Consultation outcome

Durham, Tyneside and Teesside (Lot 4) and Northumberland (Lot 34) Public Review Closure Notice

Updated 17 October 2024

New procurement to extend coverage of gigabit-capable broadband within Durham, Tyneside, Teeside and Northumberland.

Everything published prior to Annex C within this Public Review (PR) Closure Notice reflects the outcomes of the PR conducted from 18 June to 18 July 2021, which was published on 5 November 2021.

Annex C within this PR Closure Notice, published 19 December 2022, summarises changes that have since occurred within the procurement type B regional supplier contract in the North East of England across Lots 4 and Lot 34 only.

Changes to the proposed Intervention Area (IA), volumes of premises eligible, eligible area maps, IA maps, numbers of premises categorised as White, Grey, Black and Under Review and revised timescales of procurement are also detailed.

1. Introduction

The government’s ambition is to deliver nationwide gigabit-capable broadband as soon as possible. We recognise that there is a need for government intervention in the parts of the country that are not commercially viable; this is why the government has committed £5 billion for the hardest to reach parts of the country, ensuring that all areas of the UK can benefit. This will be spent through a package of coordinated and mutually supportive interventions, collectively known as Project Gigabit.

As part of this, BDUK is developing a procurement approach for funding contracts to suppliers delivering gigabit-capable wholesale infrastructure. This procurement approach will be a successor to the highly successful Superfast broadband programme.

We wish to work collaboratively with industry to maximise efficiency, minimise market distortion and achieve our objectives within a tight time frame. To do this, we must first identify the areas that are not commercially viable.

Durham County Council (DCC) (on behalf of BDUK) conducted an Open Market Review (OMR) for Lots 4 and 34 from 17 March to 14 April 2021. The OMR requested information from suppliers regarding details and supporting evidence of any current and planned investment in broadband infrastructure (within the next three years) that claim to be next generation access (NGA), ultrafast or gigabit-capable.

Following assessment of the classifications, individual discussions were held between DCC and the following local authorities:

• Gateshead Council
• South Tyneside Council
• Tees Valley Combined Authority representing the five Tees Valley local authorities of Darlington, Hartlepool, Middlesbrough, Redcar and Cleveland and Stockton

The PR closed on 18 July 2021. The PR process aims to validate the outcome of the OMR to ensure that it correctly represents the information provided by suppliers over the course of the OMR and to ensure that eligible premises are targeted for government subsidy.

Further information on the OMR/PR process and how we reach our conclusions can be found in the Subsidy Control Guidance document.

Digital Durham and BDUK invited stakeholders (including broadband infrastructure suppliers, internet service suppliers, the public, and businesses) to provide feedback about the proposed lot for government investment (intervention).

The PR notified that premises identified by BDUK as eligible, as described in section 3 of the PR, may be grouped into one or more appropriately sized IAs. The IAs have been issued to the market (20 October 2021) so that suppliers can bid for funding to support delivery to those areas.

The box below shows the order of processes, from OMR to procurement.

1. OMR

2. Public Review

3. Determine intervention areas for procurement

4. Procurement

2. Outcome of the Public Review

All meaningful responses to the OMR and PR were carefully considered and where necessary used to determine eligible premises. The initial postcode-level map showing eligible premises is shown in Annex A of this PR Closure Notice and the revised postcode-level map is shown in Annex C.

In accordance with the OMR/PR processes, supplier data submitted during the OMR and PR has been incorporated into the map using a methodology that protects commercially sensitive supplier data. BDUK corresponded with suppliers during the OMR/PR to advise how their data and information was treated in developing the maps.

The finalised eligible premises and proposed IAs will be submitted to BDUK’s National Competence Centre for approval against the UK Subsidy Control Regime.

3. Timescales

The following table summarises the indicative timescales for the procurement:

Activity	Date
Procurement start date	January 2022
Estimated contract award date	November 2022

See Project Gigabit quarterly delivery plan updates for more information on procurements BDUK intends to run.

4. Final eligible area map

BDUK classify premises on the basis of their existing or planned qualifying broadband infrastructure:

• White - indicates premises with no gigabit network infrastructure, and none is likely to be developed within 3 years

• Grey - indicates premises where a single qualifying gigabit infrastructure from a single supplier is available, or is to be deployed within the coming 3 years

• Black - indicates premises with two or more qualifying gigabit infrastructures from different suppliers being available, or will be deployed within the coming 3 years

In addition, the proposed IA may include a number of Under Review areas. These are areas where suppliers have reported planned commercial broadband coverage with an evidence base in support of claims, but those plans have been determined through the OMR/PR as requiring continued monitoring and verification within the 3-year period by BDUK to ensure that plans are fulfilled. BDUK may request commitment from the supplier that significant progress is made within three years. In the event that these commercial plans fall away these premises will be mapped as eligible and form part of the proposed IA and therefore eligible for intervention via this aid measure.

