3.1 This part of the report examines the extent to which the Department's interests are protected under the contract. Over a ten year period, many changes can be expected, particularly in an industry like telecommunications which is subject to rapid technological advances. A prudent purchaser would negotiate effective terms to ensure that services are delivered as specified, and contain incentives and flexibility to ensure the services do not become expensive or obsolete over the ten year period.
3.2 We found that the implementation of the project is broadly going to plan. The Department have sought to achieve continuing value for money over the period, although their terms for compensation for poor performance are weaker than other large telecommunications outsourcing, facilities management and privately financed service contracts. The contract allows for new services and technology to be incorporated, and shares demand risk between the Department and BT. The Department can re-tender the contract at the end of the period, but BT will have advantages over other bidders due to their experience in operating the contract, if they perform satisfactorily during the current contract period. But the Department have told us that they intend to generate competition, possibly by including other services in which BT are less dominant.