Airwave, the UK’s emergency services communications network operator, is suing the Home Office over the contract process relating to Lot 3 (main area network) for the proposed new 4G broadband network designed to replace its services – known as the Emergency Services Network (ESN).
The basis of Airwave’s case is that it believes that bidders for Lot 3 were not given equal treatment by the Home Office. The full shortlisted line up for Lot 3 was Airwave, EE, Telefonica O2, Vodafone and UK Broadband Networks. The Home Office has issued a strong rebuttal and says it will contest the challenge.
In a statement issued to Wireless, Airwave said: ‘We have issued a claim against the Home Office relating to the procurement for Lot 3 of the proposed Emergency Services Network.
‘We do not believe that bidders, including Airwave, were given equal treatment under relevant procurement laws and we have therefore made a claim in order to protect our position for any loss suffered.’
A Home Office spokesperson said: 'We can confirm Airwave Solutions Ltd (ASL) has challenged the award to EE of Lot 3 of the Emergency Services Mobile Communications Programme. The Home Office will vigorously contest this challenge. We are confident we have identified suppliers who can deliver a service which will improve public safety and cost considerably less than current arrangements.”
The Home Office added that it will be seeking the earliest possible hearing and it will also be seeking damages to protect it from any delay costs as a result of the challenge. It pointed out that ASL's accounts suggest the current contract delivers the operator over £200m per year in profit (EBITDA - Earnings Before Income, Tax, Depreciation and Amortisation).
Commenting on the HO statement, one communications industry expert Wireless spoke to said that 'it is very disingenuous of the HO to allude that Airwave is making excessive profit, as that profit pays for the debt incurred when setting up the network in the first place'.
He pointed out that with PFI contracts the risk is front loaded and the benefit back loaded. In this case Airwave has delivered a reliable public safety network for the emergency servcies and is still repaying the debt amounting to well over £1 billion incurred in its construction.
An application hearing for Airwave’s claim is to be held in the Technology and Construction Court in the Rolls Building at 9am in Court 18 before Mr Justice Stuart-Smith on Friday 27 November 2015 – (HT-2015-000396 Airwave Solutions Limited v The Secretary of State for the Home Department).
Airwave’s claim comes at an awkward time for The Home Office, which is poised to award contracts imminently to Motorola Solutions and UK mobile operator EE for two of the Lots that make up the Emergency Services Network (ESN) – a 4G broadband network that will replace the existing dedicated narrow band TETRA two-way radio network designed, built and operated by Airwave under a private finance contract.
Gordon Shipley, the head of the Emergency Services Mobile Communications Programme (ESMCP) – the team within the Home Office charged with procuring and delivering ESN – announced on Friday 13 November that Motorola Solutions and EE were the Home Office’s choice for preferred bidder for Lot 2 and Lot 3 respectively. However, under EU procurement rules there is a 10-day cooling off period to allow for any objections.
Wireless understands that Airwave filed an objection just ahead of the deadline on the last day of the 10-day cooling off period on Monday 23 November 2015. The move will delay the award of contracts.
The ESN procurement has been underway since 2014. It is designed to move 300,000 police, fire, ambulance and other users onto a 4G broadband network running on a commercial mobile operator’s system.
Airwave was shortlisted for three or the original four Lots (cut to 3 Lots in February 2015). Lot 3 ESN Mobile Services involves providing the main area resilient mobile network and technical interfaces to Lot 2. EE ended up as the only bidder for this Lot following the decision by Telefonica O2 to withdraw from submitting best and final offers in June 2015. The other three bidders including Airwave were eliminated earlier in the process in February this year.
Airwave decided not to submit a bid for Lot 2 ESN User Services, which involves being a technical service integrator to provide end-to-end systems integration for the ESN. The Lot 2 supplier has to develop and operate: the public safety applications; the necessary telecommunications infrastructure; mobile device management; customer support; and service management.
Of the five shortlistees only Motorola and HP submitted bids, but Motorola ended up as the sole bidder for Lot 2 as HP pulled out in July 2015 ahead of final bids being submitted.
The current situation is complicated by the fact that Motorola Solutions is understood to be in serious negotiations to buy Airwave at the moment, although neither party has confirmed this and no deal has been announced at this point.
Airwave Solutions Ltd is owned by Guardian Digital Communications Ltd (GDCL), which in turn is wholly owned by the Australian investment firm Macquarie Group’s Macquarie European Infrastructure Fund 2 (MEIF II), which bought Airwave from O2 in 2007.