BDUK will target only those premises identified as White.

Postcodes have been used to summarise the premises classifications and map the proposed eligible areas. For this purpose, the postcodes have been classified as follows:

1. A postcode is White if any White premises are present.
2. A postcode is Under Review if any Under Review premises are present.
3. A postcode is Black if all premises in the postcode are classified Black.
4. A postcode is Grey if all premises are Grey or a mixture of Grey and Black.

The outcome of the PR is summarised in terms of White, Grey, Black and Under Review postcodes and premises below:

Postcode Classification	Number of postcodes	Number of gigabit Black premises	Number of gigabit Grey premises	Number of gigabit Under Review premises	Number of gigabit White premises
White	23,630	2,506	88,244	69,903	198,249
Under Review	24,553	3,081	79,042	372,435	0
Grey	25,628	14,622	506,434	0	0
Black	1,546	33,857	0	0	0
Total	75,357	54,066	673,720	442,338	198,249

The postcode level map showing premises classification is provided in Annex A.

5. Procurement and commercial approach

During the PR stage for Lots 4 and 34, Digital Durham and BDUK sought responses from the market and other stakeholders to validate the preceding OMR’s Subsidy Control map (showing White, Grey, Black and Under Review determinations) - and also carried out market engagement to seek feedback from suppliers about the design of the IA and Lot design, the procurement type (A - local supplier, B - regional supplier or C - cross regional supplier) and also the capacity of the market to bid for a potential procurement.

The procurement types selected for Durham and Northumberland (Lots 4 and 34), following engagement with market and other stakeholders, are a procurement type A (a local supplier contract) in Lot 4, a procurement type A in Lot 34, and a joint procurement type B (a regional supplier contract). A premises-level map detailing these proposed IAs can be found in Annex B.

Durham and Northumberland (Lots 4 and 34) forthcoming procurements will be carried out in accordance with the Public Contracts Regulations 2015 (PCR2015). BDUK procurement approaches are designed to address the scale of the individual procurements. Durham and Northumberland (Lots 4 and 34) procurements will be conducted in a transparent and nondiscriminatory manner.

Forthcoming procurements - Durham and Northumberland (Lots 4 and 34)

The total public funding investment will be based on the final number of premises requiring subsidy. BDUK will allocate a specific budget drawn from public funding, for this area, at the procurement stage. The budget will be specified within the forthcoming Invitation To Tender (ITT) documentation. Details of any restrictions on the use of public subsidy will be explained in the tender documentation. BDUK intends to procure gigabit-capable solutions – those capable of achieving a minimum of 1Gbps download speed - for eligible White premises identified and shown in this PR Closure Notice. To be clear, BDUK will target selected White premises for subsidy, and this will be set out in the forthcoming ITT documentation.

6. Annex A - Map of eligible areas

7. Annex B - Map of proposed Intervention Areas

Green - Lot 4 type A, Lot 34 type A
Blue - Combined Lots 4 and 34 type B (initial scope)
Red - Combined Lots 4 and 34 type B (deferred scope)

8. Annex C - Post PR Closure Notice updates - December 2022

Everything prior to Annex C within this PR Closure Notice reflected the outcomes of the PR conducted from the 18 June to 18 July 2021.

This Annex summarises changes that have since occurred within the procurement type B regional supplier contract in the North East of England across Lot 4 and Lot 34 only. Changes to the proposed IA, volumes of premises eligible, eligible area maps, IA maps, numbers of premises categorised as White, Grey, Black and Under Review and revised timescales of procurement are detailed.

The two type A local supplier contracts in the North East continued to use the PR outcomes from 2021 throughout their procurements.

Section 5 of this document details the procurement types selected for Durham and Northumberland following market engagement. These were two type A local supplier contracts (one in Lot 4 and one in Lot 34 - now referred to as Lot 4.01 Teesdale and Lot 34.01 North Northumberland - see BDUK summer update 2022 and BDUK quarterly updates). In addition, there was a joint type B regional supplier contract across Lots 4 and 34 (now referred to as Lot 4 North East England in BDUK communications).

Since the publication of the original PR Closure Notice, the type A local supplier contracts have been successfully awarded and live contracts are now in place. These procurements utilised data from the PR conducted in 2021 (relevant maps showing type A IAs remain in Annex A and B of this document).

