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In-house: National Grid drops three firms from panel following ‘pay to play’ review

BDB Pitmans, Irwin Mitchell and Norton Rose Fulbright have been dropped from National Grid’s panel, understood to be worth about £12m a year in the UK alone, following an extensive tender process which saw firms pay to compete for spots.

Womble Bond Dickinson is the sole new appointee on a roster which reduced the number of advisers from 12 to ten. The review, which began in May this year, was potentially going to reduce the number of advisers to six, but Addleshaw Goddard, Bryan Cave Leighton Paisner, CMS Cameron McKenna Nabarro Olswang, Dentons, DLA Piper, Eversheds Sutherland, Herbert Smith Freehills, Linklaters and Shakespeare Martineau all retained their spots.

National Grid group general counsel and company secretary Alison Kay (pictured) said more than 60 companies applied. The new contract begins on 1 February 2020 for three years, with an option to extend for a further two years. The panel was previously extended in 2017 following the last full review in 2015.

The panel features full services and specialist advice firms covering regulated and non-regulated property and planning, corporate services, as well as gas and electricity legal work.

‘The key objective of the review was to create a panel that is efficient, effective, future-facing and innovative,’ Kay commented. ‘Having run an extensive process over the last seven months, the interest we received was remarkable. We had over 60 companies apply.’

National Grid’s panel review was notable as one example of major companies starting to press external counsel to pay to compete for adviser spots, which sees law firms paying to be ‘validated’ by a procurement company and effectively covering the cost of the agency.

Firms pitching for the FTSE 100 energy company’s panel had to pay to register on a system called UVDB, provided by procurement agency Achilles. This system provides more than 65 buyers in the utilities sector, including National Grid, Thames Water and SSE, with access to more than 7,000 suppliers that Achilles audits. Santander, meanwhile, is believed to have used the company Hellios for a similar process.

One firm told Legal Business that the first stage supplier qualification process for National Grid cost £540, followed by a £1,200 fee for an all-day assessment. Covering the third party procurement costs came as a surprise and was described as ‘unusual’ by one firm.

National Grid responded by saying it and other water, energy, transport and postal services companies had to comply with the Utilities Contract Regulations 2016, which require it to competitively tender works, goods and services above certain thresholds. To do this it used the Achilles UVDB system, which both advertises new tender opportunities and annually audits supply chains.

They added that before publishing its Legal Services Framework Tender earlier this year, vendors were told they needed to register on the system through both a letter and a notice on the OJEU.

‘The interested parties were made aware of the requirement to undertake any required audit prior to contract award and were notified of the associated cost in the same letter sent in March. They were advised the audit process could have been completed by contract award,’ a spokesperson said.