Public procurement notice: Contract Award Notice
Published: 2019-12-30
Buyer: Knowsley Metropolitan Borough Council
Country: UK
Contract type: Works
Procedure: Contract award without prior publication
CPV classification: 44212381 | 45111000 | 45210000: Building construction work | 45213111 | 45351000
Estimated value: 21500000 GBP
Award criteria: Lowest price

Technical requirements: As part of the Knowsley Metropolitan Borough Council’s (the ‘Council’) ‘Strategy for Knowsley 2016-2020’, the Council committed to delivering a new retail offering in Kirkby town centre in order to regenerate the area. The Council identified a number of sites in the town centre area, that it wished to purchase in order to achieve its regeneration objective. The sites were owned by St Modwen Developments (Kirkby 2) Ltd (‘St Modwen’). It was a condition of sale of the sites that the Council entered into a development management agreement with St Modwen under which St Modwen would design and build a retail development and manage the leasing of that development. The value shown in the section below is the current estimated value but may vary upwards or downwards.
The Council has acquired further land interests in Kirkby Town Centre to facilitate regeneration. These were Kirkby Town Centre, on land north of Cherryfield Drive, Kirkby; the Shopping Centre known as St Chads Parade; and a bare development site known as land to the south of Cherryfield Drive (which together comprise the ‘Sites’).
The Sites are in Kirkby Town Centre. The Sites were previously owned freehold and long leasehold by St Modwen who agreed to sell the Sites to the Council conditional on the Council entering into the Development Management Agreement (‘DMA’) with St Modwen.
Under the terms of the DMA, St Modwen will be responsible for the redevelopment of Kirkby Town Centre. This will include an obligation to procure, manage, monitor and supervise the design, construction and completion of a new retail development to be anchored by a Morrisons supermarket and, more particularly defined under St Modwen’s planning consent, authorising the erection of a mixed use development comprising a foodstore and non-food retail shops (Use Class A1) food and drink uses (Use Classes A3/A5), petrol filling station, car parking, landscaping, highways improvements and other associated works (including 3 electricity substations) on land bound by Norwich Way, Hall Lane, County Road and Irlam Drive, and the construction of a car park with ancillary works on land off Cherryfield Drive and Cherryfield Crescent dated 9.11.2017 and was issued on 20.11.2017 and referenced 17/00559/FUL) as amended by a further planning permission (referenced 19/00228/FUL) issued on 12.11.2019.
St Modwen as the previous owner of the Sites concluded pre-lets with 3 tenants, conditional on construction of the relevant units. Under the DMA St Modwen are also to be responsible for managing the leases of un-let space in the new retail development. The DMA also includes provision for St Modwen carrying out car park works on the land to the South of Cherryfield Drive.
St Modwen have concluded the terms of a JCT contract to design and construct the development with a main building contractor, GMI Construction Group plc (‘GMI’). St Modwen have also appointed letting agents. Design consultants have already been or will be selected by St Modwen and/or GMI. St Modwen are obliged to procure collateral warranties (containing step in rights) in favour of the Council from the key design consultants, employer's agent and GMI.
The Council relied on Regulation 32(2)(b)(iii) to enter into the Development Management Agreement with St Modwen.
As part of the Council’s ‘Strategy for Knowsley 2016-2020’, the Council committed to developing sustainable town centres. As part of this the Council would deliver a new retail, leisure and evening economy offering in Kirkby town centre and in particular the provision of a retail foodstore. Kirkby is a town of over 41 000 population. There is limited space suitable for this type of development within the existing town centre.
In order to meet this commitment the Council needed to acquire land in and around the existing town centre in order to regenerate Kirkby town centre. St Modwen were the freehold and long leasehold owner of several strategic plots in Kirkby town centre that the Council wished to acquire. There were no other strategic land owners within the centre other than the Council and St Modwen. The sites that the Council acquired from St Modwen are on land north of Cherryfield Drive, Kirkby; the Shopping Centre known as St Chads Parade; and a bare development site known as land to the south of Cherryfield Drive (‘the Sites’) This notice concerns the Sites. St Modwen had exclusive rights over the Sites as the holder of the freehold and long leasehold interest with the reversion vested in the Council. St Modwen agreed to the sale of the Sites to the Council, despite their existing exclusive rights, on the express condition that the parties enter into a Development Management Agreement simultaneously to the sale and purchase agreement. The Development Management Agreement obliges St Modwen to deliver the works for the Kirkby town centre retail development together with a number of design and build services. St Modwen are also responsible for managing the leasing of the development.
The Development Management Agreement will deliver the Council’s commitment. This site already has the benefit of planning permission for a retail park and has sufficient scale to deliver what is required by the planning permission in terms of parking, servicing and units.
This Development Management Agreement also commits St Modwen to delivering 3 significant tenants who are already signed up to take leases within the retail park.
There was no other site of equivalent scale in the town centre that could have been delivered in the same timeframe at the same cost whether by private acquisition or by utilising CPO powers. The Council concluded that there would be little benefit in undertaking such a development from scratch in an alternative area as any new scheme would fail through competition with the current site. There was not sufficient capacity within Kirkby for 2 such retail parks. The Council therefore had no option but to proceed with this transaction, bound by the position of St Modwen which has existing exclusive rights over the Sites, to ensure that the development was carried out without further delay which would be likely to result in detriment to the local area and local economy.
Under the DMA St Modwen are obliged to award a building contract to GMI and manage it to deliver the development. Specialist construction contractors will undertake specialist works when necessary. St Modwen will sub-contract professional services necessary for a design and build contract and will appoint letting agents in respect of the requirement to manage the leasing of the development.
The Council relied on Regulation 32(2)(b)(iii) to enter into the Development Management Agreement with St Modwen.
As part of the Council’s ‘Strategy for Knowsley 2016-2020’, the Council committed to developing sustainable town centres. As part of this the Council would deliver a new retail, leisure and evening economy offering in Kirkby town centre.


Winner: St Modwen Developments (Kirkby 2) Ltd
Award value: 21500000
Number of bids: 1