ICL Pathway has been given the go-ahead to complete the 1bn pound ($1.6bn) UK Post Office automation project which had been put at risk by changes in UK government policy (CI No 3,655). Because of the size of the project, conducted by a consortium led by ICL, the European services arm of Fujitsu Computers Ltd, its loss could have proved a fatal blow to the Japanese manufacturer’s plans to float its UK-based subsidiary. Now, with the contract confirmed at more or less the same value as before, according to a spokesperson, details of the proposed flotation are expected to be announced along with ICL’s annual results today.
The Post office project, whose original remit was to automate the counter and payment systems of all of the UK’s 19,000 Post Offices, has not escaped the recent government review process unscathed. Following the publication of a government White Paper on government automation, the UK Benefits Agency, the second customer to the original ICL Pathway contract, has abandoned plans to pay social benefit claimants via a smartcard based system. Instead, the Agency is now pursuing its own bank account- centered payments strategy, and has dropped out of the ICL Pathway contract.
This has had a fundamental impact of the Post Office Scheme which a Pathway spokesperson said now offers no easy way to calculate the number of Post Office customers who will use the system, or the value of the transactions they conduct. Consequently, the Private Finance Initiative (PFI) model, which would have seen Pathway receive a return on its investment calculated by the value of the transactions its system managed, has been replaced by a six-year fixed term, fixed priced Public Private Partnership contract.
With ICL’s results due this morning, the Pathway spokesperson would not comment in detail on the impact the change will have on the value of the Post Office project to ICL. However, the spokesperson, and others connected with ICL, were barely able to disguise the relief with which the Project’s reprieve has been greeted.
