Section one: Contracting authority
one.1) Name and addresses
The Council of the City of Sunderland
City Hall, Plater Way
Sunderland
SR1 3AD
Contact
Mr Chris Cummings
chris.cummings@sunderland.gov.uk
Telephone
+44 7909321051
Country
United Kingdom
NUTS code
UKC23 - Sunderland
Internet address(es)
Main address
Buyer's address
one.3) Communication
Access to the procurement documents is restricted. Further information can be obtained at
Additional information can be obtained from the above-mentioned address
Tenders or requests to participate must be submitted electronically via
one.4) Type of the contracting authority
Regional or local authority
one.5) Main activity
General public services
Section two: Object
two.1) Scope of the procurement
two.1.1) Title
Sunderland Central Heat Network
Reference number
DN693892
two.1.2) Main CPV code
- 65000000 - Public utilities
two.1.3) Type of contract
Services
two.1.4) Short description
Sunderland City Council (the “Council”) is seeking interest and proposals from suitable economic operators to take forward the delivery of a large-scale heat network in the Sunderland City Centre area to serve a number of municipal, commercial and residential customers through an innovative contractual structure.
Following completion of the procurement process, the Council will enter into a joint development agreement (“JDA”) with the selected bidder (“ESCO”) under which the Council and the ESCO will work in partnership throughout the commercialisation phase of the project.
On completion of the commercialisation phase and a final investment decision having been approved by both parties, the project will move to the delivery stage and the Council proposes to enter into the “Delivery Contracts” for the project including:-
- the project governance agreement (“PGA”), which shall govern the rights and relationship between the Council and the ESCO in delivering the project;
- the connection and supply agreements for the anchor load properties (see below); and
- any other relevant legal documents agreed during the commercialisation phase.
This procurement includes the opportunity to provide heat to the initial anchor load customers which includes South Tyneside and Sunderland NHS Foundation Trust, University of Sunderland, Gentoo, the Council, and other un-named Public Sector Contracting Authorities within the administrative boundary of The City of Sunderland.
CONFIDENTIALITY AGREEMENT
The procurement documents are available for access free of charge (subject to the potential bidder signing and returning a Confidentiality Agreement), which is available when bidders express an interest in the opportunity in the project at https://www.nepo.org/ and NEPO Portal project reference DN693892.
The timescale for returning the Selection Questionnaire has been extended in accordance with Regulation 53(4) Public Contracts Regulations 2015 to take account of the requirement to enter into a Confidentiality Agreement to access the procurement documents.
Further information on the Confidentiality Agreement is contained in V1.3 Additional Information of Section VI. Complementary information of this Contract Notice
two.1.5) Estimated total value
Value excluding VAT: £130,000,000
two.1.6) Information about lots
This contract is divided into lots: No
two.2) Description
two.2.2) Additional CPV code(s)
- 09323000 - District heating
- 45000000 - Construction work
two.2.3) Place of performance
NUTS codes
- UKC23 - Sunderland
two.2.4) Description of the procurement
Sunderland City Council (the “Council”) is seeking interest and proposals from suitable economic operators to take forward the delivery of a large-scale heat network in the Sunderland City Centre area to serve a number of municipal, commercial and residential customers (the “Project”) through an innovative contractual structure.
Following completion of the procurement process, the Council will enter into a joint development agreement (“JDA”) with the selected bidder (“ESCO”) under which the ESCO will be provided with a 12 month exclusivity period to work with the Council in partnership to carry out the commercialisation of the project.
The JDA will govern the terms upon which the Council and the ESCO will work together to (amongst other things): (a) finalise the connection and supply agreements for the anchor load customers and any other legal documents required for the delivery stage; (b) develop the reference design for the first phase of the network into a construction-ready design; (c) secure the necessary consents and land rights required to deliver the Project; (d) develop the financial model for the Project; (e) arrange the finance for the core scheme; (f) procure the supply chain; and (g) incorporate a special purpose vehicle (“SPV”) to act as the Project delivery vehicle.
On completion of the commercialisation phase and a final investment decision having been approved by both parties, the project will move to the delivery stage and the Council proposes to enter into the “Delivery Contracts” for the project including:-
- the project governance agreement (“PGA”), which shall govern the rights and relationship between the Council and the ESCO in delivering the Project (see below);
- the connection and supply agreements for the anchor load properties (see below); and
- any other relevant legal documents agreed during the commercialisation phase.
This procurement includes the opportunity to provide heat to the initial anchor load customers which includes:-
- South Tyneside and Sunderland NHS Foundation Trust in relation to Sunderland Royal
Hospital and, potentially, a number of other buildings owned and occupied by the Trust;
- University of Sunderland in relation to a number of buildings on the University’s City Campus;
- Gentoo Group Limited in relation to a number of social housing blocks in the City;
- the Council in relation to Sunderland City Hall; and
- other un-named Public Sector Contracting Authorities within the administrative boundary of
The City of Sunderland, with the intention for further expansion of the network in the future.
The forms of connection and supply agreements with each anchor load customer will be agreed between the ESCO and anchor load customers during the commercialisation phase based on the principles document provided as part of this procurement.
The Council and the ESCO will also agree the terms of the (“PGA”) during the commercialisation phase based on the principles document provided as part of this procurement. The PGA is intended to be a perpetual arrangement with the ESCO taking ownership and full risk in relation to the network. The PGA will include obligations on the ESCO in relation to the delivery of the works, customer service standards, transparent pricing which does not exceed a counterfactual, carbon reduction/growth targets and reporting requirements.
