Consultation outcome

Surrey (Lot 22) Public Review Closure Notice

Updated 6 October 2023

New procurement to extend coverage of gigabit-capable broadband across the Surrey (Lot 22) region.

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.

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 first identified the areas that were not commercially viable through the Open Market Review (OMR) and Public Review (PR) stages. This allowed us to understand from suppliers if there were any current or planned investment over the next three years in broadband infrastructure (Next Generation Access broadband, ultrafast and gigabit-capable) in the identified geography. For this Lot, the identified geography lay within the Surrey region.

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

Through these stages, BDUK classifies premises as eligible/ineligible for subsidy on the basis of their existing or planned qualifying broadband infrastructure. Details on the classification system of White, Grey, Black and Under Review and methodology can be found in section 3.2 BDUK Classifications and methodology for this PR.

Premises categorised as White by BDUK during OMRs and PRs (ie eligible for subsidy) are grouped into Intervention Areas (IAs). IAs list those premises that will be targeted for subsidy in any potential procurement to follow this PR. To be clear, not all eligible premises may have been targeted for subsidy. The finalised IA will be issued to the market at the Invitation to Tender (ITT) stage of procurement so that suppliers can bid for subsidy to support delivery to this IA.

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

2. Outcome of the preceding Open Market Review

Preceding the current PR stage, BDUK conducted an OMR for Surrey (Lot 22) from 20 October to 22 November 2021. This OMR requested information from suppliers regarding current and planned broadband infrastructure within the next three years.

All meaningful responses to the OMR were considered and where necessary used to determine eligible premises. Suppliers who responded to the OMR were informed of the classifications applied to the existing and planned infrastructure relevant to their submission.

The key findings of the OMR are presented in the postcode-level map showing eligible premises identified through the OMR for Surrey, and a list of eligible postcodes can be found on our website.

3. Outcome of the Public Review

3.1 Background

The PR for Surrey (Lot 22) ran from 29 March to 29 April 2022. During the PR, BDUK invited stakeholders (including broadband infrastructure operators, internet service providers, the public and businesses) to provide feedback regarding which areas were made up of eligible premises.

BDUK also carried out market engagement to seek feedback from suppliers about the design of the proposed IA and Lot, 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 PR stage aimed to validate the outcome of the preceding OMR to ensure that it correctly represented the information provided by suppliers over the course of the OMR.

Suppliers who missed contributing to the preceding OMR, had no definitive plans and/or evidence base on which to substantiate claims at that earlier stage, or had subsequently updated their plans had a final opportunity to notify BDUK before final determinations were made on premises eligibility. All meaningful responses were carefully considered and where necessary utilised to determine eligible premises. BDUK also sought feedback from Surrey County Council. The finalised postcode-level map showing eligible premises is shown in Annex A of this PR Closure Notice. See postcode-level map.

A finalised list of postcodes showing White, Grey, Black and Under Review PR outcome has been published. A list of eligible (White/Under Review) premises is also available to suppliers upon request.

The proposed IA shown in Annex B has been submitted to BDUK’s National Competence Centre and obtained approval to proceed. The finalised IA will be available to bidders at the forthcoming ITT stage.

Changes to the Lot Area

Please note, Lot areas are not fully aligned to Local Authority Boundaries. Specific Lot Boundaries (and IAs) may flex during the OMR, PR and Pre-Procurement Market Engagement (PPME) processes to enable an optimum procurement to be put to the market. 

Since the PR closed on 29 April 2022 there have been changes made to the proposed Lot Boundary Area. These changes are consistent with the revised Lot Boundary Area shown in this document in Annex B which includes the IA referred to as West and Mid Surrey, which is included within the initial-call off areas of the type C cross-regional supplier framework contract.

To be clear, the changes made during the PR to the Lot Boundary Area are as follows:

• The district council areas of Waverley, Guildford, Working, Surrey Heath, Runnymede, Spelthorne, Elmbridge, Epsom & Ewell and the North/West areas of the Mole Valley have been included in the type C cross-regional supplier framework contract.
• The district council areas of Tandridge, Reigate & Banstead and the South/East areas of the Mole Valley have been retained for a potential subsequent intervention in the future.
• These changes were required due to lack of supplier interest that BDUK received in the West and Mid Surrey areas during our market engagement exercises, with concentration of supplier interest predominantly focused in the East Surrey districts.

