FPSL Central Infrastructure Procurement

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Ann Underwood
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1 FPSL Central Infrastructure Procurement Information Pack for Interested Parties v /10/2017 Restricted Circulation

2 Background This document is an introduction for parties interested in bidding for the real-time, 24*7 clearing infrastructure as articulated in the NPA The procurement is for infrastructure renewal (not a direct replacement) and associated full management of the Faster Payments service The process is being run as a competitive tender with the same criteria and rigour applied to all bidders, including the incumbent supplier(s) A competitive procurement is expected to be repeated approximately every 10 years 2

3 Items covered Key Project Drivers: Internal Key Project Drivers: Regulatory Project Objective Fundamental Service Principles Framing the Requirements Transition Approach Procurement Phasing Procurement Status Activities in next Quarter Questions 3

4 Key Project Drivers: Internal The current contract expires 30/06/2020, by which time the service architecture will be over 10 years old The need to provide a platform that caters for current and future needs of UK Plc and meets the strategic direction of the Company, and removes any unnecessary user barriers to safe and open access New Payments Architecture with a 24/7 real-time clearing and settlement capability at its heart PSF and PSR market review drive to ISO messaging and competitive tender: a level playing field for vendor selection via EOI/RFI/RFP 4

5 Key Project Drivers: Regulatory [ ] to promote effective competition and innovation in payment systems, in the interests of service-users [ ] we have decided to implement two remedies: mandating competitive procurement exercises for Bacs, FPS and LINK when they purchase central infrastructure services introducing ISO messaging standards in future procurement exercises for Bacs and FPS We consider that our remedies, taken together with the sale of Vocalink, will remove barriers to entry and create a competitive procurement process, opening up the provision of central infrastructure to competition. Specifically, these measures remedy the following competition issues that we identified in our final report: Operators and direct payment service providers (PSPs) do not have a strong incentive to run competitive procurements, which has resulted in limited competitive pressure on Vocalink. The use of bespoke messaging standards by Bacs and FPS represents a barrier to entry for alternative providers of central infrastructure services. The current ownership and governance arrangements at Vocalink are likely to reduce the level of competition in the provision of central infrastructure services. PSR: Market review into the ownership and competitiveness of infrastructure provision; Remedies Decision publ. ref. MR15/2.5, June

6 Project Objective To manage the gathering of service user requirements and deliver the service definition, competitive procurement, implementation of and transition to the next NPA-compliant, 24/7, safe and secure, real-time service by current contract end, including the managed migration of Participants to the next infrastructure and the delivery of revised or new legal, contractual, operational and support frameworks across stakeholders. 6

7 Fundamental Service Principles Assumed requirements for successor to the Faster Payments service:- 24/7 real-time Synchronous Immediate payment Irrevocable Immutable Very high availability Dynamic scalability Guaranteed settlement (Separate discussion on asynchronous payments delivery mechanism ongoing) 7

8 Framing the Requirements Availability Security and resilience Outsourced model Central architecture Payment types and payment volumes Settlement Risk Management Vendor(s) Currency(ies) Data and data analytics capability 8

Transition Approach X months X months X months SET

parties will be invited to comment on transition and

stages SEND TRANSITION Migration EXISTING CI

9 Transition Approach X months X months X months SET UP TO RECEIVE Testing and Live Proving Interested parties will be invited to comment on transition and migration strategies and timescales at RFI and RFP stages SEND TRANSITION Migration EXISTING CI Parallel Running EXISTING CI Dormant but retained as fall-back 9

Procurement Phasing Oct 2017 Nov 2017 Apr 2018 Jun 2018 Sep 2018 EOI RFI RFP 1 RFP 2 Appointment The purpose of this phase will be to ensure that the net is cast as widely as possible in attracting

The aim at this stage is to ensure that only legitimate vendors receive copies of the RFI and that documentation is not distributed to other parties who are merely phishing for information.

All bidders will have the opportunity to ask for clarification on any questions in dedicated Q&A sessions.

10 Procurement Phasing Oct 2017 Nov 2017 Apr 2018 Jun 2018 Sep 2018 EOI RFI RFP 1 RFP 2 Appointment The purpose of this phase will be to ensure that the net is cast as widely as possible in attracting potential talent to the bidding process and that the process is fair, transparent and nondiscriminatory. All bidders will be evaluated and scored with the same criteria. The aim at this stage is to ensure that only legitimate vendors receive copies of the RFI and that documentation is not distributed to other parties who are merely phishing for information. The aim is to act as market research, to elicit current thinking, planned future direction and trends/innovation within the industry. All bidders will have the opportunity to ask for clarification on any questions in dedicated Q&A sessions. Any new questions and related FPSL responses arising will be noted, and after completion of all the Q&A sessions, will be consolidated and distributed to all bidders to ensure a level playing field and that all bidders have the same level of knowledge and insight via equality of disclosure. Bidders will receive an RFP questionnaire and a copy of the contract and will be asked to provide realistic timelines, resource requirements to support the timelines and costs. Equality of disclosure will apply on any questions asked as per previous stage RFP responses will be reviewed and scored by a FPSL panel applying the same rigour and criteria to all bidders, and the scoring will determine which bidder(s) is/are shortlisted for the final RFP selection phase. Shortlisted bidders will be invited to present to an FPSL panel and a Best and Final Offer may be requested. Depending on whether reference customers are provided, additional visits to reference sites by the FPSL panel may be carried out. Bidders not shortlisted will have the opportunity to have a follow-up session with feedback on the rationale for nonselection. 10 The Preferred Bidder and Preferred Reserve will be notified and letters of intent will be sent for signature.

11 Procurement Status Procurement process formally kicked off on 06/10/2017, with publication for Expressions of Interest (Eligibility requirements and process can be found at: Requirements hierarchy developed: High Level Requirements will be made available at EOI, detailed at RFP stage Engagement with existing Participants ongoing to elicit new requirements (to feed into RFP) Additional engagement underway via workshops to feed into RFI & RFP phases (security, testing, settlement and clearing, standards etc.) 11

12 Activities in Next Quarter Workshops to cover areas in the Requirements Hierarchy Workshops to cover architectural requirements RFI distribution, Q&A and review Continued refinement of existing requirements into Requirements Catalogue Collation of new requirements into Requirements Catalogue 12

13 Questions All further procurement-related questions should be routed via: Any communications regarding procurement directly addressed to individuals within FPSL will be deleted and will not receive a response Restricted Circulation 13

NPSO Limited. New Payment System Operator 2 Thomas More Square London E1W 1YN. 28 th March 2018.

NPSO Limited. New Payment System Operator 2 Thomas More Square London E1W 1YN. 28 th March 2018. New Payment System Operator 2 Thomas More Square London E1W 1YN www.newpso.uk enquiries@newpso.uk 28 th March 2018 Dear Hannah Thank you for your letter dated 18 January 2018. As you point out the creation