Utility Week

UTILITY WEEK | 5TH - 11TH APRIL 2019 | 27 Customers recorded consistently and clearly and provide a full and transparent record of the utility's reasons and reasoning (do not confuse the two) behind the conclusions reached. Do your sums The operation of the aggregation rules must be checked when considering whether to conduct a regulated procurement. Although an individual contract may be below the rel- evant nancial threshold, the total value of purchases to be made under a number of similar contracts may, with aggregation, take the overall value above the threshold. Beware the low price Utilities are under a duty to investigate abnormally low tenders and, in certain cir- cumstances, may be under a duty (rather than have a discretion) to reject them. And if the bid is low primarily by reference to other bids, it may be appropriate to investigate whether there has been bid-rigging. No double counting Although the historic distinction between selection criteria and award criteria has been muddied in recent times, the shortlisting pro- cess should be kept separate from the award stage. In particular, care must be taken not to assess bidders twice on the same criteria at di• erent stages of the procurement process. Keep an eye on the time Bidders need su cient time to prepare bids and engage in the process: the statutory periods represent minimum time limits, and urgency is no excuse where it is of the util- ity's own making. The time limits for mak- ing a procurement challenge di• er. To claim damages it is usually one month from the date of knowledge, but for a declaration of ine• ectiveness it is six months from conclud- ing the contract. Publishing a contract award notice will shorten the latter to 30 days, while publishing a voluntary ex ante trans- parent (VEAT) notice could remove the risk. A VEAT notice is not a "get out jail" card A valid VEAT notice, setting out justi cation for not conducting a tender process before awarding a contract, can remove the risk of that contract subsequently being declared ine• ective. This will, however, only protect a utility where the relevant conditions are met. Publishing a VEAT notice where the purported justi cation is less than robust could have the opposite e• ect and expose the utility to an additional risk of challenge. Warsha Kale, counsel, and James Harrison, associate, London antitrust & competition practice, Mayer Brown Look to the supply chain for innovation in AMP7 An open dialogue between water companies and their contractors and other partners is essential, says Matt Cannon. T his time last year we were contending with the Beast from the East. The cold snap pushed water companies' capabilities to the limit. Now, the cold shoulder from the regulator is set to do the same. Ofwat is living up to its promise of a tough price review period with an initial assessment of AMP7 busi- ness plans that criticised innovation, a• ordability and resilience strategies. Water companies had wanted to spend £56.3 billion, but have been told they should be spending £48.4 billion to achieve the same outcomes. The "delivering more for less" mantra could create a temptation to pass these pressures down the supply chain. Contractors and other partners have a crucial role to play in shaping the future of the sector, but this should emerge from an open dialogue. Our teams have invaluable front- line experience that will help water companies develop and deliver the innovative, customer-centric strategies that Ofwat wants to see. Capitalising on this means ensuring that delivery frameworks are set up to encourage better collaboration and – crucially – outcome-focused rather than output- focused relationships. Ensuring partners are working towards shared goals means more than a water company's logo on a contracting operative's safety gear. It needs alignment at every level. Grounded innovation Of Ofwat's four key drivers, "inno- vation" is arguably the key that will unlock the other three: better cus- tomer service, improved a• ordability and greater network resilience. For instance, we know that digital tools are already proving to be a game changer around leakage. Our experience tells us that it can cost a typical water company £10 million a year in workforce resource alone to investigate leakage. Yet with tools that we have developed with our technology partner Dootrix using Microsož 's Azure platform, we predict this cost could be almost halved through more e• ective use of machine learning to identify leaks quicker and x them more e ciently. Data gathering The acceleration and commoditisation of Internet of Things technology driven by growth in the smartphone indus- try now enables data gathering on a scale that would have been nancially and technically impossible just ve years¡ago. Greater saturation of technology also holds the power to transform pub- lic thinking about our industry dur- ing AMP7. Perception is set to play an increasingly crucial role with Ofwat's C-MeX methodology taking a wider approach to customer satisfaction beyond those who have actively con- tacted their water company. In this context, the mobile device in our operatives' hands becomes even more powerful. This is true not only for our customers, but also for the tech-savvy generation considering a career in an industry that, like most, is in desperate need of new blood. They, like us, want to see progress. Supply chain on board Contractors' expertise can help water companies shape business plans that will foster this kind of transformative innovation, not only for the next ve years to 2025, but ultimately laying the foundations for a truly modern water network. Matt Cannon, CEO, Clancy Group An open dialogue between water companies and their contractors

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