Green Homes scheme procurement 'over-ambitious'

8 September 2021

The government should engage properly with the supplier market for any future decarbonisation schemes, according to the National Audit Office (NAO).

In a report on the Green Homes Grant Voucher Scheme, the NAO said it was delivered to an over-ambitious timetable and was not executed to an acceptable standard, which significantly limited its impact on job creation and carbon reduction.

The use of a standard government contract limited the commercial options, and the timescale limited its ability to fully develop the requirements of the contract, the NAO said.

The Department for Business, Energy & Industrial Strategy (BEIS), which ran the scheme, only consulted with installers after it was announced, which limited the opportunities to include industry views in the design.

The scheme, which ran from September 2020 to March 2021, was part of the government’s plan to deliver net zero by 2050 by decarbonising home heating.

It offered homeowners up to £5,000, or £10,000 for low-income households, for the installation of energy efficient improvements.

It was expected to support up to 82,500 jobs over six months, and enable up to 600,000 households to save up to £600 on their energy bills. However, it failed to reach these targets, with BEIS estimating that only £314m of the £1.5bn funding available would be spent on the scheme, with £50.5m going on administration.

The NAO said the 12 weeks given to BEIS by the Treasury to design the scheme, consult with stakeholders, and procure an administrator was over-ambitious”.

BEIS decided using a Crown Commercial Services framework, a standard government contract with pre-assessed suppliers, was the only way to meet the timescale while minimising the risk of legal challenge and high costs, the NAO said.

However, this meant it was limited to a pool of 13 framework suppliers with standard contract terms, which did not provide financial incentives for timely processing of voucher applications.

BEIS was still developing the scheme at the time of the procurement, making it more difficult to set out clear contractual obligations, with some terms needing to be agreed after the contract was awarded. The winning bidder was ICF Consulting Services, which scored highest overall and was the lowest cost.

Other bidders said at least 15 weeks would be needed to fully implement a system, with greater amounts of manual processing in the interim. But ICF said it could rapidly adapt its existing grant administration software in six-and-a-half weeks at lower cost, said the NAO.

BEIS did not accept the system ICF delivered in early November and instructed it to implement a rectification plan. ICF told the NAO BEIS’s requirements for the system were complex, not sufficiently clear, and in some instances changed from the procurement stage.

The NAO said many homeowners and installers had a poor experience of the scheme, with delays issuing vouchers to homeowners and paying installers. More than 3,000 complaints were made between October 2020 and April 2021

BEIS decided to close the scheme early this year, saying there had not been enough improvement in performance.

The NAO said BEIS is currently negotiating with ICF to work out how to process remaining voucher applications, and to reach a commercial settlement for its performance.

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