Maybe this is a euphemism for "bunch of old people who don't know how the internet works but were put on the web site steering committee anyway and made a bunch of of absurd requests that had to be fulfilled in order to get approval".

You missed the clarification:

    I can confirm that that the old website 
    development environment was upgraded 
    from one server to two.

How does that have any impact on the cost of a favicon? Unless they were charged per FTP transfer...

Well yes, that and the original maintenance cost doubled.

PS: if you pay attention, right now I am laughing really, really loud, so you might hear me.

I wonder if they were the ones who set the favicon up so it worked on their server.

If that's the case, diving around someone else's code for £585 is pretty cheap.

Behold, the magic of Apache (or pretty much any web server) ...

   Alias favicon.ico /path/to/your/physical/location/favicon.ico

Now please give £300 for selling you this tip.

Here's £150, because you only told me how to do it on one server :P

Curiosity: does that work for subdomains with different favicons?

Quick and dirty solution, for each favicon you'll have a different virtual host inside Apache.

And I fail to grasp the situation where you've got multiple subdomains setup inside the same virtual host config (through ServerAlias), but still having different favicons. But even for this case you can probably come up with something based on mod_rewrite.