3.2 BDUK Classifications and methodology for this PR

During the PR, BDUK categorised 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 will 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, we will only release White and Under Review Unique Property Reference Numbers (UPRNs).

3.3 Summary of PR findings - premises eligibility

For presentational purposes only, postcode-level mapping has been used to present the map showing eligible premises. (NB we will 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 in Annex A. Suppliers - please note that this map does not show which UPRNs have been determined as White and Under Review.

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	12,445	6,952	78,829	33,051	95,208
Under Review	8,952	5,164	71,957	73,952	0
Grey	12,276	21,660	194,115	0	0
Black	1,920	34,341	0	0	0
Total	35,593	68,117	344,901	107,003	95,208

3.4 Forthcoming procurement

During the PR stage for Surrey (Lot 22), BDUK sought responses from the market and other stakeholders to validate the Annex A Subsidy Control map (showing Gigabit White, Grey, Black and Under Review determinations). 

BDUK also carried out market engagement to seek feedback from suppliers about the design of the proposed IA and Lot, 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 outcome of this market engagement in relation to the proposed IAs (information provided below) which took place in October 2022 was that BDUK did not receive sufficient and clear interest from suppliers in bidding for our proposed IAs.

Therefore, BDUK decided to not progress Surrey (Lot 22) to procurement based on the proposed IAs options at that time and deferred the Lot area.

For informational purposes, the indicative funding that was initially allocated to this Lot during the Soft Market Testing exercise was as follows:

Type A (Lot 22.01) - Total of 8,627 UPRNs approximately £13,531,087

Type A (Lot 22.02) - Total of 4,637 UPRNs approximately £8,307,785

Type A (Lot 22.03) - Total of 2,846 UPRNs approximately £5,772,512

Type B - Total of 25,380 UPRNs approximately £45,520,543 split as follows:

• Initial Scope: 18,400 UPRNs approximately £35,853,145

• Deferred Scope: 6,980 UPRNs approximately £9,667,398

As referenced above, no procurement type was selected for Surrey (Lot 22) following engagement with stakeholders and the market via the completion of our market engagement exercise in October 2022.

Surrey (Lot 22) Post PR - Closure Notice Updates October 2023

Since then, alternative procurement approaches have been developed for Surrey (Lot 22) during 2023 following the outcome of additional market engagement.

BDUK undertook further PPME in March 2023 with another proposed type A local supplier contract for Surrey (Lot 22) being designed and shared with the market for feedback, referred to as East Surrey (Lot 22.01); with the West and Mid Surrey areas remaining deferred.

The findings from this exercise revealed significant planned commercial activity within the East Surrey districts, leaving only a limited number of premises eligible for subsidy. As such, it was concluded that the standalone type A local supplier contract referred to as East Surrey (Lot 22.01) was not the right approach to take within Surrey (Lot 22) at this time.

Therefore, as of October 2023, in order to accurately ascertain how to best serve these East Surrey premises, we have chosen to pause our procurement timeline and engage the market, councils and other local stakeholders on the most suitable design and scale of  alternative interventions.

Moreover, separately BDUK proceeded to explore alternative routes to market for the West and Mid areas of Surrey (Lot 22) via potential inclusion within the initial call-off areas of our type C cross-regional supplier framework contract.

BDUK undertook PPME in April 2023 for multiple areas of the UK being considered for inclusion within the initial call-off areas for the planned type C cross-regional supplier framework contract, with Surrey (Lot 22) being one of those areas identified for potential inclusion; as an area which previously had no or no appropriate market interest for our previously proposed type A local supplier contracts or type B regional supplier contract IAs.

BDUK found established supplier interest to progress the West and Mid areas of Surrey (Lot 22) for inclusion within the initial call-off areas via the cross-regional supplier framework contract referred to as West and Mid Surrey (Lot 22C).

Further details on the proposed IAs identified for inclusion in the initial call-offs to be procured at the same time as the framework can be found in the Type C Post Public Review - Closure Notice Update - June 2023 published 28 June 2023.

