Smart DCC Ltd: procurement practices

Case outcome

We have decided to close this investigation by way of Alternative Action. This is based on DCC agreeing to pay into the Ofgem Voluntary Redress Fund and improve their procurement processes.

DCC will pay £200,000 into the Ofgem Voluntary Redress Fund. They will also make the following improvements to their procurement processes:

• improving procurement record-keeping standards
• strengthening consistency in procurement decision-making
• adding extra procurement assurance checkpoints
• improving procurement compliance training
• implementing independent validation of procurement controls

DCC must complete the improvements by 31 March 2027. They must keep us updated on their progress for each action. While not part of this investigation, we note that as part of the Price Control Decision 2022 to 2023, DCC was disallowed a total of £402,000 costs in relation to the delivery of one of the contracts investigated, with future estimated cost disallowances totalling an additional £2.271 million.             

Read the full case action

Enforcement description

We have investigated DCC’s procurement practices associated with certain contract procurements between 2021 and 2024. We have assessed its compliance with Licence Conditions (LCs) 11.6–11.9 and 16.4–16.6 of the Smart Meter Communication Licence. These licence conditions require the licensee to undertake procurement activity without undue preference or discrimination and on a competitive basis in compliance with the Principles of Procurement set out in the LCs.

We reviewed five contracts that DCC awarded between 2021 and 2024. Of these, we determined that one contract was procured through a non-competitive process, but in accordance with the Principles of Procurement, and one contract was awarded to DCC’s parent company, Capita. We reviewed the procurement processes and assessments that informed DCC’s decisions to award the contracts.