3.3 During the first three years BT are responsible for operating the existing fixed telecommunications services whilst preparing their systems to take over the service at dates agreed in the contract. The process of transferring service delivery to BT systems, known as migration, is scheduled to be completed by July 2000. Until then, BT will receive payments for the achievement of defined "milestones" towards migration to the new system.
3.4 In addition BT also receive an "interim tariff" for delivering the existing point-to-point and circuit switched services, which is higher than the final tariff. This is a result of their taking more risk and responsibility for existing systems prior to the defined migration dates than was set out in the invitation to tender. The interim tariffs were negotiated following BT's selection as preferred bidder. Following the defined migration dates, the Department will make payments based on the new, lower tariff for these services, even if BT fail to achieve that migration date, unless the reasons for delay are outside BT's control. This gives BT an incentive to achieve migration at the agreed time.
3.5 Most milestones have been achieved by the due date, although there was a delay in migrating the Royal Air Force's circuit switched service due to technical problems. The migration of the next Armed Service, the Army, started on time in April 1999 and BT still expect to complete migration of the whole of the system by the contractual date of July 2000.