Keystone Column 91 – Risky Procurement Strategy: National Broadband Plan

Keystone Column 91 – Risky Procurement Strategy: National Broadband Plan

Last week open-access broadband provider SIRO announced its withdrawal from the Government’s National Broadband Plan tender process. SIRO, which is a joint venture between the ESB and Vodafone, said it “cannot develop a competitive business case to justify continued participation” in the tender process. With just two bidders remaining, this raises concerns about whether tax payers will get the best value and calls the Government’s procurement strategy in to question.

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Procurement Strategy in flux?

The National Broadband Plan (NBP) aims to ensure that all citizens and businesses have access to high speed broadband no matter where they live or work by providing all parts of Ireland with a modern and reliable broadband network, capable of supporting current and future needs. Published back in 2012, the NBP initially aimed to connect around 842,000 homes and businesses through a combination of commercial and State-led investment in a “State Intervention” network.

Through an ongoing procurement process, the Government is currently looking for a company or companies to build, maintain and operate the State Intervention network for the next 25 years. Three companies – Eir, SIRO and enet – had been shortlisted for the final phase of this tender process.

While both Eir and enet remain involved in the process, SIRO has announced its withdrawal following a deal agreed between the Government and Eir in April that is set to see 300,000 premises in rural areas around the country removed from the NBP and allocated directly to Eir. This leaves the number of premises to be connected via the plan at around 542,000.

At the time of the agreement sources suggested the removal of 300,000 premises from the tender, many of which may have cost less to connect to a high speed network due to their location compared to more remote properties, would make the State contracts less attractive for the bidders.

Clearly there has been an major change to the scope of the procurement mid way through the process. This is not generally considered best practice as it changes the whole premise of the competition and undoes all of the work done in preparing the bid to that point, in addition to altering the business case. It introduces the risk that some bidders will withdraw i.e. SIRO. With fewer bidders comes a higher chance that the buyer i.e. the tax payer, will not get the best value.

That the most attractive potential customers have been removed and provided directly to one of the bidding parties in a side-deal is bound to raise eye brows. There may well be sound reasons for altering the scope of the procurement and allocating over 300,000 of the most attractive customers to Eir, but the optics are not good and an explanation should be provided.

Our own feeling is that the NBP itself is a missed opportunity and has a very 1990s feel to it. Back then exclusive rights to the mobile phone spectrum were auctioned off to the highest bidder. As SIRO, Eir and enet will all be continuing to roll out their own infrastructure in specific areas regardless of the tender outcome, we could be faced with what in effect would be a number of mini-monolplies – with providers staying out of areas already served by their competitors (due to the prohibitive cost of rolling out infrastructure). Experience elsewhere suggests that developing an integrated infrastructure, managed so that that multiple operators can offer services over it, leads to much better value for the customer. Sadly, the NBP has not developed along these lines.

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Finding Public tenders

Over 100 tenders issue every week, we have been tracking these tenders for nearly two years now and know that almost all industries and sectors have opportunities. Opportunities present in almost every conceivable category of good or service.

Keystone recommends:

www.etenders.ie – register to obtain the latest tenders from State bodies

www.supplygov.ie – the latest lower value tenders for trades / supplies from local authorities

www.tenderscout.com – a tender engine highlighting opportunities in Ireland and overseas