3.13 In our report on the PRIME deal, we stated that the Department should not adopt an inflexible approach to negotiations that would damage the long-term partnership with the contractor and benefit neither party. Both parties should be willing to trade variations in the contract over its 20-year duration and manage their contractual relationship in a spirit of partnership. This recommendation is of particular relevance to the STEPS deal, where there are still a number of issues surrounding payments to Mapeley STEPS that form part of ongoing negotiations with it. These negotiations fall into two areas, financial and contractual. Although it is inevitable that the two areas overlap the Departments have been able to ensure that, for the most part, it has been possible to progress day-to-day contractual issues independently of the financial negotiations. The financial negotiations fall into two distinct categories:
■ Variations clearly within the contract, that can be priced within the contract, such as additions of new buildings and changes to service specifications.
■ Claims that arise primarily out of the procurement process such as the specification of pricing of security services and discrepancies in property information.
3.14 In December 2002, the Departments decided to open negotiations with the contractor to seek an overall settlement of the outstanding claims covering both Mapeley STEPS' contractual claims and any other areas where there have been unforeseen results due to developments since contract signature. The financial negotiations are under the supervision of a steering group that comprises two board-level Departmental representatives and the Head of the Private Finance Unit at the Treasury. The Departments' position is that, if any additional payments are to be made to Mapeley STEPS in respect of claims they must be to meet contractual liabilities or be in return for tangible benefits. In respect of variations any additional payments must offer quantifiable value for money. Negotiations are still ongoing and this has prevented some key senior management staff from focusing on core business and the Departments have not yet been able to focus as much on core services as was envisaged.