Public procurement notice: Contract Award Notice
Published: 2017-12-19
Buyer: London Legacy Development Corporation
Country: UK
Contract type: Works
Procedure: Contract award without prior publication
CPV classification: 45000000: Construction work
Estimated value: 990000000 GBP
Award criteria: The most economic tender

Technical requirements: Variation to an existing development agreement awarded in 2015 for the provision of multi-dwelling buildings and individual houses, leisure and retail facilities and related infrastructure in the East Wick and Sweetwater area of Queen Elizabeth Olympic Park.
The contract variation is being implemented in order to maximise the financial returns from the scheme in the current market and thereby enhance the payments to be made to the Contracting Authority under its long-term investment in the development scheme.
a) Amend the payment and long-term ownership provisions relating to the delivery of the private rental units ("PRS Units") to be constructed by the Developer. In summary, the changes will provide LLDC with a higher proportion of rental income from a smaller number of units. Currently, the Agreement provides the LLDC with a smaller percentage from all PRS Units. The changes also replace (only in specific circumstances) an obligation upon the Developer and/or the long leaseholder of the PRS Units to pay to LLDC 2.75 % of any disposal of the PRS units if disposed of within 15 years (none thereafter) with a payment to LLDC (for LLDC to retain) upon completion of each of the long leases of the PRS Units insofar as this obligation relates to Phase 1 and Phase 2 only. There are no changes to this obligation for subsequent phases;
b) Amend the conveyancing structure in respect of the site so that construction will take place under licence rather than a building lease; with head lease and subleases still being granted thereafter;
c) Amend the management provisions relating to the private rental units that LLDC will have an interest in by moving from a structure based upon operating leases between East Wick and Sweetwater Projects (Holdings) Limited and Places For People Homes Limited (“PfP”) (pursuant to which PfP had various direct obligations to LLDC) in the original winning consortium to a separate management services arrangement (pursuant to which PfP has similar direct obligations to LLDC) and in relation to their PRS Units which LLDC will not have an economic interest a structure where a management agreement from PfP is provided in the alternative to an operating lease;
d) As a direct consequence of the Developer being granted licences rather than leases, until the Developer contracts with the local planning authority to adhere to planning obligations relating to the Site (which it shall be obliged to do when such licences are entered into), the Developer will not have a direct obligation to the local planning authority albeit that the Developer will be obliged to indemnify LLDC against all liability resulting from any breach of such obligations;
e) Amendments to the payment arrangements for the specified infrastructure works to change from a target cost model to a lump sum model but without amending the original estimated range of the overall price for specified infrastructure works to LLDC as envisaged by the original procurement and also amendments in respect of permitted cost reimbursement in relation to party wall issues; and
e) A number of minor drafting changes facilitating and ancillary to these amendments will also be necessary.
LLDC considers that the changes do not affect the nature or scope of the construction works and the original contract which was tendered but are minor and in relation to LLDC's total long-term investment in the built assets following construction. The Deed of Variation is, therefore, not a substantial modification to the original Development Agreement as defined by Article 72(4) of EU Directive 2014/24/EU and Regulation 72(8) UK's Public Contracts Regulations because it does not render the contract materially different in character and the tests at Article 72(4)(a)(b)(c)or(d) are not met.
1. LLDC has considered the original procurement and evaluation criteria and is satisfied that the modification does not introduce conditions which may have affected the outcome of the original procurement;
2. Collectively the changes do not alter the overall economic balance of the Development Agreement in favour of the Developer. In particular, the share of any overage payments between the Developer and LLDC remains the same and LLDC shall receive guaranteed payments relating to PRS disposal;
4. A new contractor is not replacing a contractor which was originally awarded the contract as both East Wick and Sweetwater Projects (Holdings) Limited and Places for People Homes Limited were members of the original winning consortium and party to the original contract.
In any event, LLDC considers that the exemption under Article 72(1)(c) would apply as the changes are in order to address changes in the PRS market and generally since the Agreement was entered into which were unforeseeable by the Authority; they do not alter the overall nature of the contract; and there is no increase in price and/or any value in the variation is less than 50 % of the original contract value.
For administrative purposes, various special purpose vehicles wholly owned by East Wick and Sweetwater Projects (Holdings) Limited are also a party to the Development Agreement and will be a party to the Deed of Variation. They are: East Wick and Sweetwater Projects (Phase 1) Limited; East Wick and Sweetwater Projects (Phase 2) Limited; East Wick and Sweetwater Projects (Phase 3) Limited; East Wick and Sweetwater Projects (Phase 4) Limited; East Wick and Sweetwater Projects (Phase 5) Limited; East Wick and Sweetwater Projects (Phase 6) Limited; and East Wick and Sweetwater Projects (Phase 7) Limited. All have the same registered address as East Wick and Sweetwater Projects (Holdings) Limited.
Please contact the Katherine Hosea at the London Legacy Development Corporation for further information using the contact details above.


Winner: East Wick and Sweetwater Projects (Holdings) Limited
Award value: 990000000
Number of bids: 1