Ofwat has awarded two more contracts without going out to tender to external consultants to provide additional capacity to support the delivery of the 2024 Price Review - due to “extreme urgency brought about by events unforeseeable for the contracting authority.”

At the end of March 2023 the water sector regulator awarded the original £8.3 million contract for its Price Review 2024 Delivery Partner to Pricewaterhouse Coopers LLP (PwC) – Ofwat has now awarded 2 more contracts with a combined value of £2 million.

The contracts are intended to commence in September 2023 (subject to final agreement) with any required services to be completed by January 2025. Grant Thornton UK LLP and PA Consulting Ltd. have been awarded the contracts which are capped at a value of  £1 million for each supplier.

Ofwat has published a Voluntary Ex-Ante Transparency (VEAT) notice about the new contract awards – which did not go out to competitive tender. The additional capacity is needed to provide what Ofwat describes as “flexible access to high quality resources across a range of technical skillsets” for 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.

Contracts to be used on “need only basis” in particular for  "projects where the existing Delivery Partner contract for PR24 may be unable to fulfil the requirement”

Ofwat said the contracts will be used on a “need only basis” to respond to changing requirements throughout the period of the contract, “in particular for those projects where the existing Delivery Partner contract for PR24 may be unable to fulfil the requirement.”

Ofwat first went out to tender with a contract for the original services in December 2022  which defined the Delivery Partner as "a flexible, efficient resourcing solution, that is capable of being adapted to respond to changing requirements throughout the period of the contract. Critically, it is an arrangement that brings additional resource into Ofwat that is able to successfully integrate into our internal delivery effort. In practice this means that the "Delivery Partner" will provide resource on a flexible basis"

The regulator received bids from 3 consortia -  Grant Thornton UK LLP, PwC and PA Consulting Ltd - PwC was awarded the contract as the highest scoring bidder. 

The VEAT notice says the latest contract awards were negotiated without a prior call for competition due to “extreme urgency brought about by events unforeseeable for the contracting authority.”

The water sector economic regulator explains the requirement for the additional capacity as “a matter of strict necessity” brought about by a number of circumstances, none of which were foreseeable, as follows.

After the tender process concluded in April 2023, Ofwat secured approval from the Treasury to increase the size of its budget to enable delivery of additional regulatory work on behalf of customers and the environment. Ofwat said the scale of work required under a number of areas - including PR24 where infrastructure investment will be larger than previous price reviews - has increased as a result.

There is now a 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 is undergoing a period of growth in its in-house capacity and further procurement to bolster its access to third party support - however, “this will not be fully completed in time for the Price Review process.”

"We do not have sufficient time to retender for potential additional capacity to ensure the successful Delivery of PR24"

The regulator says in the VEAT notice:

“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.

“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. The contracts will be used on a need only basis, in particular for those projects where the existing Delivery Partner contract may be unable to fulfil the requirement and for services of a lower value, up to a capped valued of £1m +VAT for each supplier.”