Public sector customers from across England will begin switching to Business Stream and Castle Water from 1 January 2018 after these suppliers won out in an e-auction run in October under the public sector procurement framework put in place by the Crown Commercial Service (CCS) and partners back in March.
CCS ran an e-auction on behalf of interested customers under lot 1 of the framework, which is for water and sewerage services only (see below). These customers included central government departments, councils, NHS trusts, blue light services and educational establishments in various parts of the country, often via public sector procurement specialists like YPO.
There are eight suppliers on the lot 1 framework, but those who bid on this tender also had to be able to deliver specific commitments identified by it. These included a list of compliance demands, along with a number of specific service requirements, such as no extra charges for paper bills and the provision of a portal with defined functionalities. Those who could prove they could meet the requirements went forward to the e-auction and competed on price in two lots: one for quarterly billing (which Business Stream won) and one for monthly billing (which Castle Water won).
Energy procurement manager at YPO, Richard Hudson (pictured), explained the price structure of the e-auction was cost-plus and that there was a wide range of margins bid. “It was very varied,” he said, “and showed a wide variety compared with the average 6% often quoted.” He plans to interrogate the price information within each wholesaler region to get a better understanding of geographical patterns and complexity, but said the overall result “looks like a good deal for the public sector”.
He praised both the winning suppliers for their “good engagement from the top”, noting that both Business Stream’s Johanna Dow and Castle Water’s John Reynolds took personal interest in the deals. On compliance and service, he said the terms themselves and the scrutiny from expert procurers like YPO was challenging.
He said Business Stream “was able to demonstrate good systems and processes, as you’ d expect” and that his team was very impressed with Castle for learning from its early experiences in the market. “We are happy with the way they proposed to deal with legacy issues and are confident they can supply the level of support and service we need.” Among Castle’s proposals, for instance, is a dedicated helpline and discrete escalation processes for public sector customers.
On the portal specifically, Hudson noted that at the time of bidding, Castle did not have this ready to go but said he is satisfied this will be available for 1 January 2018 start. He advised customers looking to switch to specify clearly what they want and judge suppliers not only on what they have in place but also on what they can commit to deliver to meet the specification.
There is some flexibility in the on boarding process to allow public sector customers sufficient time for internal sign off procedures. Those who can move quickly will start to be onboarded on 1 January 2018, with others able to start the process within the following months. The supply deals run for two years with an option of extending for another two. Hudson explained that time frame combined with the cost-plus pricing caters for any changes to the market framework that emerge at the next price review in 2019. “This way, the margin can be applied to whatever scenario brought by PR19,” he said.
The public sector framework put in place in March was the work of CCS in collaboration with YPO, The Energy Consortium, Eastern Shires Purchasing Organisation (ESPO), North East Procurement Organisation (NEPO), West Mercia Energy, and the Ministry of Defence. Thirteen suppliers made it on to the three lots: eight onto lot 1 – for water and sewerage services; 11 onto lot 2 – for ancillary services such as new connections and water management advice; and nine onto lot 3 – a one stop shop of services covered by both lot 1 and lot 2. The framework runs for three years from April 2017, with the option to extend by a further 12 months.
Further procurement opportunities through e-auctions will follow.