Introduction
The delivery of water infrastructure in the United Kingdom has undergone significant transformation in recent years, driven by innovation and regulatory change. One of the most notable developments is the introduction of the Direct Procurement for Customers (DPC) regime. First outlined by Ofwat in the 2019 Price Review (PR19) and reinforced in the 2024 review, Ofwat now expects major new infrastructure projects to be delivered through competitive models by default. Ofwat’s guidance, including its Major Projects Stage Assessment process, provides a comprehensive framework for this approach.
Among the flagship schemes adopting the DPC model is the Haweswater Aqueduct Resilience Programme (HARP), a critical project designed to secure the continued supply of high-quality water to the North West of England, (read more). Through our involvement advising STRABAG UK on HARP, DWF has gained unique insight into the practical implementation of the DPC regime, positioning us among the few law firms with first-hand experience of this evolving procurement model.
What is the DPC regime?
The DPC regime requires water companies to competitively tender the design, build, financing and operation of major infrastructure projects to third-party providers, rather than relying solely on in-house delivery or traditional supply chain arrangements. This process results in the appointment of a Competitively Appointed Provider (CAP) to manage delivery. The regime seeks to encourage competition beyond the usual price controls, deliver better value for customers through cost savings and innovation, and improve project delivery by leveraging private sector expertise and financing. Transparency and accountability are central to the process.
Projects with a whole-life total expenditure exceeding £100 million are considered suitable for DPC, and Ofwat has confirmed that projects over £200 million should default to this model. By inviting competitive bids, water companies can secure efficient and innovative solutions, potentially reducing costs and improving service for customers.
Please see this useful Ofwat diagram on page 5.
The DPC regime and its implementation
The Cunliffe review
Risk allocation
Risk allocation under DPC largely mirrors that of PFI and PPP projects, covering familiar concerns such as land acquisition, ground conditions and delay or cost overruns. CAPs typically flow down risks from the project agreement, known as the CAPA, to contractor(s), supported by security packages including bonds and guarantees.
