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United Kingdom-London: Telecommunications services
Contract award notice
Results of the procurement procedure
Section I: Contracting authority
Main address: https://www.gov.uk/government/organisations/home-office
Section II: Object
Emergency Services Network (ESN) Lot 2 Mobile Services — Contract Variation Award
In December 2015, following an OJEU advertisement (2014/S 077-133654), the Home Office concluded ‘the ESN Lot 3 contract’ with EE Ltd (‘EE’), for the development and provision of a 4G network, as part of the emergency services network (‘ESN’) project. ESN will be used by organisations (including the emergency services) requiring a public safety communications solution (‘PSCS’). ESN will replace ‘Airwave’, which uses old technology and is costly. The new solution will provide ‘push to talk’ functionality and new data services.
The Lot 3 services will provide the network for the push-to-talk and data solution provided by ESN’s Lot 2 provider. The Lot 3 network will utilise a network provider’s existing mobile network, but also bespoke services, including special ‘coverage’ (e.g. in tunnels and remote locations) and specific services (e.g. priority over other network traffic, high availability, security protections and integration with the Lot 2 solution and end-user devices.
Under the existing ESN Lot 3 contract, the main services provided by EE (remaining the same following variation) comprise these key elements:
— provision of mobile network coverage, capable of supporting the PSCS,
— supply, installation and maintenance of radio equipment to enable coverage in an extended area,
— provision of ESN and critical mobile communications services,
— technical interfaces,
— manage availability and capacity across the ESN mobile network,
— support services,
— a capability to deliver enhanced ESN coverage, and
— testing of mobile devices ESN.
Key aspects of the variation:
— contract period to be extended. Its original term is due to expire on 8.12.2021 (or, insofar as extension options in the original contract are exercised, on 8.12.2022). The variation will extend the term to Dec 2024 in order to provide a network capable of supporting the new technology throughout the period for ‘rollout’ of the ESN solution to end users (from approximately Sept 2020 to Dec 2022), and for a relatively short period thereafter to enable stabilisation of the ESN solution, and preparation for transition to any new provider,
— a new payment structure whereby EE will be paid for delivery of the network on the basis that it is materially completed; but any infrastructure which is not completed by the milestone date results in payment abatements,
— a new methodology which sets out the process and approach to identification of any ‘gaps’ in the network and EE’s obligation to fix gaps,
— the testing approach and timetable will be amended to be incremental rather than 'big bang' to align with the delivery of the ‘Kodiak’ push-to-talk application,
— the transition of users onto the EE network will be phased over a 27-month period commencing in Sept 2020,
— additional product and testing services to be provided by EE shall be paid for and ordered by the authority to support changes in the Lot 2 contract (e.g. Wave 7 000 to Kodiak),
— joint commitment to build an engineering plan for evolving the ESN core network and IP Multimedia subsystem (‘IMS’) (a new standardised and virtualised core network). EE is to have a unilateral right of termination in the event that the ESN programme does not move to an IMS-hosted core,
— historic disputes and claims between the Home Office and EE will be settled.
The value of the Lot 3 ESN contract when originally procured was 735 800 000 GBP (‘m’). Pursuant to other developments or changes in the contract over its lifetime, its current value, prior to the amendments described herein, was 675 600 000 GBP at the time of the heads of terms. Following the amendments described herein, its total value over the lifetime of the contract will be to 895 700 000 GBP, and its prospective value from the date of amendment will be 681 400 000 GBP.
The increase in value of 220 100 000 GBP from the 675 600 000 GBP figure to 895 700 000 GBP is made up of:
— the extension to the contract term 216 000 000 GBP,
— an extra 20 000 000 GBP in ROM costs associated with moving to an incremental delivery model, less
— 15 900 000 GBP in reduced charges due to delayed roll out.
The need for these changes is because the ESN project is delayed. It is necessary to extend the Lot 3 contract, which would otherwise expire during (or at best very shortly after) the ESN rollout period (from Sept 2020 to Dec 2022); otherwise, there would be a change of network provider during the critical rollout period, or a high risk of a change of provider during the critical rollout period; or, at best, a change of provider during the important period of stabilisation immediately following rollout. Other changes reflect changes to the Lot 2 contract (‘incremental’ rollout will mean at least some users being provided with an ESN solution earlier than they would with a ‘big bang’ rollout; mitigating the delays; and Lot 3 will now need to accommodate the new ‘Kodiak' solution from Lot 2) and refinement of the Home Office’s requirements.
Section IV: Procedure
This is a modification of a contract via a new procurement procedure pursuant to paragraph 5 of Article 72 of Directive 2014/24/EU.
The new procurement procedure is the negotiated procedure without prior publication, under Article 32.
Having taken specialist legal advice, the authority's view is that reliance on Regulation 32 is justified because the services being procured under the modified contract can be provided only by EE because competition is absent for technical reasons.
The services required by the Home Office consist of the network services needed for a full rollout of the ESN solution as soon as reasonably possible (to transition away from, and avoid the high costs of, Airwave and to improve end users' PSCS).
If the Home Office continues to use EE as its Lot 3 provider then it expects that availability of a fully functional solution (known as ‘prime’ availability) will be ready for the start of rollout to end users in around September 2020. Rollout is scheduled to require approximately 27 months thereafter, such that it will be complete by around December 2022, and Airwave can be switched off in December 2022 (with the high costs of Airwave therefore ending at that point).
The Home Office is therefore procuring Lot 3 services which will enable the commencement of rollout in around September 2020, and the completion of rollout in around December 2022. Only EE is able to supply such services. There is no realistic prospect of a new Lot 3 provider being in position to facilitate a ‘prime’ date as early as September 2020. The Home Office estimates that it would take 3 years to procure through a fresh competition a signed contract with a new provider for a contract as large and complex as this one; and that it would then take the new provider a further 2 years to build the requisite coverage and network solution (whereas EE has already made very substantial technical progress in building these). On that timetable, for technical reasons (i.e. the need to build requisite coverage and the network solution), a new provider could not reach ‘prime’ until mid-2024, i.e. almost 4 years later than with EE. Even if it were somehow possible for a new provider to start providing Lot 3 services earlier than that, it would certainly be unable to do so before the start of the ‘rollout’ period in September 2020; and any transition to a new provider during the ‘rollout’ period, or during stabilisation, would make no sense (for example, making delivery risks unacceptably high, and requiring a challenging, expensive and probably unreliable interface between EE’s ESN network and the new provider’s ESN network), especially in the context of critical national infrastructure which must be wholly reliable.
The Home Office has therefore concluded that a switch to a new Lot 3 provider would delay the ESN project by approximately 4 years, in that it would delay the start of rollout to mid-2024, as compared with a current planned date with EE of September 2020; and delay the completion of rollout to late 2026, as compared with a current planned date of December 2022. The Home Office forecasts that, aside from delaying the rollout of important new functionality to end users in the emergency services, this delay would have a financial cost (principally because of the high cost of Airwave Services, which cannot be switched off until ESN is fully rolled out) of in excess of 1 600 000 000 GBP.
Therefore, for technical reasons (ultimately, the requirement for any new provider to build the requisite coverage and network solution), the Home Office is procuring services (namely, a network solution and coverage which enable the start of rollout by September 2020) which only EE can provide.
Section V: Award of contract
Emergency Services Network (ESN) Lot 3 — Mobile Services — Contract Variation Award
The Services include various specialist technical activities. EE have declared their intention to sub-let some of these elements to relevant specialists. It is intended that these sub-contracted Services account for in the region of 10 % of the total contract value.
Section VI: Complementary information