Potential bidders should note that the Council (and the other named public-sector anchor load customers set out above) intend to enter into the relevant Delivery Contracts with the ESCO following completion of the commercialisation phase under the JDA without a separate procurement being undertaken. However, if a final investment decision is not achieved in accordance with the JDA the Council reserves the right to conduct a new procurement process for another ESCO for the Project and enter into the Delivery Contracts with the successful bidder in that procurement process.
Further detail on the background and structure of the Project is set out in the procurement documents.
two.2.5) Award criteria
Price is not the only award criterion and all criteria are stated only in the procurement documents
two.2.6) Estimated value
Value excluding VAT: £130,000,000
two.2.7) Duration of the contract, framework agreement or dynamic purchasing system
Duration in months
480
This contract is subject to renewal
No
two.2.9) Information about the limits on the number of candidates to be invited
Maximum number: 4
Objective criteria for choosing the limited number of candidates:
The basis on which the Council will select the number of candidates to be invited to the next stage is set out in the Selection Questionnaire.
two.2.10) Information about variants
Variants will be accepted: No
two.2.11) Information about options
Options: No
two.2.13) Information about European Union Funds
The procurement is related to a project and/or programme financed by European Union funds: No
Section three. Legal, economic, financial and technical information
three.1) Conditions for participation
three.1.1) Suitability to pursue the professional activity, including requirements relating to enrolment on professional or trade registers
List and brief description of conditions
Please see procurement documents
three.1.2) Economic and financial standing
Selection criteria as stated in the procurement documents
three.1.3) Technical and professional ability
Selection criteria as stated in the procurement documents
three.2) Conditions related to the contract
three.2.2) Contract performance conditions
Please see procurement documents
Section four. Procedure
four.1) Description
four.1.1) Type of procedure
Competitive dialogue
four.1.8) Information about the Government Procurement Agreement (GPA)
The procurement is covered by the Government Procurement Agreement: Yes
four.2) Administrative information
four.2.1) Previous publication concerning this procedure
Notice number: 2024/S 000-009011
four.2.2) Time limit for receipt of tenders or requests to participate
Date
21 May 2024
Local time
12:00pm
four.2.3) Estimated date of dispatch of invitations to tender or to participate to selected candidates
16 April 2024
four.2.4) Languages in which tenders or requests to participate may be submitted
English
four.2.6) Minimum time frame during which the tenderer must maintain the tender
Duration in months: 4 (from the date stated for receipt of tender)
Section six. Complementary information
six.1) Information about recurrence
This is a recurrent procurement: No
six.3) Additional information
The JDA approach is effectively a form of two stage procurement. Following conclusion of the procurement process the Council and the ESCO will enter into the JDA. Following conclusion of the commercialisation phase (and subject to a final investment decision being approved by both parties) the Council and the ESCO will enter into the PGA and connection and supply agreements and the ESCO will enter into the connection and supply agreements with the other anchor load customers.
The procurement has been structured so as to ensure that the Council and other public sector customers identified as the anchor load customers are able to enter into the delivery contracts without a further procurement process being undertaken.
The proposal is for the network to provide low carbon heat to a number of customers in the Sunderland City Centre area which shall initially include:-
- South Tyneside and Sunderland NHS Foundation Trust in relation to Sunderland Royal
Hospital and, potentially, a number of other buildings owned and occupied by the Trust;
- University of Sunderland in relation to a number of buildings on the University’s City Campus;
- Gentoo Group Limited in relation to a number of social housing blocks in the City;
- the Council in relation to Sunderland City Hall; and
- other un-named Public Sector Contracting Authorities within the administrative boundary of The City of Sunderland, with the intention for further expansion of the network in the future.
For the purposes of Section II.2.7 (Duration), it is mandatory to enter a figure for contract duration in the template for this notice. The term of 40 years (480 months) has been inserted as this was one of the factors used to calculate the estimated contract value (as set out above). However, as set out in Section II.2.4, the duration of the Project is not time limited, subject to complying with the relevant project documents.
The value provided in Section II.2.6 represents the Council’s estimate of the total value of the contract opportunity based on information available and Council assumptions relating to the Core Scheme over a period of 40 years with additional connections and expansion opportunities.
The Selection Questionnaire documents are available for access free of charge (subject to the potential bidder signing and returning a Confidentiality Agreement).
CONFIDENTIALITY AGREEMENT
Bidders may access the Confidentiality Agreement which is available when bidders express an interest in the opportunity in the project at https://www.nepo.org/ and NEPO Portal project reference DN693892 and signing and returning their signed Confidentiality Agreement via the NEPO Portal.
The Council will countersign and return the Confidentiality Agreement to the bidder and provide unrestricted access to the full set of Procurement Documentation.
The timescale for returning the Selection Questionnaire has been extended in accordance with Regulation 53(4) Public Contracts Regulations 2015 to take account of the requirement to enter into a Confidentiality Agreement to access the procurement documents.
six.4) Procedures for review
six.4.1) Review body
High Court of England & Wales
7 The Rolls Building, Fetter Lane
London
EC4A 1NL
Country
United Kingdom
six.4.3) Review procedure
Precise information on deadline(s) for review procedures
The Council will incorporate a minimum 10 calendar day standstill period at the point the award decision is notified to bidders. Any communication and/or claims must be made by a bidder in accordance with the process and timescales set out in the Public Contracts Regulation 2015 (SI 2015 No 102).