Indicative funding allocated to this procurement for Surrey (Lot 22) is as follows:

• West and Mid Surrey (Lot 22C) Type C - Total of 8,018 UPRNs approximately £23,800,000

This procurement was designed utilising data from the PR conducted in April 2022 mentioned above, supplemented with information derived from the January 2023 National Rolling Open Market Review (NR OMR) undertaken by BDUK.

As of January 2022, BDUK has been asking 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 commercial build with supplier submissions being used to inform eligibility across Project Gigabit.

Following the completion of the evaluation process of responses received from suppliers to the January 2023 NR OMR, the subsequent subsidy control classification results were overlaid and used by BDUK to design and create IAs for the initial call-off areas. Further information can be found within the January 2023 NR OMR Closure Notice published 14 June 2023.

BDUK is confident that integrating these NR OMR findings will ensure the best possible outcome for these IAs, maximising both coverage and value for money accordingly. Our interventions will always flex to respond to both changes in the dynamic marketplace, and the appetite for our procurements. Further information on the NR OMR process can be found in our Subsidy Control Guidance document.

Timescales

The following table summarises the indicative timescales for the procurement.

Activity	Date
Procurement start date (SQ Launch)	27 July 2023
Estimated contract award date	April - June 2024

The cross-regional supplier framework (type C) procurement was successfully launched via BDUK’s procurement portal Atamis on 27 July 2023.

See Project Gigabit procurement timelines for more information.

3.5 Summary of PR findings

• There are 95,208 White premises (out of 615,229) where the market does not intend to build, indicating there is a strong commitment from active suppliers in Surrey to reach a large proportion of premises in the county.

• As such, in order to develop a viable procurement that could be released to the market, BDUK ensured all supplier feedback provided during the Soft Market Testing and PPME exercises was considered during the IA design process for Surrey; which resulted in the Lot originally being deferred due to our proposed IAs not attracting strategic market interest.

• The IA which has been included in the cross-regional supplier framework contract  has been designed to address areas outside of where we expected the commercial sector to build to, prioritising footprints where there is an appetite for BDUK to go further, faster.

• We contacted all known national and local suppliers to ask them to respond to the OMR and PR and multiple iterations of market engagement exercises that have been undertaken for Surrey. This included working closely with Surrey County Council to ensure active and prospective suppliers were aware of these activities and could feed in their responses.

4. Conclusion

A key output for the OMR/PR for Surrey (Lot 22) is the map showing premises that are eligible for subsidy. Annex A sets out this map at postcode level.

From this map, BDUK developed the IA which were proposed to the market during the PPME phase. Annex B sets out the draft IA map at UPRN level.

This identifies the areas where premises are eligible for subsidy. A full list of White and Under Review UPRNs is available on request to suppliers via ukgigabit@BDUK.Zendesk.com.

5. Annex A – Map indicating locations of eligible premises

The postcode level map below indicates areas where those premises eligible for subsidy are located ie White areas. These eligible premises may be included within the IA. 

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

Surrey Lot 22 Postcode level map (showing subsidy control classifications at a postcode level)

6. Annex B – Map of Proposed Intervention Area

The map below highlights the IA that was approved following completion of the PPME exercise in April 2023.

West and Mid Surrey (Lot 22C) 8,018 Initial Scope UPRNs

Please see section 3 above for information on BDUK’s findings, contextualising how eligible premises were included in the proposed IA. 

The above premises-level map indicates eligible premises that form the proposed IA for inclusion in the initial call-off area for West and Mid Surrey as part of the type C cross-regional supplier framework contract.

The cross-regional framework supplier contract only includes a single category of intervention: Initial Scope, where the supplier should build as quickly as possible. We will always either descope Under Review premises or defer build to them and we will always descope Grey or Black premises.

Those premises which are highlighted in orange (8,018 premises) are referred to as the Initial Scope premises that will be targeted for subsidy. 

This map is accompanied by a list of UPRNs that fall within the IA, clearly demarcating which premises are within the Initial Scope which suppliers can request via Atamis. If you are unable to access Atamis, please contact the Supplier Mailbox bduksuppliers@dcms.gov.uk.

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