Public procurement notice: Voluntary Ex Ante Transparency Notice
Published: 2019-07-12
Buyer: Borough Council of Gateshead
Country: UK
Contract type: Services
Procedure: Contract award without prior publication
CPV classification: 45000000: Construction work | 71000000 | 71500000
Estimated value: 1000000000 GBP

Technical requirements: Gateshead Housing Market Renewal and Growth — Procurement of a Partner to Participate in a Joint Venture Vehicle
In 2008 the Council undertook a competition in accordance with the competitive dialogue procedure pursuant to the Public Contracts Regulations 2006 to procure a Private Sector Partner (the PSP) to establish a Joint Venture Vehicle (JV) to deliver successful and sustainable housing–led regeneration. The Council awarded the contract to Evolution Gateshead Developments LLP (EG) and the JV, Gateshead Regeneration LLP (the GRP), was set up in 2012. The Council and EG each have a 50 % interest in the GRP. The remit of the JV was advertised as being flexible and wide ranging and activities were to include master planning, promotion, design and/or delivery of housing development and remediation but could also include (without limitation) commercial development, neighbourhood/public realm improvements and community schemes as part of the holistic housing led regeneration of the Gateshead area. Under the terms of the original deal a number of development sites are allocated to the GRP.
The changes proposed in relation to the new way of working between the parties for the purposes of the GRP do not comprise substantial modifications within the meaning of Regulation 72 of the Public Contracts Regulations 2015. The GRP will remain with the same 50/50 ownership. It will continue to be the vehicle used to deliver the development as envisaged in the original procurement documents and the bid submitted by EG, the successful bidder. Briefly, those changes are as follows:
1) GRP allocated sites currently being developed under the existing arrangements will remain under those arrangements with no change to the delivery structure.
2) For all other GRP allocated (new) sites a simplified delivery contractual structure with EG will be implemented but EG will remain as the appointed property development manager but with a single fee to be paid by GRP;
3) The contracting parties with the Council for acquisition of sites and the provision of the property development and management services will remain the same;
4) For the new sites the existing Property Development and Management Agreement (PDMA) will be amended to include the additional development management services required to accommodate the new delivery model;
5) For the new sites all trade appointments will now be made directly by GRP and managed by EG, there is no build contract. As above, the services for the new sites and, in respect of the downstream chain under the joint venture, the contractual structure for provision of works will change. Again, this is not a fundamental part of the services to be provided and there will be no benefit from these changes being made;
6) EG will also be providing company secretarial and administrative support and details of the services shall be set out in a LLP Admin Agreement;
7) The fee payable to EG will be a reduction in the percentage of Gross Development Value (GDV) for each Scheme for all development, planning, construction, sales and company secretarial services. The developer margins in each scheme for GRP will not change from those at the time of the original bid. The split of profits between the members of GRP will not change. EG will receive a straight fee for the provision of the services which it is sub-contracting with costs passed straight through. GRP only makes its original development profit share;
8) The production overheads will be in addition to the fee and included within the build costs for the Scheme. This is no change in cost from the current operation;
9) The Council has received independent commercial analysis that shows there is an additional funding requirement of 7 200 000 GBP across the GRP site portfolio. The funding will be provided from a combination of Homes England (HE) and the Council's own resources through its capital programme. The Council will enter into funding agreements with the GRP in which the Council will provide the GRP with funding of up to 7 200 000 GBP to address specific site constraints with allocations agreed on a site by site basis and set out in the relevant site business plan. As part of this arrangement the Council will enter into a funding agreement with HE in relation to the HE Local Authority Accelerated Construction Programme. HE will provide funding to the Council for the acceleration of the development of land at specific sites identified by HE within the GRP portfolio. Development costs being funded include costs for the remediation, demolition, site investigation, ecological works and infrastructure works at the sites and include delivery obligations for GRP relating to pace, the use of modern methods of construction and clawback provisions.
The Council intends to make changes to the contractual structure and ways of working with the joint venture partner in this project and these changes are described in Section II.2.4 above. This section also explains why the Council believes that there is no substantial modification to the existing contracts and the changes therefore fall within Regulation 72(1)(e) Public Contracts Regulations 2015 (PCR).
To document the funding arrangements described in II.2.4 the Council requires to enter into a funding agreement with the GRP. There may also be consequential amendments required to the original the suite of documents entered into between the parties to govern the joint venture relationship, including the GRP Members' Agreement between the Council, Evolution Gateshead Developments LLP, Gateshead Regeneration LLP and Galliford Try plc (as Guarantor) and the Agreement for Sale between the Council, Gateshead Regeneration LLP and Galliford Try plc relating to the sale and transfer of certain sites from the Council to the GRP. The Council considers that the contracts can be modified without a new procurement procedure pursuant to Regulation 72(1)(a) of the PCR. The suite of documentation issued as part of the original procurement envisaged that additional funding may be required during the life of the GRP. The ITPD issued as part of the original procurement envisages that additional funding may be required over the lifetime of the GRP (including funding from Homes England) and that approval of additional funding requirements would be a matter reserved to the Council’s Members and Homes and Communities Agency (now re-named as Homes England). The original Members Agreement provides that certain matters in relation to funding are reserved matters. There is a process set out in relation to additional capital contributions being provided from members. The funding is being used for activities that were always envisaged as being within the scope of the JV (design and/or delivery of housing development and remediation) and so is not altering the overall nature of the contract.


Winner: Evolution Gateshead Developments LLP
Award value: 1000000000