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Firms fear the axe in Scottish Water procurement shake-up

CONTRACTORS AND consultants fear Scottish Water will axe them from its tender lists as part of a major procurement shake up scheduled to begin within the next month.

Firms working for Scottish Water said this week that they could lose out even though the utility plans to spend £1.8bn on capital works by 2006.

Scottish Water is completing a major overhaul of its procurement strategy, which is expected to result in a dramatic reduction in the number of contractors and consultants it uses.

Since Scottish Water was created by fusing together three regional water companies a year ago, the number of framework agreements has fallen from 400 to around 80.

Scottish firms anticipate that further large scale 'rationalisation' will take place once the new system is in operation, said British Water director Paul Mullord.

Three year frameworks are coming up for renewal over the coming year.

The shake up will create a new special purpose company to deliver Scottish Water's capital works programme.

Scottish Water Solutions (SWS) will be 51% owned by Scottish Water, with two joint venture consortia holding the remaining shares.

The two joint ventures are Stirling Water, which comprises Thames Water, Gleeson, KBR and Alfred McAlpine; and UUGM, comprising United Utilities, Galliford and Morgan Est (NCE 22 May).

SWS is being created to realise efficiencies of the kind achieved in England and Wales since privatisation in 1979.

Half the utility's capital works are planned to be undertaken by SWS directly, with the other half let out to framework contractors.

Scottish contractors are also worried about the amount of time it is taking for SWS to start operating and about its programme for advertising work.

NCE understands that establishing the legal framework for SWS has been far more complex than anticipated. The individual companies involved are believed to have insisted on last minute changes to legal documents.

As a result, contractors fear there could be delays in putting new contracts out to tender.

One contractor said work might not go out to tender until the end of March.

Scottish Water declined to comment on its procurement shake up but said that SWS would be launched within the next two to four weeks.

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