Fears of More Broadband Delays in Scotland from Gigaclear’s Lawsuit

At the end of last year the Scottish Government revealed that LOT 1 of their £600m R100 (Reaching 100%) project, which had given BT “preferred bidder” status and was aiming to extend “superfast broadband” (30Mbps+) coverage, had become the subject of a legal challenge by Gigaclear. Sadly the case is now threatening more delays.

Back in October 2019 it was announced that BT (Openreach) had won the contracts for both LOT 2 (Central Scotland) and LOT 3 (South Scotland), which was due in no small part to them being the last bidder standing (here). The award of LOT 1 (Northern Scotland) took a bit longer (here), partly because several suppliers were involved in the bidding (BT, Axione UK and Gigaclear) and additional requirements came attached.

The LOT 1 area is the largest one (valued c.£384m) and reflects about 100,000 premises around the Highlands and Islands, Angus, Aberdeen and Dundee. The contract also specified 9 mandated areas where 25% of premises must be able to get speeds of at least 100Mbps (on a Gigabit-capable connection).

At present engineers are expected to reach around half of the target premises in LOT 2 and 3 – approximately 23,000 in Central and 12,000 in the South – by the end of 2021, with the majority of the build completed by the end of 2023 (LOT 3 by summer 2024). But until now there’s been very little information about the status of LOT 1 and Gigaclear’s legal challenge.

The good news is that we finally have some solid details via The Herald, but the bad news is more delays are expected. Gigaclear’s lawyer, Mark Lindsay QC, is understood to have argued that Scottish Ministers made a “manifest error” in the procurement process (apparently this relates to the technical issue of bid scoring) and want the court to set aside BT’s award, with the possibility of financial damages as a “secondary remedy“.

Mark Lindsay QC said:

“The state aid cover expires at the end of the year and clearly it’s in the interests of both parties for this action to be resolved before then.”

The reference to state aid cover above reflects the 2016 agreement with the EU (here) and, due to on-going Brexit trade negotiations, nobody is sure how this will be handled come the start of 2021. We have seen before how major projects (e.g. Devon and Somerset) can suffer significant delays if they get caught out by a change in the state aid regime and so they’ll need to get this resolved before 31st December 2020.

Lord Clark said he agreed that the matter should be dealt with “as soon as possible” and gave the two sides 5 weeks to fine tune their cases before a procedural hearing. The ID and title for this case is as follows: CA172/19 Gigaclear Ltd &c v The Scottish Ministers. As is normal neither the Scottish Government, nor Gigaclear, have commented on the case itself.

One difficulty for Gigaclear here is that, between 2018 and 2019, many of their other state aid supported contracts across England suffered significant deployment delays (often running up to 2 years late) due to a string of major problems with resources, planning and management (Devon and Somerset even scrapped their contract with the ISP).

Suffice to say that this would have made it incredibly difficult for the Scottish Government to hand them such a big contract (i.e. the worst possible timing for such an award); politicians are highly risk averse. As a result there’s likely to be little sympathy for Gigaclear in terms of public support, which may sadly overshadow any potentially valid merits of the ISP’s case. All ordinary people will see is this causing yet more delays to the broadband roll-out.