Independent Monitor

Location

Birmingham

Description

An independent monitor (the Monitor) was appointed to monitor and review compliance by Thames Water Utilities Limited ("the Company") (a company regulated by Ofwat) with the conditions of the undertakings given by the Company, and accepted by Ofwat, under section 19(1)(b) of the Water Industry Act 1991. In that context, the Monitor has been monitoring and reviewing progress by the Company towards achieving the objective of the undertakings. The Monitor reports to Ofwat and makes recommendations as to any additional steps the Company should take to achieve the conditions and objectives of the undertakings. Under the terms of the undertakings, the Company agreed to pay the reasonable fees and out-of-pocket expenses of the Monitor. The contract end date at the time of award was 15 October 2025.

Total Quantity or Scope

In October 2024, Ofwat awarded a 12-month independent monitor contract. No overall or firm fee position was settled at the outset as it was expected that requirements under the contract would develop over time. However, initially the fees were expected to be in the region of £3m for core monitoring work. The contract was awarded under Regulation 32(2)(c) of the Public Contracts Regulations 2015, as, for reasons of extreme urgency brought about by events unforeseeable by Ofwat, the time limits for the open or restricted procedures or competitive procedures with negotiation could not be complied with. The direct award was justified due to the extremely urgent need to appoint a Monitor to fulfil the requirements of the undertakings under section 19(1)(b) of the Water Industry Act 1991 and in time for key next steps in the Company's equity raise process, and for its commitment to develop and implement a business plan as set out in the undertakings. Therefore, due to the urgency and following a non-regulated competition, Ofwat directly awarded the contract to L.E.K. to act as a Monitor. Ofwat has subsequently decided to modify the contract on three separate occasions. On each occasion, the modification was justified under Regulation 72(1)(b) of the Public Contract Regulations 2015. The value of each modification was £1.5m and the total contract value after these three modifications is £7.5m. Full details of the three contract modifications alongside an explanation of why this approach was taken can be found in the modification notice which is being published concurrently with this contract award notice. While Ofwat is not able to confirm exact dates, Ofwat intends to commence a re-procurement process for the award of the longer-term independent monitor at an appropriate juncture in mid-2026.

Award Detail

Renewal Options

The contract permits extensions of the term in limited circumstances. These include where an extension is required to maintain continuity of services while the appointment of a replacement independent monitor is completed and in the event that the Company refers its Final Determination to the Competition and Markets Authority (in which case the contract may be extended for the duration of that process and for a short period following its conclusion).

Award Criteria

CPV Codes

• 79000000 - Business services: law, marketing, consulting, recruitment, printing and security

Indicators

• Options are available.
• Award on basis of price.

Legal Justification

The contract was awarded under Regulation 32(2)(c) of the Public Contracts Regulations 2015, as, for reasons of extreme urgency brought about by events unforeseeable by Ofwat, the time limits for the open or restricted procedures or competitive procedures with negotiation could not be complied with. Prior to making the direct award, Ofwat carried out a non‑regulated competition involving seven potential suppliers. Following that process, and having regard to the urgency of appointing an independent monitor, Ofwat proceeded to negotiate directly with L.E.K. Consulting LLP and make a direct award.