Water industry regulator Ofwat has granted Bazalgette Tunnel Ltd, trading as Tideway, another procurement waiver notice – the eighth in total since granting the first waiver in 2015 when the company was appointed to deliver the Thames Tideway Tunnel project.

Ofwat has now published its reasons for granting a waiver to Tideway releasing it from procurement obligations in respect of a contract for certain Information Technology (IT) services.

The waiver follows an application by Tideway on 28th June 2019 for a specific waiver in respect of services provided to Tideway by Advanced 365 Ltd in respect of desktop services and service desk support.

The regulator agreed to grant the waiver on 6 August 2019, effective from 7 August 2019. Tideway’s application for a further waiver relates to a contract Tideway intends entering into with Advanced 365 Limited (Advanced) for desktop services and service desk support.

Following a competitive procurement process, Thames Water initially entered into a contract with Advanced in 2015. The contract, which was then novated to Tideway, is still in existence and is for a full range of managed IT services.

In line with trends in the whole IT industry, Tideway is now moving to fully cloud based services which, among other things, will enable Tideway to disaggregate its IT services into specific packages which Tideway intends to put out to tender.

However, in respect of desktop services and service desk support Tideway is planning to enter into a new contract with Advanced without going out to tender. The waiver releases Tideway from its obligations to competitively procure these services.

Ofwat said it had agreed to waive Tideway’s obligation to put the services out to tender for the following reasons:

1. Advanced is familiar with Tideway's IT systems and people and continuity in desktop services and service desk support is seen as being essential in managing the transition to cloud based services.

The need for stability in these services was confirmed by a market engagement exercise undertaken by Tideway and involving four providers of IT services.

2. People are the core component of desktop services and service desk support and if the current Advanced team were transferred to any new supplier, the opportunity to provide a significantly different or better service would be relatively limited.

With the timescales remaining on the project (construction is due to be completed in 2022), Tideway is unlikely to be able to justify investment in a radical transformation of the service, such as by introducing high levels of service automation.

The costs and effort associated with terminating the Advanced contract and implementing a new service with an alternative supplier is unlikely to be offset by a radically different or more efficient service.

3. Ofwat considers that Tideway has made a value for money case for the waiver. Entering into a new contract with Advanced will be more cost efficient than extending its existing contract with Advanced.

In addition, the fact that Tideway’s needs for these services will decrease over the next few years as the construction nears completion in 2022 impacts the value for money case for putting these services out to tender.

Tideway carried out a benchmarking exercise with a third-party provider covering the commercial and performance aspects of the Advanced contract and this indicated that Tideway’s current contract with Advanced is competitively priced, when compared to industry peers.