![CL-2024-000308 - [2025] EWHC 1332 (Comm)](https://backend.juristeca.com/files/emisores/logo_WAai98v.png){kind=logo}
CHARLES HOLLANDER KC
CHARLES HOLLANDER KC:
This matter raises issues of construction between Airwave Solutions Limited (Airwave) and the Secretary of State for the Home Department (SoS). Although it was formally a trial, no witnesses were called. The issue between the parties relates to the indexation provisions relevant to payment.
British Telecommunications plc agreed with the Police Information Technology Organisation (the PITO) to provide Services as defined in the Framework Agreement in respect of the Airwave Network pursuant to an agreement dated 29 February 2000 and entitled ‘PFI Framework Arrangement for the Public Safety Radio Communications Service.’ The parties to the Framework Agreement are now Airwave and the SoS.
The Services included the Network Services, which include the Core Service (such as radio services and network services) and Menu Services (being either additional units of Core Service or other services) as set out in Schedules 3 (Core Service) and 4 (Menu Services) to the Framework Agreement.
Pursuant to clause 5.3 of the Framework Agreement, BT was to enter into Services Contracts with the PITO and Eligible Customers (individual police forces or authorities) to provide the Network Services. Services Contracts were entered into pursuant to those provisions.
Pursuant to clause 8.1 of the Framework Agreement, in consideration of the provision of Network Services in accordance with the terms of the Services Contracts, the PITO, and now SoS, and each Customer is obliged to pay their respective portions of the charges which are to be calculated in accordance with the Charging Structure set out in Schedule 8 to the Framework Agreement.
The Core Service Charges are calculated as follows:
The starting point is the Baseline Figures for the Core Service Charges for England and Wales, Scotland and the British Transport Police (see Annex 1 to Schedule 8).
These Baseline Figures are then adjusted in each Contract Year to take account of indexation. The indexation process is set out at paragraphs 25 to 26 of Schedule 8. The result of the indexation process is the production of an Indexed Relevant Baseline Figure for the relevant Contract Year. The indexation process works by calculating an Indexation Multiplier which takes effect as a weighted indexation rate.
The Core Service Charge was to be adjusted with effect from 1 April 2001 for the Contract Year beginning on that date and subsequently on each anniversary thereof (paragraph 8 of Schedule 8). The parties were to meet when the information required to complete the relevant indexation adjustment became available (and no later than 1 February) to discuss and agree the revisions and calculate the Core Service Charge for the forthcoming year.
The Indexation Multiplier is calculated by reference to a table at Annex 4 of Schedule 8 to the Framework Agreement, which breaks down Airwave’s cost base into three Elements, as defined in the Framework Agreement, and states their relative proportions for each Contract Year (the “Indexation Weightings”). The three Elements are referred to in paragraph 26.1 of Schedule 8:
“Element A” which corresponds to the CONTRACTOR’s costs of labour;
“Element B” which corresponds to the CONTRACTOR’s site and asset-related costs; and
“Element C” which corresponds to the CONTRACTOR’s other costs.
The table at Annex 4 fixed the relative proportions of each Element from 1998/1999 for each Contract Year to Contract Year 20, being 1 April 2019 to 31 March 2020 (CY20). Paragraph 26.2 of Schedule 8 provides that they “are fixed.”
The index used for Elements A and B is RPI. Whilst the index used for Element A was more complex in the original Framework Agreement, the parties changed this to RPI in a confidential agreement. Element C costs are not subject to indexation (see the calculation of the Indexation Multiplier in paragraph 26.5 of Schedule 8 which sets out that the Indexation Weighting for Element C is always to be multiplied by zero percent).
The Indexation Multiplier is then calculated using the formula in paragraph 26.5 of Schedule 8, pursuant to which each Element is multiplied by its Indexation Weighting for the relevant Contract Year as set out in Annex 4 of Schedule 8.
The Framework Agreement permitted changes to its terms by way of the “Change Control Procedure” which results in a “Change Control Note” or “CCN”. Pursuant to various CCNs, certain additional charges have been incorporated into the Core Service Charges.
On 17 February 2016, the SoS and Airwave agreed Heads of Terms Regarding Extensions. This led to the “Blue Light Contracts Umbrella Change Control Note” dated August 2016 (UCCN1), which contained agreed amendments to the Framework Agreement.
Change Control Note 174 (CCN 174), one of the CCNs within UCCN 1, replaced clause 2 of the Framework Agreement as follows:
Clause 2 of the Framework Agreement was amended, so that the Framework Agreement would continue in force until the occurrence of National Shut Down, save to the extent SoS notified Airwave that it required continued Services in respect of any Delayed Transition Groups.
In order to achieve National Shut Down, SoS had to issue a National Shut Down Notice to Airwave. If a National Shut Down Notice was issued, but Customers subsequently needed to defer the National Shut Down Target Date, then SoS could issue a Deferred National Shut Down Notice to Airwave stating the period by which the National Shut Down Target Date would be deferred.
Under CCN 174, the National Shut Down Target Date was 31 December 2019, or such later date as SoS specified.