For more information on these two type A contracts, see below:

• Lot 4.01 Teesdale - a £6.6 million contract signed 22 September 2022, covering over 4,000 premises in Teesdale in Durham
• Lot 34.01 North Northumberland - a £7.3 million contract signed 14 October 2022, covering over 3,750 premises in North Northumberland

As in Section 5, the budget which BDUK drew down from public funding and allocated to the above two type A local supplier contracts is also specified in the ITT documentation from the procurement stage. Details of any restrictions on the use of public subsidy was explained in the tender documentation. These can be accessed on BDUK’s procurement portal or suppliers contacting the Supplier Mailbox at suppliers@bduk.gov.uk. BDUK procured gigabit-capable solutions – those capable of achieving a minimum of 1Gbps download speed – for eligible White premises identified as shown in previous sections of the PR Closure Notice.

BDUK targeted White premises for subsidy, and this was set out in the ITT documentation for the type A procurements. The procurements were carried out in accordance with the Public Contracts Regulations 2015 (PCR2015). BDUK procurement approaches were designed to address the scale of the individual procurements. The procurements were conducted in a transparent and non-discriminatory manner.

Post PR closing, the procurement type B regional supplier contract, covering Lot 4 and 34 in the North East of England, launched the ITT stage of the procurement process in January 2022. This was for suppliers who passed the Supplier Questionnaire (SQ) stage of the procurement process. This used the data gathered during the PR that concluded in July 2021 and as outlined in all previous sections of this document. ITT submissions were received from tenderers at the end of July 2022 and evaluation of supplier submissions then commenced.

In parallel to the type B ITT launch, BDUK also launched the National Rolling Open Market Reviews (NR OMR) in January 2022. BDUK asks suppliers delivering gigabit-capable infrastructure to submit national data returns on a 4-monthly basis (January, May and September) to provide detailed build plans at premises level. The purpose of the NR OMR is to ensure that BDUK has the most up to date information about suppliers’ existing and planned build over the next 3-year period on a national basis. This supports better strategic planning and prioritisation of Project Gigabit procurement IAs. As a result, this streamlines the previous local OMR process and minimises the risk of BDUK intervening in an area that would disrupt existing commercial plans.

As BDUK’s autumn update 2022 states, a broad range of suppliers have engaged extensively and positively with our first set of procurements. Their responses give us an excellent understanding of how the market is developing and how our procurements can best deliver gigabit-capable coverage to a particular area. Responses from commercial suppliers to the May 2022 NR OMR showed BDUK that there will be significantly more commercial delivery in the North East than was identified through the initial PR, specifically in the original IA for the type B regional supplier contract across Lots 4 and 34.

Using the more recent data, BDUK has updated the scope of the IA for the type B regional supplier contract only, in line with the process set out in the Open Market Review and Public Review guidance. This will ensure the best possible outcome for the area - maximising coverage and value for money - and we have revised our procurement timeline accordingly.

BDUK relaunched the ITT stage of the procurement process. A revised ITT was relaunched in November 2022, where suppliers who were already actively preparing responses to the original ITT have been given an expedited 8-week period to submit a response to the revised ITT documentation and revised scope and IA.

The amount of government subsidy, as well as the number of eligible premises, has reduced - details of which are given further on in this Annex. BDUK believes this approach will achieve the best possible outcome for citizens in the North East; it avoids disrupting suppliers’ existing commercial plans and subsidising suppliers to build where the commercial market is already going.

Our interventions will always flex to respond to both changes in the dynamic marketplace, and the appetite for our procurements. We need to minimise the risk of subsidising projects to reach areas that are likely to be served commercially, and we may defer or revise our procurements in order to ensure we support the best way to deliver gigabit-capable coverage to an area.

To produce a revised IA, BDUK used the data gathered from the local PR that concluded in July 2021, and overlaid NR OMR data from May 2022, which highlighted the areas in which commercial broadband suppliers were building to in our original proposed IA which went out with the original ITT in January 2022.

During the process to revise the type B regional supplier contract IA, BDUK continued to categorise premises as gigabit White, Grey, Black or Under Review.

