3.16 All three shortlisted bidders told us that they were conscious of the size and complexity of CAPS and that any slippage in its development would be likely to affect the Benefits Payment Card Project. The proposed CAPS timetable at the time the Benefits Payment card contract was signed specified that by December 1996, half of all post offices would have been converted and half of all CAPS benefit payments would be converted to a card basis. Both systems would continue to roll out in parallel over the following two years. This development project was managed by the Department and was comparable in size and complexity to the Benefits Payment Card itself, thus compounding the complexity, challenges and risks of the programme as a whole.
3.17 Developing these two large, linking projects and Post Office systems in tandem added substantially to the development risk of the whole programme. Pathway have said that one of the major technical obstacles to their progress was that the CAPS system was not available when promised. In particular they point to a clause in the contract which they interpret as meaning that the Department would provide Pathway with complete data and interfaces with CAPS for testing purposes by September 1996. This did not happen. This was important because Pathway's system had to change in response to changes in CAPS interfaces. The Department's view is that this interpretation is unrealistic in terms of the way the development programme operated, and is based on the contract as signed, and not as modified by the "no-fault" agreed replan in February 1997. They also contend that Pathway did not have a complete system to test by September 1996 in any case. The clause and the interpretations placed on it, are reproduced in Appendix 6.
3.18 During 1996 the CAPS project and Pathway had both slipped against their original plans. Pressure to meet the timescale for the initial go live with Pathway in ten post offices resulted in software being designed specifically to work in the low risk context of handling a relatively small number of Child Benefit payments. Much more work was necessary to develop it further to provide a generic, high volume, solution with the full range of security features that the Department required to support all benefits.