3.5 At the time the purchasers invited private sector interest their requirements were defined only at high level. A formal Statement of Service Requirements was only agreed by the Department and Post Office Counters Ltd in February 1995 and issued to bidders in April 1995, eight months into the procurement. This statement changed subsequently. Consultants producing an assessment of "lessons learned" for the purchasers in November 1997 reported that requirements had increased by between 10 and 20 per cent in the period from April 1995 to February 1996. They said that the increases resulted from clarifications, new requirements not included in the original statement, and detailed documentation of the rules and constraints under which services were to be provided. Customer Surveys in late 1995 had also emphasised the need to continue to provide customers with existing facilities to use post offices other than their own and to nominate agents to collect benefit on their behalf. The former Director of the Procurement Authority told us that this was a period in which there had been increased involvement of Department of Social Security officials responsible for aspects of service to benefit customers. As a result the Department's service requirement emphasised to a greater extent the need to replicate existing payment rules, as opposed to reengineering a simpler process.
3.6 In October 1995, in an effort to draw together the detailed requirements, the Purchasers started to set up a Requirements Catalogue. It was intended that the catalogue would provide detailed service definitions and that service providers would respond with solutions to these in their bids. However, in November 1995 in response to increasing concerns from the service providers and the purchasers about the time and cost of the procurement the Authority stopped work on developing these service definitions. With the agreement of all three shortlisted bidders the Purchasers stated that detailed requirement definitions would be agreed with the selected supplier after the contract had been awarded, and invited tenders on the basis of higher level specifications. Though work on the Requirements Catalogue was stopped, the purchasers continued to direct additional information on their requirements to the bidders right up to the issue of the formal invitation to submit priced bids. Some 333 additional details and clarifications to requirements were issued between November 1995 and the end of January 1996.
3.7 From the records it seems that when the contract was signed there were 289 "agreements to agree" the detail of the service contained in it, of which 38 remained to be agreed by Pathway with the Department, 124 with Post Office Counters Ltd, and 127 with both clients jointly. Pathway told us that they had expected these to be cleared within the first three months during a process of drop-down, but drop down instead focused on legal arrangements rather than the technical and service aspects in the agreements to agree. The Department told us that it had never been intended to resolve the agreements to agree during drop down; only the mechanisms for completing them. Some of the outstanding agreements were relatively minor, such as the design of the logos to appear on the card, whereas others, examples of which are shown in Appendix 2, were more significant. Resolving the more important agreements to agree was essential to finalise the detailed design of the system and deliver the full service.