Accepting a pilot on a conditional basis is a high risk strategy 

3.15 PITO saw the key issue as whether an improved service was being provided which could soon be brought to the contractual levels required.  Following careful consideration, PITO accepted the pilot conditionally in September 2001. The conditions included:

  An option to return to pilot status if coverage on major roads is not resolved by February 2002 or to extend conditional acceptance;

  10 per cent of the core service charge will be withheld until a resolution of coverage on major roads is reached. O2 will be repaid if it demonstrates that the coverage met contractual requirements all along; and

  An agreement that a permanent price reduction will be negotiated if coverage cannot be brought up to the contracted level, but reaches a level with which police forces are content.

3.16 Even though acceptance of the pilot triggers roll-out to all forces, O2 must pass the same comprehensive acceptance tests for each force, with each force having the option to refuse to accept the service until faults are rectified. It remains to be seen if any force exercises this option, but the potential delays to O2's revenue stream could incentivise O2 to resolve issues rapidly. It is doubtful whether any force could justify not taking Airwave providing it offers an adequate operational service. The only real alternative to any force would be to procure and pay for a separate radio system outside of the Airwave service.

3.17 As conditional acceptance of a pilot will allow a substantial portion of the income stream to begin flowing to O2, the incentives to take action to meet outstanding contractual conditions may be diminished. Previous public sector IT procurements have encountered problems when accepting a pilot service on a conditional basis and in our view it is not good practice.

3.18 In this case, however, the system is being used successfully by the Lancashire force. It was reluctant to have the service switched off while the remaining problems were resolved because it considered that Airwave was providing substantial operational benefits over the previous analogue system. Furthermore, PITO has been particularly careful to seek financial recompense for any failure to deliver, as well as providing for the opportunity to step back to pilot status if key elements of the contractual requirements are not resolved satisfactorily within an agreed time frame. These provisions appear robust and the ability to walk away remains, although the likelihood of this option being exercised once a number of forces have migrated to the service looks remote. As forces conduct their own testing prior to acceptance, they are likely to focus on areas where the pilot or previous forces have experienced difficulties. O2 continues to work on resolving the technical issues and is providing regular reports to the programme board.