On Tuesday, the Department of Energy and Climate (DECC) published, in the European public procurement journal Tenders Electronic Daily, Contract Notices calling for applications for the contracts for the provision of smart metering data and communications services. This commences the competitive dialogue procurement process for data and communication services that will be contracted through the central Data and Communications Company (DCC).  DCC is a special purpose company, yet to be created, which is to handle data communicated to and from smart meters.  Separate procurement processes are being undertaken for each of the data and communications service contracts.  Bidders should register their request to participate in the competitive dialogue by completing a Pre-Qualification Questionnaire.  The deadline is 14 October 2011.

The contracts on offer

  1. The IT Services Contract Notice covers the procurement of data services for DCC to assist in managing smart meter information from over 30 million households and businesses across GB.  This will include three main work packages: developing and implementing the software solutions; IT hosting; and application management services.  It is expected that all three work packages will be awarded to a single bidder through a single contract with break clauses between work packages.  The term of the contract will be up to 12 years and the value of the contract could be as much as GBP 240m.  

The Wide Area Network Contract Notice covers the procurement of communications services to connect meters in up to 30 million households and businesses across GB.  The communications services will be divided into three geographically based lots:

  1. northern GB including Scotland;
  2. central GB including Wales; and
  3. southern GB.

Bidders may bid for one, two or all three lots and multi-lot discounts will be considered.  For each lot bidders will be expected to: provide communications services for up to 100% of smart meters in the specified geographic area; supply the communications module that will allow the smart meter to connect to the communications service; and connect the communications service to one or more data centre locations (to be specified).  Bidders may also be expected to take responsibility for communications services to compliant smart meters already installed within the specified geographic area.  The term of the contract will be up to 20 years and the value of the contract is stated to be between GBP 330m and GBP 1,525m.

The communication of data to and from smart meters in the domestic sector will be managed centrally by DCC.  DCC will provide a two-way communications channel between smart meters and a central communications hub.  Smart meter service users (suppliers, network companies and other authorised third parties) will be granted access to the data for specified and limited purposes. 

The possible installation of some smart-metering equipment is also anticipated during the foundation stage of implementation, which is the period before DCC is operational.  During the foundation stage, suppliers opting to install early will be responsible for preparing their own communications procurement contracts.  To provide greater commercial certainty to these suppliers, the Government will require DCC to adopt communications contracts relating to compliant smart metering systems installed during the foundation stage.  Adoption will be subject to the communications contracts meeting the agreed pre-defined criteria.  The Smart Metering Implementation Programme (SMIP) is currently working to develop appropriate adoption criteria, but the criteria will be available before any significant roll-out of compliant smart metering systems.  The scope of the IT Services Contract(s) discussed above allows for the adoption of communications contracts to the extent that there is a net benefit and a limit may be applied.

  1. Key events in the timeline
  • 27 July 2010: the Government (and the Office of Gas and Electricity Markets (Ofgem)) published a prospectus containing proposals for the delivery of electricity and gas smart metering in GB.
  • 30 March 2011: the Government (and Ofgem) published the Government’s response to the prospectus.
  • 12 May 2011: the Government published the Prior Information Notice (PIN), informing the markets of prospective opportunities arising from the GB Smart Metering Implementation Programme.
  • 17 June 2011: SMIP launched its Project Information Memorandum (PIM).
  • 18 August 2011: the Smart Metering Implementation Programme published a consultation on draft licence conditions and technical specifications for the roll-out of gas and electricity smart metering equipment.  This includes requirements with respect to In-Home Displays and interoperability.  Responses should be submitted by 13 October 2011.
  • 30 August 2011: contract notices published, commencing the process for the competitive procurement of the data and communication services that will be contracted to DCC.  Responses should be submitted by 14 October 2011.