POL00104259
POL00104259
In Strictest Confidence
POST OFFICE LTD BOARD
Noting Paper
Lessons Learned — Second Sight Investigation into Horizon
1. Issue
1.1This paper addresses the lessons learned from the handling of the
commissioning of the Second Sight investigation into Horizon and subsequent
events.
2. Background
2.1 Following the publication of the interim Second Sight report into Horizon and
associated issues the Board commissioned a short review to capture the key
lessons learned from the experience, starting from the point at which James
Arbuthnot MP first raised concerns with the Chair of the Post Office, to help
increase the maturity and resilience of the business and its ability to handle
similar challenges more effectively in the future.
3. Approach
3.1 Rather than attempt an in depth analysis of all the documentation relating to this
subject, this review is based on individual interviews with all key Post Office
personnel involved at the time this issue first arose (some of whom had left the
Post Office) and is therefore based, in a large part, on people’s understanding
and perceptions. No attempt has been made to identify written evidence or
corroboration of any information or opinion I have been given.
3.2 In undertaking the review, and presenting my ‘findings’ I have drawn on:
e the information gleaned from my interviews with key Post Office
personnel;
e other relevant experience within Post Office; and
e my previous experience of ‘independent’ reviews and inquiries within
Government.
3.3 Having discussed the approach previously with both the Chair and the Chief
Executive of Post Office Ltd, I have positioned my findings as a ‘best practice’
approach which can be developed into a more detailed blueprint for handling
similar challenges in the future.
4. Conclusions
4.1 There will be occasions where it is necessary for Post Office Ltd to respond
quickly and publicly to an issue, as it was felt necessary to do in response to
Lessons Learned — Second Sight Investigation into Horizon Belinda Crowe
25 April 2014
POL00104259
POL00104259
In Strictest Confidence
concems raised about Horizon. Appendix 1 sets out, in draft, the key high level
issues and learning points presented as a generic best practice guide for
managing crises and other high-profile non-BAU activity.
4.2 The aim of the approach is not to fetter Post Office’s ability to respond to new or
unexpected high profile issues, or make it slow to do so, but acknowledges that
the type of issue that is likely to give rise to some sort of ‘independent' review is
exactly the type of issue over which particular care should be taken to ensure the
response is the right one for the business and is dealt with in a way that gives
internal and external confidence in the outcomes.
5. Recommendation
5.1 The Board is asked to note the draft lessons learned paper and provide any
comments direct to me (by 10 May). I will take any comments into account
before finalising the best practice guide. This will then be presented to the ExCo
to inform the development of the detailed blueprint for handling similar challenges
in the future.
5.2 To note the intention to follow the best practice principles set out in the paper
when implementing any decisions on the future of the Mediation Scheme.
Belinda Crowe
24 April 2014
Lessons Learned — Second Sight Investigation into Horizon Belinda Crowe
25 April 2014
POL00104259
POL00104259
In Strictest Confidence
Appendix 4
DRAFT
Best Practice based on Lessons Learned from the investigation into Horizon
1. Enterprise wide response
1.1 There are a number of different circumstances where an enterprise-wide response is
called for and what follows should apply to dealing with any crisis, high risk or high-
profile issue, including the establishment of an ‘independent’ review, and, particularly,
in the face of public attention.
1.2 It will normally be clear where accountability for managing the work rests. However,
to enable the accountable person to effectively discharge their responsibilities in
circumstances such as those referred to in this paper, an enterprise wide response is
required which acknowledges that the issue is usually:
e high profile and above and beyond normal BAU activity;
¢ likely to be stressful (and relentless) for those involved due to the scrutiny of
ExCo/Board/media/Ministers/MPs; and
e likely to require financial and staff resource outside of BAU.
1.3 To ensure this non-BAU activity is given the support, attention and resource
appropriate to its importance and risk profile by the ExCo and the Board Post Office
should have arrangements in place which:
¢ provide an ‘off the shelf’ (and generally acknowledged and understood) protocol,
covering for example, governance arrangements, which reflects the complexity,
importance and risk profile of the work;
e enable pan-enterprise identification of BAU or project activity which could be
delayed or stopped to counter the cost of the new project;
¢ enable the identification and rapid mobilisation of an appropriately sized and
skilled team to manage the work as a priority (see 1.4 below); and
¢ require and allow ExCo to manage the work as a business wide project to ensure
that the project team does not encounter cross directorate barriers and that the
appropriate support is available from all areas.
1.4 Post Office should consider whether it has the in-house capacity and capability to
effectively manage this type of issue and, if not, whether the permanent recruitment
of such a resource would provide better value for money than ‘buying in’ suitably
skilled staff when required. If the latter, the costs will probably be high (for the
duration of the project) and arrangements need to be in place to access the external
resource quickly and easily.
2. Clarity of message and its ownership
2.1 Post Office should aim to deliver and own the relevant message/narrative and keep
control of it. The more high profile the issue and complexity of the stakeholder
landscape, the more important this is.
2.2 Whilst it can be helpful for stakeholders to endorse or publicise a statement or
announcement, Post Office should retain contro! of the content and timing of
announcements, including the appropriate time to update interested parties.
Lessons Learned — Second Sight Investigation into Horizon Belinda Crowe
25 April 2014
POL00104259
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In Strictest Confidence
3. Engaging external services/suppliers
3.1. There will be occasions where it is necessary to engage external
suppliers/contractors at short notice without going through the Post Office normal
procurement processes. A rapid, bespoke engagement outside of normal processes
should not mean lack of rigour and the following points should be considered when
engaging suppliers/contractors in such circumstances:
e the more sensitive/high profile the work, the greater need for a rigorous
engagement process;
¢ the absence of the robustness of a full procurement process, increases the need
for other additional due diligence. This should include an interview panel,
confirmation of qualifications and direct oral references from other clients to
confirm capability and quality of outcomes;
« the agreement of a letter of engagement before work starts. Post Office has a
comprehensive set of 'standard' terms for suppliers on call off contracts which
cover all the basics and which should be adapted as required without watering
down the essence of a solid framework for managing contractors; and
e aworkplan should be agreed at the outset with proper, albeit light touch, control
arrangements in place for varying that.
4. Managing external suppliers
4.1 The delivery of services or outputs from external suppliers should always be subject
to the proper management and propriety arrangements. This is also true in the case
of an ‘independent’ review, short of fettering the independence of the conclusions.
Effective and visible management of delivery against cost, timescales etc. is a matter
of propriety and Post Office has a responsibility to properly manage and account for
public funding; it should therefore be clear at the outset about how it will do that and
rebut suggestions that doing so is in any way fettering the independence of outputs.
5. Stakeholder engagement
5.1 At the outset: There may be a need to obtain stakeholder agreement or buy in to a
proposed form of action or elements of it. Before committing to engage with external
stakeholders, clear parameters should be set and articulated to give clarity about
what external stakeholders can influence and what they cannot, and the extent of that
influence.
5.2 Ongoing: Ongoing stakeholder involvement may be appropriate but here too the
rules of engagement should be clearly communicated and should not extend to direct
contact or directing activities unless within a framework agreed in advance by Post
Office.
6. Public commitments
6.1 Before any non BAU public commitments are made announced or agreed to publicly
(i.e. outside of the Post Office) internal agreement should be sought and obtained
through proper governance mechanisms to:
« scope and Terms of Reference including outcomes and outputs; and
¢ understand the legal, financial and PR implications and risk.
Lessons Learned — Second Sight Investigation into Horizon Belinda Crowe
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