Direct and Indirect Speech

When using indirect or reported speech, the form changes. Usually indirect speech is introduced by the verb said, as in I said, Bill said, or they said. Using the verb say in this tense, indicates that something was said in the past. In these cases, the main verb in the reported sentence is put in the past. If the main verb is already in a past tense, then the tense changes to another past tense; it can almost be seen as moving even further into the past.

http://www.athabascau.ca/courses/engl/155/support/direct_and_indirect_speech.htm