers and the contracting authorities themselves, it would be our
intentiun to move as rapidly as possible to incorporate these heads of agreement into a detailed ©
and binding renegotiation of the ctttrent contracts in accordance with the established couteactual
change contro] procedures,
In addition, I should reiterate formally what T have already confirmed in our informal
discussions: that Ministers still hold to their position that ICL should not be looking for a
positive return on their investment over the life of the project, given its history. I should also
make clear that we would wish to establish the ground roles for the discussions in the form of
a binding Standstill or Moratorium Agreement, similar to the one agreed at the outset of the
contact discussions in September of last year. These ground rules should include as a minimum
agreement that:
- our discussions are without prejudice and confidential:
-, ali parties reserve their zights and remedies with respect to past performance of
the contracts;
- none of the parties will take pre-emptive legal action against any other party
while discussions are continuing;
- all discussions and any agreements arising from them are subject to contract,
RESTRICTED-COMMERCIAL - ot
08/03 ‘99 14:29 TX/RX NO. 0850 P02 i
POL00069066
POL00069066
89+25-s6 15:24 FROM:PEP TEAM HM TREASURY I PAGE:23
; RESTRICTED - COMMERCIAL
@ - any settlement resulting from our discussions is subject to consideration of the
pracurement law consequences;
- work on the Horizon Project will continue in accordance with existing
contactual obligations while discussions are continuing except and only to the
extent that all the parties agree in writing to suspend the performance of any of
their obligations.
1 look forward to taking forward with you and Richard Christov the next stage in developing 4
potential upproach to which all parties can commit.
Finally, I am grateful to Richard for his letter of 4 March, As I indicated when we met this
moming, I am not in a position to respond to that letter now - much of it is concerned with
technical and commercial matters which are for the parties to addréss. But, as you know, I do
understand your perspective on the timetable.
Copies of this letter go to Private Secretaries to Alan Milbum, Alistair Darling, Stephen Byers
and Charles Falconer; to Richard Christou. John Roberts and Peter Mathison; and to those who
will be attending the meeting 1 am chairing with the parties tomorrow.
STEVE ROBSON
2
RESTRICTED - COMMERCIAL
" 98/03 ‘99 14:29 TE/RK NO. 0850 P03