The history below covers the early stages of
Procurement (October 1996December 1998)
30. The decision to seek a single supplier
to deliver IT services to the magistrates' courts was taken in
1996. The services were to be delivered under the Private Finance
Initiative (PFI). The objectives of the project were:
To develop a new, bespoke, software
application to replace the three existing legacy systems, with
To provide links between the system
and those elsewhere in the CJS organisations;
To provide a new infrastructure and
To provide office automation products.
31. The procurement was advertised in the
Official Journal of the European Communities in October
1996. We received three expressions of interest. They were from
FS and Unisys acting as a single bidding consortium; EDS with
STL Technologies; and TRW/Bull. The latter dropped out early in
the initial discussions, leaving two potential bidders.
32. The final version of the Statement of
Business Requirement (SBR) was issued to the two bidders in the
summer of 1997, following extensive consultation with MCCs and
the bidders. The bidders were asked to provide detailed proposals
showing how they intended to meet the requirements. Both sets
of proposals were deficientprincipally on the level of
detail. They were both asked to provide more detailed proposals
as to how they intended to meet each of the requirements, their
plans, development approach, team organisation and numbers and
technical solution. These were worked up in discussion with the
procurement team and finally delivered as part of the tender.
In parallel with this process draft contracts were negotiated
with each supplier. In the case of the FS/Unisys consortium, it
was agreed between the two companies that FS would be the prime
33. The advisors on the project were Bird
and Bird (legal) and Hambros Bank (financial). Also, the Treasury
PFI Taskforce were involved throughoutadvising on PFI aspects.
34. In April 1998 the two bidders were invited
to submit tenders. During the three week tender period, EDS withdrew.
35. Following post-tender negotiations,
the final deal was agreed in December 1998 at a contract value
of £1 84 million. The contract was awarded on 21 December
1998. The proposals from FS were taken through the full evaluation
process following submission of their tender to ensure they were
acceptable and value for money.
Award of Contract to First Renegotiation (January
36. The first stage of the project involved
FS carrying out a detailed analysis of the requirements.
37. In October 1999, FS approached the Department
requesting a renegotiation of the contract. Their financial projections
had assumed significant early revenues and the project was causing
problems with their borrowing. Before agreeing to enter negotiations,
we commissioned two studies. The first, carried out by independent
consultants, was to assess whether the project should be saved
and FS's capability of delivering. The answer was affirmative
in both cases. The second study was carried out by Ernst and Young
into their financial model. It concluded that the model contained
major flaws and that the position was worse than FS had declared.
It was agreed that a new financial model would be produced and
jointly paid for and owned by the two parties to establish a proper
baseline for any negotiations. That work was undertaken by Ernst
38. In March 2000 we concluded an agreement
for a revised deal. The main changes were:
An extension of the contract length
by four years (this was provided for in the original contract);
Implementation of the office automation
service in all MCCs 9 months prior to the forecast date for them
to take the new software application;
Reprofiled payments to FS involving
additional cash in the early stages in return for a reduction
of the on-going service charges for the remainder of the contract;
A profit sharing scheme.
39. The overall effect was to increase the
value of the contract from £184 million to £319 million.
All of the increase was for early services for office automation
and the extra four years of service at the end of the contract
so there was no real increase in costs. The Treasury agreed to
provide an additional £23 million in 2001-02 and 2002-03.
40. The revised contract was signed in May
41. The delivery of the first stage of the
project, to rollout successfully the new IT infrastructure, started
as planned in October 2000 and has continued to date broadly on
schedule apart from a small number of MCCs where local circumstances
such as new building plans had to be taken into account. Rollout
has now been achieved in 86% of MCCs. This includes the delivery,
operation and support of a network linking all magistrates' courts,
with all staff working in the magistrates' courts being provided
with desktop PCs, running standard office software, and providing
access through these PCs to their main legacy systems. The new
PCs replaced older ones as well as dumb terminals connected to
legacy systems. To date, about 9,500 out of the total 11,000 staff
in the magistrates' courts now have access to these facilities.
All these staff have full internal e-mail across their own MCCs
and the other MCCs as well as to external organisations. It also
means that the platform for the delivery of new software and the
benefits, which accrue from this, is in place ahead of a new application.