Audit of Data Communications Company

Ofgem is seeking an independent auditor to annually assess the Data Communications Company’s (DCC’s) contract management and procurement activities.

The DCC is the central communications body licensed to provide the communications, data transfer and management required to support smart metering. DCC was appointed using an outsourced service model, to manage contracted smart metering service providers. As such, external costs compose the largest proportion of DCC’s costs, and it is critical that these contracts are entered into, managed and closed out effectively and efficiently. Each year, Ofgem scrutinises DCC’s incurred and forecast costs through the annual Price Control process to determine whether these costs are economic and efficient. Alongside the cost assessment, DCC also faces financial incentives under the Operational Performance Regime (OPR).

The audit will run on an annual cycle alongside Ofgem’s annual price control process and is expected to have four main stages: evaluation, reporting, consultation and decision. The evaluation stage is expected to take six weeks, with the auditor producing an interim report for DCC to provide comment. In this stage, the auditor will need to assess DCC’s commercial activity over the course of a Regulatory Year to provide a score and rationale against each supporting question against the NAO framework, covering contract management, procurement and re-procurement.