---
title: "Inflation and the Cost of Debt"
ocid: "ocds-b5fd17-ed3ff6ae-4bd2-40c8-86f7-940c332137ad"
canonical_url: "https://d3tenders.com/contract/?ocid=ocds-b5fd17-ed3ff6ae-4bd2-40c8-86f7-940c332137ad"
markdown_url: "https://d3tenders.com/contract/ocds-b5fd17-ed3ff6ae-4bd2-40c8-86f7-940c332137ad.md"
json_url: "https://d3tenders.com/contract/ocds-b5fd17-ed3ff6ae-4bd2-40c8-86f7-940c332137ad.json"
source: "Contracts Finder"
current_stage: "Award"
buyer: "O F W A T"
published: "2026-02-13"
---

# Inflation and the Cost of Debt

Buyer: O F W A T  
Current stage: Award  
OCID: ocds-b5fd17-ed3ff6ae-4bd2-40c8-86f7-940c332137ad

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## Summary

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.

## Notice

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.

## Key Details

| Field | Value |
| --- | --- |
| Publication source | Contracts Finder |
| Latest notice | https://www.contractsfinder.service.gov.uk/Notice/79905e19-04cd-46eb-8d39-788422b426e8 |
| 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 |
| All stages | Award |

## Dates

| Field | Value |
| --- | --- |
| Publication date | 13 Feb 2026 |
| Submission deadline | 8 Dec 2025 |
| Future notice date | Not specified |
| Award date | 12 Dec 2025 |
| Contract period | 18 Dec 2025 - 31 Mar 2026 |
| Recurrence | Not specified |

## Values

| Field | Value |
| --- | --- |
| Tender value | £89,640 |
| Lots value | Not specified |
| Awards value | £89,640 |
| Contracts value | Not specified |

## Status

| Field | Value |
| --- | --- |
| Tender status | Complete |
| Lots status | Not specified |
| Awards status | Active |
| Contracts status | Not specified |

## Buyer

| Field | Value |
| --- | --- |
| Main buyer | O F W A T |
| Locality | BIRMINGHAM |
| Post town | Birmingham |
| Postcode | B5 4UA |
| Country | England |
| ITL 1 | TLG West Midlands (England) |
| ITL 2 | TLG3 West Midlands |
| ITL 3 | TLG31 Birmingham |
| Local authority | Birmingham |
| Electoral ward | Ladywood |
| Westminster constituency | Birmingham Ladywood |
| Delivery location | TLG West Midlands (England), TLI London |

## Supplier

| Field | Value |
| --- | --- |
| Number of suppliers | 1 |
| Supplier names | STEER DAVIES & GLEAVE |

## CPV Codes

### Divisions

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

### Codes

- 79410000 - Business and management consultancy services

## Release History

- 13 Feb 2026 at 16:30 - Award - Award Notice - https://www.contractsfinder.service.gov.uk/Notice/79905e19-04cd-46eb-8d39-788422b426e8

## Documents

- https://www.contractsfinder.service.gov.uk/Notice/79905e19-04cd-46eb-8d39-788422b426e8
  13th February 2026 - Awarded contract notice on Contracts Finder

## Notice URLs

- http://www.ofwat.gov.uk

## Provenance

This Markdown file is an alternate public rendering of the D3 Tenders contract record. The canonical page is https://d3tenders.com/contract/?ocid=ocds-b5fd17-ed3ff6ae-4bd2-40c8-86f7-940c332137ad. The underlying structured data is available as OCDS JSON at https://d3tenders.com/contract/ocds-b5fd17-ed3ff6ae-4bd2-40c8-86f7-940c332137ad.json.