The Corporate Director Communities reported on an update on the development of the Bridgend Town Heat Network Project and sought delegated authority to award the contract for the construction and operation of the heat network subject to the approval of the revised project Financial Model by the Council’s Section151 Officer.

The Corporate Director Communities reported that Cabinet at its meeting in April 2018, approved the Outline Business Case for the project and to the submission of an application to UK Government through its Heat Network Investment Programme (HNIP).  The application was approved in December 2019 for £1,000,000 capital investment towards the construction of the heat network and £241,000 for pre-construction activities.  Cabinet was advised on an update on the project in January 2021 covering elements such as the procurement of a Design Build Operate Maintain contractor under the Utilities Contracts Regulations 2016 and applications for the necessary permits (Environmental Permit due to the gas CHP engine falling under the Medium Plant Combustion Directive) and permissions (planning permission for the location of a thermal store at the rear of the Bridgend Life Centre). 

The Corporate Director Communities informed Cabinet of the progress made on the Environmental Permit; Planning Permission and the Design Build Operate Maintain Contractor Procurement.  She stated that all the bids received for the main construction contract were outside the project’s expenditure budgets, due to the impact of Covid-19 and the cost of raw materials and labour.  She stated that extensive dialogue was carried out with all the bidders over the following months to understand where savings could be made to re-align the costs of the project within the project budget, whilst ensuring deliverables remained the same, final bids were received at the end of January 2022.  The bids were assessed as compliant from a procurement process perspective and officers and the consultant team evaluated the bids from a quality and cost perspective.  Following the evaluation of the bids, an updated financial model is being produced by the consultant team for the project containing the actual bid prices, to be approved by the Section 151 Officer.  She stated that a further report would be presented to Cabinet to award the Design Build Operate Maintain (DBOM) contract, however as this was the last meeting of Cabinet prior to the local government elections in May 2022, there was insufficient time to evaluate the bids received, update the financial model, and present the financial model to the finance department for approval by the Section 151 Officer.  In addition, a decision to award the contract cannot wait until after the local government elections because the tender prices submitted by bidders would not remain valid for that length of time.  It was proposed that delegated authority be given to officers to award the DBOM contract and enter and arrange execution of that contract on behalf of the Council subject to the Section 151 Officer approving the updated financial model (which would be updated following the evaluation of the bids) and determine that the scheme is financially viable.

The Cabinet Member Communities in commending the proposal stated that the project was innovative and at the cutting edge and that the emergency services as well as Bridgend College were interested in connecting to the Heat Network.

RESOLVED:             That Cabinet:

• Noted the update on the development of the Bridgend Town DHN Project.

Subject to the determination by the Chief Officer – Finance, Performance and Change that the Bridgend Town DHN Project is financially viable, delegated authority to the Corporate Director – Communities in consultation with the Chief Officer – Finance, Performance and Change and the Chief Officer – Legal & Regulatory Services, HR and Corporate Policy to award the contract for the design build operation and maintenance of the Bridgend Town DHN Project and subject to no challenge being received during the standstill period, enters into and arrange execution of that contract on behalf of the Council with the successful bidder.