11 SBS saw the acquisition of the operational service as a strategic asset which, with skilled and experienced staff already in place, provided an opportunity to develop services for other customers. Its bid was therefore priced to reflect the creation of at least 1,200 jobs on such third party work. If SBS is not successful in creating these new jobs, it will bear the costs of any potential redundancies.
12 Although SBS plans to use at least 1,200 staff on third party work, the contract price included a time-limited contingency of £45 million in the event that SBS was not as successful as expected in winning third party work. Any part of this contingency provision which is unused will be shared in a ratio of 70:30 between National Savings and SBS. Where SBS uses staff and other assets which remain employed on National Savings' business for third party work, National Savings will share in profits and receive rebates on running costs.
13 Within the contract price SBS is required to facilitate the introduction of four new products in each of the first two years and two new products in each subsequent year. But SBS is not guaranteed all the additional work needed to introduce new savings products. If National Savings enters new areas of business through the introduction of fundamentally different products or develops fundamentally different sales channels, SBS is required to assist National Savings in their design and development. However, to preserve the ability to use competition to get good value, the contract allows National Savings to go out to tender for the operations needed to deliver and maintain such products and channels. In addition to detailed sharing mechanisms covering specific aspects of the partnership, National Savings is also entitled to receive 50 per cent of the amount by which SBS's annual net profit margin exceeds an agreed percentage in the contract and will not share in losses.