The Water Industry (Specified Infrastructure Projects) (English Undertakers) Regulations 2013 (the SIP Regulations) allow the Secretary of State or Ofwat to specify certain large infrastructure projects as projects that must be delivered by a competitively appointed infrastructure provider. The SIP Regulations also allow Ofwat to regulate an infrastructure provider that has been appointed by an incumbent water company to deliver a specified large infrastructure project.
On 4 June 2014 the Secretary of State project as a project that must be delivered by an infrastructure provider appointed under the SIP Regulations.
On 14 July 2015 Thames Water Utilities Limited (Thames Water) announced Bazalgette Tunnel Limited (trading as Tideway) as the preferred bidder to be appointed as an infrastructure provider to deliver the Thames Tideway Tunnel Project (the Project).
On 24 August 2015 we granted Tideway a project licence to carry out all activities described in the Project Specification Notice apart from those activities that Thames Water is to carry out under the Preparatory Work Notice.
The SIP Regulations, require Tideway to apply a procurement regime that is a modified form of the procurement regime in the Utilities Contracts Regulations 2016 (UCR). However, under Regulation 6(8), Ofwat may waive this obligation in relation to the procurement of certain contracts.
At the same time that we issued a project licence to Tideway, we also issued a notice under regulation 6(8) of the SIP Regulations dis-applying to a limited extent Tideway’s obligation to apply the procurement provisions set out in the SIP Regulations (referred to below as a ‘Waiver Notice’). In particular, this first Waiver Notice provided that Tideway should benefit from some of the exemptions that apply to all utilities under the UCR. It also provided that Tideway did not have to follow the modified procurement regime for contracts with a monetary value under a specified threshold. This threshold is the same threshold that applies to all utilities under the UCR.[1]
Since granting this first waiver, we have issued eleven further Waiver Notices to Tideway. Some of these have been general waivers (i.e. they apply to all contracts that meet the criteria set out in the Waiver Notice) and some have been specific (they apply to named contracts). In each instance we have issued a document setting out our reasons for granting the waiver (see list of waiver notices issued).
Link to useful documents:
- IN 15/11: Project licence and regulatory guidance for the Thames Tideway Tunnel infrastructure provider
- The project licence
- Explanatory memorandum to the project licence
- Guidance on approach to the economic regulation of the infrastructure provider
- Note on enforcement issued jointly with the Environment Agency
[1] The current thresholds are £426,955 for a supply or a services contract, and £5,336,937 for a works contract.