Subsidy control classifications are set out below:

• White - indicates premises with no gigabit network infrastructure and none is likely to be developed within 3 years^{[footnote 1]}
• Grey - indicates premises where a single qualifying gigabit infrastructure from a single supplier is available, or is to be deployed within the coming 3 years^{[footnote 1]}
• Black - indicates premises with two or more qualifying gigabit infrastructures from different suppliers being available, or will be deployed within the coming 3 years^{[footnote 1]}
• Under Review - indicates premises where suppliers have reported current or planned commercial broadband coverage, but where claimed current gigabit coverage has not been verified, or, in respect of planned build, where evaluators are confident that gigabit infrastructure will be delivered, but some risks to delivery remain, or there are some gaps in evidence.

BDUK has continued to only provide subsidy to target premises that have been designated as White. Premises which have been designated as Under Review may be included within the Deferred Scope of a procurement. Where this is the case, a further review will be undertaken to confirm whether they are Grey or White before they are released for build.

In accordance with the OMR/PR processes, supplier data submitted during the OMR and PR has been mapped using a methodology that protects commercially sensitive supplier data. To reflect this sensitivity, BDUK only releases White and Under Review Unique Property Reference Numbers (UPRNs).

For presentational purposes only, postcode-level mapping has been used to present a map showing eligible premises for the revised type B regional supplier procurement in the North East (NB we will still only subsidise build to premises which have been designated as White - postcodes are not used to determine IAs for subsidy).

For this purpose, postcodes have been classified as follows:

1. A postcode is White if any White premises are present.
2. A postcode is Under Review if any Under Review premises are present.
3. A postcode is Black if all premises in the postcode are classified Black.
4. A postcode is Grey if all premises are Grey or a mixture of Grey and Black.

A postcode-level map summarising these premises classifications is provided further in this Annex. Suppliers - please note that this map does not show which UPRNs have been determined as White and Under Review.

BDUK does not change the Subsidy Control categorisations when creating the IAs. The revised IA for the North East uses the Subsidy Control categorisations taken from evaluated outcomes from the North East PR and overlaying May 2022 NR OMR data over the North East PR data for the procurement type B regional supplier contract across Lots 4 and Lot 34 in the North East, which is summarised in terms of White, Grey, Black and Under Review postcodes and premises below:

Postcode Classification	Number of postcodes	Number of gigabit Black premises	Number of gigabit Grey premises	Number of gigabit Under Review premises	Number of gigabit White premises
White	16,816	1,838	64,171	37,194	136,277
Under Review	16,976	3,804	81,625	209,354	0
Grey	25,206	19,529	481,383	0	0
Black	2,496	45,790	0	0	0
Total	61,494	70,961	627,179	246,548	136,277

An updated postcode level map showing premises classifications is provided below.

This postcode level map indicates areas where those premises eligible for subsidy are located ie White areas. These eligible premises may be included within the IA for the joint procurement type B regional supplier contract in the North East.

Black, Grey and Blue (Under Review) areas indicate where those premises ineligible for Subsidy are located.

Map indicating locations of eligible premises - revised type B regional supplier procurement

Map of proposed Intervention Area - revised type B regional supplier procurement

The above updated map shows the eligible premises that form the proposed revised IA for the type B regional supplier procurement in the North East of England.

The map shows ‘Initial Scope’ premises that will be targeted for subsidy, as well as ‘Deferred Scope’ premises, which will not be targeted for subsidy unless they have been determined to be eligible (White) as part of BDUK’s monitoring process.

This map is accompanied by a list of UPRNs that fall within the IA, clearly demarcating which premises are within Initial or Deferred Scope which suppliers can request via suppliers@bduk.gov.uk.

The joint type B regional supplier procurement in the North East of England, covering Lots 4 and 34, is now live. The total public funding investment was based on the number of premises requiring subsidy. BDUK allocated a specific budget drawn from public funding for this area at the procurement stage.

The budget information is specified within the ITT documentation as well as below. Details of any restrictions on the use of public subsidy are explained in the tender documentation. BDUK intends to procure gigabit-capable solutions - those capable of achieving a minimum of 1Gbps download speed - for eligible White premises identified and shown in this Annex; to be clear, BDUK has targeted selected White premises for subsidy, and this is set out in ITT documentation. ITT documentation can be accessed on BDUK’s contracts portal or by contacting suppliers@bduk.gov.uk.

Indicative funding allocated to the revised procurement type B in the North East of England is shown in the table below:

Lot 4 type B regional supplier contract - North East England - original versus revised funding and UPRN numbers

Original	Original figure	Revised figure
Funding Allocated	£89.6 million	£82.7 million
Total number of uncommercial premises in IA	61,800	53,256

The 53,256 UPRNs shown in the table above is split as follows:

• Initial Scope: 39,136 UPRNs, with a funding value of £62.5 million

• Deferred Scope: 14,120 UPRNs, with a funding value of £20.2 million

The procurement type selected has remained the same, procurement type B - a regional supplier contract. Please see the premises level map earlier in this Annex. As detailed in Section 5, during the PR stage for Lots 4 and 34, Digital Durham and BDUK conducted market engagement and feedback from suppliers about the design of the IA. The procurement type B was deemed by BDUK to still be eligible even post the revision to the proposed IA which is now in ITT.

