Award

Inflation and the Cost of Debt

O F W A T

This public procurement record has 1 release in its history.

Award

13 Feb 2026 at 16:30

Award Notice
Summary of the contracting process

The public procurement process titled "Inflation and the Cost of Debt" has been completed by Ofwat, located in Birmingham, England. This contract falls under the services category specifically for business and management consultancy services, classified under CPV code 79410000. The procurement was awarded to Steer Davies & Gleave Limited, and the process utilised a selective method, calling off from a framework agreement. The contract period spans from 18th December 2025 to 31st March 2026, targeting delivery in regions such as West Midlands and London, United Kingdom. The tender was awarded on 12th December 2025 and published on 13th February 2026, with a contract value of £89,640 GBP excluding VAT.

This tender provides substantial opportunities for small and medium enterprises (SMEs) specialising in consultancy services within the finance sector. Businesses capable of assessing and advising on debt cost, particularly amidst fluctuating inflation dynamics, will find this tender advantageous. The alignment with Crown Commercial Service's Management Consultancy Framework Four (MCF4) suggests favourable conditions for companies familiar with public-sector frameworks. Companies experienced in economic analysis could leverage this opportunity to offer insights into regulatory reforms, particularly in the water and utility sectors, thus promoting business growth through strategic policy advisory roles.

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Notice Information

Notice Title

Inflation and the Cost of Debt

Notice Description

Awarded using Crown Commercial Service (CCS) Management Consultancy Framework Four (MCF4) (RM6309), Lot 4 Finance. Key parts of a price control include setting the cost of debt allowance and determining how the capital/asset value is indexed over time. There have been significant gains and losses by water companies from the inflation assumption used in our determinations being different to what occurs in practice. Citizens Advice estimate that the windfall to the water sector for the first 4 years of the PR19 period was in the order of PS2bn. In the 2020-25 period these gains helped companies offset cost pressures and reduce gearing. After 2025 there are significantly more mechanisms in place to protect companies from cost shocks including indexing costs where independent indices exist and customers sharing a higher proportion of cost under and outperformance. Therefore, higher than expected inflation is now more likely to lead to higher profits for companies. In its provisional determinations Ofgem has proposed to set a nominal allowance for fixed-rate debt to reduce the exposure of consumers to inflation and adopting a different approach to indexing the Regulatory Asset Value (RAV). Public responses from the electricity and gas companies and Citizens Advice agree with the change in principle. We want to consider the approach Ofgem has taken, as if it is adopted it appears that it could reduce the likelihood of windfall gains and losses for customers and investors and provide greater stability. This aligns with the direction of travel set out in the Independent Water Commission (IWC) final report that suggested reducing volatility of returns at risk and greater consideration of indexing observable and time-varying components of the Weighted Average Cost of Capital (WACC). We anticipate that a report resulting from this work will form the basis for discussions between stakeholders in the water industry on this issue. We require advice on the matters required to be considered before any decision could be made about whether similar changes to those proposed by Ofgem should also be implemented in the water sector. We require a supplier branded report that we expect to share publicly with stakeholders. The report is to consider the advantages and disadvantages of a change to set a nominal allowance for fixed and floating rate debt in the water industry at PR29 and to index only the Regulatory Capital Value (RCV) of water companies for the proportion of it assumed to be financed by equity and indexed linked debt components thereafter. We are not looking for definitive recommendations at this stage. Instead, we require a report that can be used to help us engage with stakeholders and decide how to progress.

Notice Details

Publication & Lifecycle

Open Contracting ID
ocds-b5fd17-ed3ff6ae-4bd2-40c8-86f7-940c332137ad
Publication Source
Contracts Finder
Latest Notice
https://www.contractsfinder.service.gov.uk/Notice/79905e19-04cd-46eb-8d39-788422b426e8
Current Stage
Award
All Stages
Award

Procurement Classification

Notice Type
Award Notice
Procurement Type
Framework
Procurement Category
Services
Procurement Method
Selective
Procurement Method Details
Call-off from a framework agreement
Tender Suitability
SME
Awardee Scale
Large

Common Procurement Vocabulary (CPV)

CPV Divisions

79 - Business services: law, marketing, consulting, recruitment, printing and security

CPV Codes

79410000 - Business and management consultancy services

Notice Value(s)

Tender Value
£89,640 Under £100K
Lots Value
Not specified
Awards Value
£89,640 Under £100K
Contracts Value
Not specified

Notice Dates

Publication Date
13 Feb 20261 weeks ago
Submission Deadline
8 Dec 2025Expired
Future Notice Date
Not specified
Award Date
12 Dec 20252 months ago
Contract Period
18 Dec 2025 - 31 Mar 2026 1-6 months
Recurrence
Not specified

Notice Status

Tender Status
Complete
Lots Status
Not Specified
Awards Status
Active
Contracts Status
Not Specified

Buyer & Supplier

Contracting Authority (Buyer)

Main Buyer
O F W A T
Contact Name
Available with D3 Tenders Premium →
Contact Email
Available with D3 Tenders Premium →
Contact Phone
Available with D3 Tenders Premium →

Buyer Location

Locality
BIRMINGHAM
Postcode
B5 4UA
Post Town
Birmingham
Country
England
Major Region (ITL 1)
TLG West Midlands (England)
Basic Region (ITL 2)
TLG3 West Midlands
Small Region (ITL 3)
TLG31 Birmingham
Delivery Location
TLG West Midlands (England), TLI London
Local Authority
Birmingham
Electoral Ward
Ladywood
Westminster Constituency
Birmingham Ladywood

Supplier Information

Number of Suppliers
1
Supplier Name

STEER DAVIES & GLEAVE

Further Information

Notice Documents

Open Contracting Data Standard (OCDS)

View full OCDS Record for this contracting process

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The Open Contracting Data Standard (OCDS) is a framework designed to increase transparency and access to public procurement data in the public sector. It is widely used by governments and organisations worldwide to report on procurement processes and contracts. 

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