We have reported heavily over the past couple of years on the procurement by the Department for Energy & Climate Change (DECC) for data and communication services to be contracted to a new GB wide function – DCC (data & communications company) – for the management of smart meter information. It’s all related to UK Government’s plan to install ‘smart’ electricity and gas meters in all British homes and small businesses (search for ‘smart meter’ in the UKHotViews archive to see the history) – the Smart Meter Implementation Programme. 53 million smart meters are set to be deployed between 2015 and 2020.
There have been several procurements running in parallel: three contracts focused on regional communications services, one focused on data services, one focused on data management, and a final “Smart Energy Code Administrator and Secretariat” contract. Today, the preferred bidders for all contracts (worth a total of up to £2.4b) were announced:
- Capita has been chosen to manage the data for the smart gas and electricity meters. Likely to be effective from September 2013, the DCC license is worth £175m over 12 years with an option to extend for a further six years. It will oversee the rollout of a secure two-way communications system between smart meters and a central communications hub. It will also manage the companies awarded Communications Service Provider (CSP) licences (see below). We understand that G4S had also been in the running.
- CGI has been chosen as the DCC’s data services provider (£75m license) in a contract that will run for between seven and nine years (plus three possible one year extensions). It will design, build, run, host and support the solution that will link gas and electricity meters with the business systems of utility companies. As we highlighted in 2011 (see Logica teams with Qinetiq for smart metering competition), CGI will partner with security specialist Qinetiq to deliver the deal. CGI has significant experience on which to draw; it already delivers smart metering data services to eight utilities operating in Britain, and also runs ten of the sixteen central energy market solutions globally. But many others had shown an interest in the contract: other players bidding included IBM (see UK Public Sector SITS Supplier Landscape report), HP and CSC. We understand that Atos withdrew from the competition last year.
- Telefónica UK and Arqiva have been selected as for the CSP licenses to support the smart meter rollout. Telefonica has been selected for two regional contracts covering the South of England and Central Region (which includes Midlands, East Anglia and Wales) in a deal worth £1.5b, while Arqiva (with Sensus, BT and BAE Systems Detica) will cover the North region covering North of England and Scotland. In a deal worth £625m. Vodafone and Airwave had also been previously shortlisted.
- Finally, Gemserv has been selected as the preferred bidder for the £10 million contract which will see it maintain and update the industry code governing the use of smart meters.
We have commented before on how we feel the Smart Meter Implementation scheme is misguided (see Smart Meter Madness – 6 and work back). You can’t blame the suppliers for wanting to get a slice of this major spend. But even if they deliver to contract, it’s highly doubtful that the programme will save the suppliers and consumers the billions of pounds predicted by Government. And if the taxpayer doesn’t get value for money from the £2.4b expenditure, suppliers (rightly or wrongly) will, once again, come out looking like the bad guy. We're only at preferred bidder stage so there's no detail on the contracts yet; but when there is it will be interesting to see whether there is a 'payment by results' element. We suspect the rollout may extend past 2020 (and potentially, therefore, the supplier rewards too).