The regional supplier contract includes two categories of intervention: Initial Scope, where the regional supplier should build as quickly as possible and Deferred Scope where we wait and see whether commercial plans or voucher projects translate to delivery, but we could then build to if not. These numbers have been highlighted above.

For premises that are included in the Deferred Scope of contracts, we will seek a price from the regional supplier, but will not authorise build unless and until they are re-classified as White. We will always either descope Under Review premises or defer build to them and we will always descope Grey or Black premises.

The type B regional supplier contract procurement in the North East of England across Lot 4 and Lot 34 continues to be carried out in accordance with the Public Contracts Regulations 2015 (PCR2015). BDUK procurement approaches are designed to address the scale of the individual procurements. The procurement is being conducted in a transparent and non-discriminatory manner.

The Authority, BDUK, reserves the right to amend or withdraw the procedure for the competitive sourcing process at any time. Any amendments will be done in line with the procurement regulations.

Suppliers acknowledge and accept that by issuing this document (revised PR Closure Notice) BDUK shall not be bound to progress or conclude any related procurement activity.

Under no circumstances shall the Authority incur any liability in respect of the information contained in this document or any supporting documentation.

The following tables summarise the timescales followed for the two type A local supplier procurements in the North East that are now in live contracts, and the revised indicative timescales for the type B regional supplier procurement:

Lot 4.01 type A local supplier contract - Teesdale

Activity	Date
Procurement start date (ITT)	January 2022
Actual contract award date	August 2022
Actual contract commencement date	September 2022

Lot 34.01 type A Local Supplier Contract - North Northumberland

Activity	Date
Procurement start date (ITT)	January 2022
Actual contract award date	September 2022
Actual contract commencement date	October 2022

Lot 4 type B regional supplier contract - North East England

Activity	Date
Procurement start date (ITT)	January 2022
Original estimated contract award date	November 2022
Revised ITT start date	November 2022
Revised estimated contract award date (subject to change)	April to May 2023

See Project Gigabit Quarterly Delivery Plan Updates for more information on procurements BDUK intends to run.

Update - January 2024

As confirmed in section 5 of the V2 Closure Notice, the procurement type for Northumberland Lot 34, following extensive engagement with the market and other stakeholders, was decided to be a type A local supplier contract for Lot 34.01.

Following the conclusion of the contract’s Stage 1 on 30 April 2023, BDUK and the supplier now have a better understanding of the Intervention Area. As such, on 10 August 2023 we approved a Change Request via the closure of Stage 1 which removed 40 premises from scope whilst adding 148. This is to ensure we are targeting the correct premises for subsidy in the procurement and guaranteeing both the contract’s delivery and value for money.  

Changes to the proposed Northumberland Lot 34.01 IA, specifically to the volume of premises included in this intervention, are detailed below.

Indicative funding allocated to the revised Northumberland Lot 34 contract is shown below:

Northumberland Lot 34.01 Type A (original versus revised funding and UPRNs)

Original	Original figure	Revised figure
Funding Allocated	£7.3m	£6.6m
Total number of uncommercial premises in Contract	3,790	3,898

An updated map of the Intervention Area is available on request by contacting the Supplier Mailbox at suppliers@bduk.gov.uk. Once a request has been received to produce a map it will be added to this Closure Notice. 

There are no other changes to Northumberland Lot 34 Type A to report at this time. 

See BDUK quarterly updates for more information on procurements BDUK intends to run. 

In line with the timeline for the North East type B regional supplier procurement, BDUK awarded the contract to the preferred bidder in May 2023. However, the bidder and BDUK were unable to sign the contract and subsequent discussions with another bidder were also unsuccessful. The outcome of this procurement is no award and the procurement was closed on 11 January 2024. BDUK is designing an Intervention Area from Lot 4 to be included in the Type C framework, whilst some premises are being made eligible for a Gigabit Voucher. Eligibility for these interventions will be based on the outputs of the latest Open Market Review collection. At time of publication of this update, this is the September 2023 NR OMR.

1. There may be occasions where credible plans extend beyond a 3-year period, in that case, these may be taken into account. ↩ ↩² ↩³