In a worrying departure from its original proposal – which stipulated a five-year contract – the HSE revealed that Capita would be awarded a 10-year deal, worth £14 million a year.
Defending its decision, an HSE spokesman said: “During the competition it became clear that there could be significant advantages for achieving gas safety and better value for money by going for a longer period.
“The HSE asked bidders to consider alternative periods at the invitation to tender stage. Given the potential additional benefits, it would not have been proper for the HSE not to consider alternative terms. HSE has concluded that there are significant benefits in awarding a 10-year contract.”
It was widely understood that the new contract would be put out to tender at the end of its term to ensure competition in the marketplace. But H&V News has learned that the contract could continue indefinitely provided the scheme is operated satisfactorily.
The spokesman continued: “The guarantee of exclusivity is only for the first five years of the contract, but the 10-year deal means that we do not need to hold another competition unless there is a need to do so.
“During the second period of five years, HSE retains the discretion to terminate the contract at any time and/or open it up to competitors.”
The HSE was keen to stress that the contract incorporated stronger governance arrangements between itself and Capita, including the monitoring of performance delivery against a set of challenging key performance indicators and a range of measures within the contract to monitor successful service delivery.
It also includes a range of financial incentives to encourage Capita to continuously improve gas safety and services to gas consumers and installers.
“If it fails to meet these, there will be financial implications requiring payments to be made to the new gas safety charity and/or reimbursement to installers,” the spokesman said.
“The amount of this payment will depend on the level of service failure. HSE is also likely to require a service improvement plan. In the event of gross failure to deliver, the HSE will be able to terminate the agreement.”
The Association of Registered Gas Installers and the Chartered Institute of Plumbing and Heating Engineering said they had anticipated a five-year contract which included an option to extend the deal for another five years, depending on performance.
Ciphe chief executive Blane Judd added: “Although this appears to be a change from expectations, it is much better than where we were with a one-year rolling contract.”
Bob Towse, HVCA head of technical and safety, said: “We were under the impression that the new registrar would be awarded a five-year contract. However, we don’t see this as a negative turn of events. We’re pleased that the HSE has announced the new provider and we can now get on with moving the scheme forward.”