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United Utilities set to tender Direct Procurement contract in first for UK water industry

16 May 2022

United Utilities has issued a periodic indicative notice as it looks to start the tender process for the Haweswater Aqueduct Resilience Programme, under a ground-breaking new contract model, after receiving formal consent from water regulator Ofwat.

It is the first time that the Direct Procurement for Customers model has been used in the UK water sector, following three years of planning and commercial development by United Utilities including extensive engagement with the market and regulator to formalise the new approach.

HARP will be the largest infrastructure project undertaken by United Utilities since privatisation. The original aqueduct was completed in the 1950s to increase supplies of water into Manchester and the Pennines region from the Lake District. The project will see the replacement of six tunnel sections along the 80-mile aqueduct route, ensuring the resilience of the asset for decades to come.

For such a large-scale project, effective and efficient procurement and delivery have always been key considerations and, having worked closely with Ofwat in developing the detail of the DPC model, United Utilities concluded that this approach would have the potential to offer the best value for customers. 

Neil Gillespie, Director of Strategic Programmes at United Utilities, explained the significance of the move: “A project of this scale will always be challenging from a technical and planning perspective, but we have also had to start from scratch to develop the commercial framework for the procurement model.  United Utilities has a long tradition of embracing innovation to push the status quo, driven by the ambition to improve efficiency and secure the best possible value for our customers. This is an exciting milestone on that journey and this process will provide robust insights and learning for the future use of the DPC model.

“We are seeking to appoint a Competitively Appointed Provider (CAP) to design, build and fund six replacement tunnels sections of the Haweswater Aqueduct and maintain it for a period of 25 years post construction.

“We have put a lot of effort into engaging the market over the last three years, hosting a number of events to test our thinking and take on board feedback to help us to refine the DPC model.  This has also given potential bidders early insight into what the winning CAP will be responsible for and this process has generated considerable interest from investors and construction companies.”

Keith Mason, Senior Director, Future Assets and Resources at Ofwat said "Direct procurement for customers has, through competition, the potential to benefit customers in England and Wales in delivering the largest and most complex water and wastewater assets at a lower cost, while allowing new providers to introduce new ideas. We welcome the HARP project. It is a pathfinder being the first project to be procured under our DPC process which we expect will become a model for future infrastructure delivery."

While the commercial framework was being developed, considerable preparatory work was undertaken to support the design process. The biggest risk for a project of this nature is the tunnelling work and United Utilities carried out extensive ground investigations to provide insight into the anticipated ground conditions along the proposed route for the replacement tunnels. This process involved numerous boreholes and extensive geophysical surveys.  United Utilities also partnered with the British Geological Survey to generate a 3D ground model to allow prospective bidders to understand the ground conditions. This innovative approach won the accolade Ground Investigation Project of the Year at the Ground Engineering Awards in 2021. 

At the same time, United Utilities’ largest ever stakeholder engagement programme was carried out to help develop the best solution. The team has consulted with local residents in the vicinity of the proposed works, planning authorities, highways agencies, environmental bodies and many more. The consultation had to be agile enough to cope with the Covid pandemic, and the team developed a “virtual exhibition” which allowed people to access all of the information about the project and ask questions of the United Utilities team remotely. A record number of people took part in the consultation, with more than 70,000 virtual visits to the exhibition and 2,000 pieces of feedback.  

Neil added: “The digital approach to consultation is another first for United Utilities and it has been so successful that we will continue to use it in conjunction with traditional face to face engagement for future projects.”