Olympic bosses axe £300m utilities programme

The Olympic Delivery Authority (ODA) has scrapped a £300m utilities procurement programme despite bidding teams nearing the final stages of the process.

The ODA decided to start from scratch about a year into the process after the industry said it was structured too much like a PFI and was not financially viable.

Sources said the package was worth about £300m and that teams had spent as much as £1m bidding for the contracts.

Initially, the contract was offered on a design, build, operate and finance basis, which sources claim the consortiums complained about from the start.

However, the method was only shelved when the ODA received the final bids and was not happy with the prices.

Thames Water and EDF Energy are thought to have been among the original bidders, with supporting work from Alfred McAlpine, EC Harris and others.

It is understood that a shortlist of upt to eight teams had been asked to submit final bids.

One source said: “The sums didn’t stack up. The ODA had a financial model in mind that was like a PFI but now it is coming back to a design-and-build model. It has gone back to an open tender.”

The ODA confirmed that it was making the changes. A spokesperson said: “Industry feedback and response has shown that better value can be achieved by offering some packages as design-and-build contracts, and leaving the finance and operate elements to be procured later.”

He denied that work on the projects would be delayed: “The retendering will not affect the delivery of utilities in the Olympic park. Work remains on track to start on site next summer,” he said.

He added that three packages were being retendered: gas, water and telecommunications. The electrical network, energy centre and heating and cooling pipework will be procured as planned.