Public procurement notice: Voluntary Ex Ante Transparency Notice
Published: 2019-03-07
Buyer: Homes England
Country: UK
Contract type: Works
Procedure: Contract award without prior publication
CPV classification: 45210000: Building construction work | 45211100 | 45211300 | 45211340 | 45211350
Estimated value: 70000000 GBP

Technical requirements: Following a competitive dialogue pursuant to the Public Contracts Regulations 2006, the Homes and Communities Agency (the “Agency”), which now trades as Homes England, entered into an Agreement for Lease (‘AfL’) with Carillion (Maple Oak) Limited (“Carillion MO”) on 16.10.2015. The original procurement exercise was split into 2 separate lots [Lot 1 — Acquisition and development of Tower Works (procured by the Agency) and Lot 2 — The redevelopment/refurbishment of the former Engine House (which sits within the wider Tower Works site and procured by Leeds City Council)]. Carillion MO was awarded Lot 1, to provide works and services connected to the acquisition and development of Tower Works. Subsequent to the liquidation of Carillion PLC, the contractual documents in respect of Lot 1 will be varied as described in this notice. The Agency believes these changes are consistent with regulation 72(1)(d) and 72(1)(e)/72(8) of the Public Contracts Regulations 2015.
The original project comprised of mixed commercial and private/affordable dwellings. Following execution of the Agreement for Lease, the original project structure was subject to variations as set out in VEAT notice reference 2017/S 035-062905. Further changes are required to 3 leases which form part of this structure (2 building leases for Phases 1 and 2, and a lease for Phase 1A); these changes do not require an additional procurement process, for the reasons detailed in section IV.1.1) below.
Subsequent to the liquidation of Carillion PLC, Carillion MO was acquired by another entity. It has changed its name to "Cedar Maple Oak Limited" ("Cedar MO") and appointed new directors.
If the acquisition is construed within the meaning of Regulation 72(1)(d) so that a “new” contractor has replaced the one that was initially awarded the contract, the Agency is satisfied that such replacement fulfils the conditions required by Regulation 72(1)(d)(ii): Cedar MO fulfils the initial qualitative selection criteria; there are no other substantial modifications to the contract nor any aim to circumvent the application of the Public Contracts Regulations 2015.
Pursuant to this, 3 leases which the original parties entered into (2 of which contain building obligations) are being varied in relation to the following issues:
Planning — a revised planning application will be submitted which will reflect changes to the residential element of the project which involve the Net Internal Area (NIA) of the revised scheme being increased by 5,49 % to 15 350 ft
There are amendments to the leases on the procedure for submitting the planning application which are more onerous on the developer than previously. Further detail is set out in Section VI.3).
Termination and compensation — there are additional provisions which clarify the process to follow in the event that the Agency terminates the Lease for Phase 1, and the arrangements for compensation in the event of the Agency disposing of the land. Further detail is set out in Section VI.3).
The changes outlined above operate to protect the position of the Agency. They are not assessed as being substantial under Regulation 72(8) as they neither render the contract materially different in character from the one initially concluded, nor introduce conditions which had they been part of the initial procurement procedure, would have:
Additionally, the Agency is of the view that the modifications do not change the economic balance of the contract in favour of Cedar MO and do not extend the scope of the contract considerably. To that end, the Agency is of the opinion that permitting the above mentioned changes would be compliant under Regulation 72 of the PCR 2015.
Additional detail from Section IV.1.1) on the planning application: Cedar MO is required to submit the draft planning application for the revised residential element to the Agency for approval before the application is made. Cedar MO is required to target submission of the planning application within 2 months of the date of the deed of variation and in any event the application must be made within 4 months of the date of the deed of variation. Following submission of the application Cedar MO is to use reasonable and commercially sensible endeavours to procure the grant of planning within 6 months of the date of the deed of variation. The original lease did not include these specified timings. The deadlines can be extended by agreement unless the delay is caused by unreasonable inactivity on the part of the developer. If planning is refused a procedure has been added in relation to appeals which was not previously included. Cedar MO has the option to pursue an appeal and if it does so there are obligations relating to the conduct of the appeal. These timescales have been included to make the planning process more robust in order to protect the position of the Agency.
An additional safeguard to protect the position of the Agency obliges Cedar MO to have substantially commenced the development works within 6 months from the grant of planning permission. The lease originally required the developer to commence the development within 6 months of the date of the lease. The developer’s obligation in the varied lease is to commence the residential element of the development within 6 months of the date on which satisfactory planning permission is granted and is free from challenge. The deadline can be extended by agreement unless the delay is caused by unreasonable inactivity on the part of the developer.
Additional detail from Section IV.1.1) on the variations to the Phase 1A lease: the Phase 1A lease, which contains no building obligations, is to be varied to include a right of first refusal to the Agency to acquire the lease should Cedar MO look to sell it.
Additional detail from Section IV.1.1) on financial standing provisions: Cedar MO must further evidence its financial suitability to carry out and complete the development prior to commencing work.
Additional detail from Section IV.1.1) on termination and compensation provisions: in particular, the failure of the developer to comply with the obligation to procure planning within the varied timescales detailed above is treated as a fundamental breach in the varied lease, entitling the landlord to terminate the lease immediately. Failure to obtain planning was not treated as a fundamental breach in the original lease. This amendment therefore provides greater protection to the Agency in the event of a breach occurring.


Winner: Cedar (Maple Oak) Limited
Award value: 70000000