Ofwat has cited “extreme urgency” in explaining its intention to award additional contracts to support the delivery of PR24 without first tendering them.
The regulator has published a voluntary ex ante transparency notice stating that it intends to draft in PA Consulting and Grant Thornton, each under a £1m+VAT deal, to provide additional capacity to the following workstreams: risk and return / cost of capital; financial modelling; data governance and modelling coordination; direct procurement for customers; costs; outcomes and leadership/ coordination.
It said the contracts, which will run from September 2023 to January 2025, will be used on a need-only basis, “in particular for those projects where the existing Delivery Partner contract for PR24 may be unable to fulfil the requirement.”
Ofwat awarded the main delivery partner contract to PWC after tendering for the work in December 2022. PA Consulting and Grant Thornton also bid, and will now be asked to provide the additional capacity. The regulator justified its decision to proceed without a further tender, saying “Extreme urgency brought about by events unforeseeable for the contracting authority and in accordance with the strict conditions stated in the Directive”.
It noted the following circumstances:
a budget increase from the Treasury – approved in April 2023 after the original delivery partner tender concluded – to fund additional regulatory work and in view of the larger infrastructure investment earmarked for PR24; and
“The need for Ofwat to have access to a wide range of advisors with the relevant capability and capacity and who are in a position to provide that support to Ofwat independently.”
Ofwat said it was in the process of growing its in-house capacity and third-party support in light of its work and budget expansion. “However, this will not be fully completed in time… for the Price Review process. Business Plans are received in October 2023 and we do not have sufficient time to retender for potential additional capacity to ensure the successful Delivery of PR24, including time for the necessary onboarding."
The regulator went on: "To ensure successful delivery of PR24 we require flexible access to high-quality resources across a range of technical skillsets. Therefore, it is the intention to award a contract to the two unsuccessful lead bidders from the original Open Procedure who also demonstrated access to these resources, along with their ability to deliver and to ensure best quality outcomes.”
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