Scottish ministers delay awarding water contract to English company

Scottish ministers have again postponed a decision on awarding a £350m contract to supply water to Scotland’s schools, hospitals and jails after it emerged that an English utility company, Anglian Water, was poised to win it.

The Scottish government delayed the decision for the third time this year, until 31 December, saying on Thursday there were additional questions for bidders to address.

Ministers face the politically embarrassing prospect of selecting Anglian Water, which has been identified as the preferred bidder. The decision was first delayed in February after Anglian Water outbid a private firm run by publicly owned utility Scottish Water, which currently holds the contract.

The Scottish National party repeatedly attacked the privatisation of public services in England during the independence referendum campaign in 2014, and during the general election this year, and has been accused by Labour of delaying a decision to avoid allegations of hypocrisy.

The decision to award the contract, which involves supplying about 100 organisations in the Scottish public sector with water and sewer services for three years, was postponed in the runup to the general election.

Scottish Labour warned that ministers run the risk of legal action over the delays or a demand for compensation by Anglian Water, which was the first private water company to win business in Scotland after the sector was deregulated.

It already supplies companies including Asda, Aviva insurance and the brewers and pub chain Belhaven.

The decision to temporarily extend the contract to Scottish Water’s private supply operation, Business Stream, for the third time was made without any public announcement.

The latest extension to its contract ended at midnight on Tuesday 30 September but the decision to extend it a third time was not listed on the Scottish government’s procurement page.

Anglian Water said it had not yet been officially informed about the decision to postpone the contract again.

“We’re poised and ready to get going once the contract is awarded,” a spokeswoman said. “We are confident that the tender process we went through will prevail. We know our bid will represent savings for the Scottish public sector.”

A Scottish government spokesman said: “The standstill period has been extended to give bidders time to consider some additional feedback on their submissions.

“It is reasonable to grant bidders extra time to consider this additional feedback. All bidders will be given at least seven days’ notice before the standstill period ends.”

Jackie Baillie, Scottish Labour’s public services spokeswoman, said: “We value Scottish Water being a public utility, providing services for the public sector in Scotland. It would be hugely disappointing if, on the SNP’s watch, our water provision [were] privatised.

“There is now going to be a year’s delay in awarding this essential contract to Scotland’s public services; they can’t properly plan if there’s continuing delay. They’ve got themselves into a mess and it looks like Anglian Water, as the preferred bidder, would have a claim for compensation.”

Johanna Dow, the chief executive of Business Stream, said the delay would allow her company to improve its bid.

“The contract extension until 31 December is very welcome,” she said. “We look forward to building on the benefits we’ve already delivered to public sector organisations across Scotland to help them meet their challenging financial targets.”