3.30 In 1995 the Procurement Authority required the three shortlisted suppliers to demonstrate the credibility and viability of their proposed solutions. The demonstrations formed a key part of the purchasers' technical evaluation of the suppliers' proposed solutions. They were used by the purchasers to identify the risks associated with each bid and to invite proposals for the bidders as to how they would deal with them. They also offered the suppliers the opportunity to "sell" the benefits of their solution.
3.31 The technical evaluation of bids was undertaken during the demonstrator phase. The evaluation could only ever have provided very limited assurance about the capability and viability of the service providers, because all three demonstration systems had only limited functionality and were not fully fledged prototypes. They were to help convince the purchasers that the suppliers knew what they were getting involved with and, for example could demonstrate some understanding of the speed with which business could be transacted at post offices. One bidder described the phase to us as "just smoke and mirrors". Nevertheless, one losing bidder told us that they had spent up to £1 million in simulating the environment and systems for their bid.
3.32 In 1994, when the Department and Post Office Counters Ltd established their project procurement strategy they considered having two bidders entering into a pilot competition through which each would develop and trial a system. Such an approach is particularly suitable where there are substantial development risks. Costs of the pilots may be shared between the bidders and the purchaser. The purchasers however did not adopt a piloting arrangement, on the grounds that it would have delayed the project.