PR19 - Direct Procurement for Customers (Commercial)

In July 2017 we published a consultation on our methodology for the Price Review 2019 (PR19) where we set out further details on our thinking on direct procurement. This included setting our guidance on the types of projects that would be in scope, the potential approaches to tendering, and draft procurement and contracting principles.

Objectives and Scope

Following the consultation we will publish our final methodology for PR19 in December 2017. Ahead of our final methodology we want to consider further some of the detailed design of the direct procurement process for customers to optimise potential customer benefits.

Companies will be the purchaser and will run the procurement process, then manage the competitively appointed provider (CAP). We expect appointees to run a fair and open procurement process for DPC. We expect companies to enter into a long-term contract with the CAP for a revenue stream. As this is a new requirement for appointees we intend to provide robust guidance around the principles which should underpin the procurement process and the contracts between appointees and CAPs. We have set out draft guidance and want to build on this in our final methodology.

The overall objectives of this work are to:

• Provide us with a set of principles that will give appointees, investors and above all customers confidence that robust direct procurement exercises can be undertaken.

• Help us to finalise our guidance in our final PR19 methodology that will ensure that appropriate projects use the direct procurement process.

• Provide us with a solid understanding of the likely timings, phases and key decision points in a direct procurement process to help us plan our resources during the next Asset Management Plan (AMP) period.