Public procurement notice: Voluntary Ex Ante Transparency Notice
Published: 2020-10-09
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: The original project comprised of mixed commercial and private/affordable dwellings. Changes are required to the phase 1 lease in order to ensure that phase 1 can be delivered. These changes do not require a new procurement procedure for the reasons detailed below.
The original project (OJEU contract notice reference 2014/S 073-125096) 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 and 2019/S 047-107103. Due to circumstances which a diligent contracting authority could not foresee, further changes are required to the phase 1 lease in order to ensure that phase 1 can be delivered. These changes do not require a new procurement procedure, and Directive 2014/24/EU does not apply to them, for the reasons detailed below.
Homes England is modifying the phase 1 lease via a deed of variation. These modifications are permitted by Regulation 72 of the Public Contracts Regulations 2015 (‘Regulations’), specifically Regulation 72(1)(c) and 72(1)(e).
The following modification will be made to the phase 1 lease in accordance with Regulation 72(1)(c) of the Regulations. A modification notice will be published in due course. The need for modification is brought about by circumstances which a diligent contracting authority could not foresee, specifically the Covid-19 pandemic and the significant effect this would have on the development finance market.
The termination date for failure to hit the minimum development threshold in the phase 1 lease will be extended from 30 March 2023 to 31 March 2024 (and then as shall be further extended by a period equivalent to force majeure extensions of time certified under the building contract, subject to an ultimate revised drop dead date of 31 March 2026). This is in light of the significant delay to start on site caused by the Covid-19 pandemic and the consequences this will have on the developer's ability to tender the building contract, secure the necessary development finance, and accommodate the risk of ongoing disruptions associated with the pandemic. It remains a real concern that further lockdowns, whether local or national, could apply over the course of the development period. In order to facilitate the developer being able to secure forward funding and to accommodate the new Covid-19 extension of time requirements of building contractors in the current market, it is necessary to build in the extended development period to give sufficient comfort on timings in view of the ongoing Covid-19 risk the market is now faced with. This is notwithstanding the fact that commencement of development on the site has been delayed by Covid-19.
The amendment to the minimum development threshold termination date is therefore a result of the Covid-19 pandemic and is needed to enable the developer to secure the required funding to carry out the works so as to achieve the minimum development threshold and dispose of the build to rent phase of the development to the forward funder.
Homes England considers that this modification does not alter the overall nature of the phase 1 lease.
For the avoidance of doubt, the modification is not considered by Homes England to increase the value of the phase 1 lease and, as such, the value of the modification is less than 50 % of the original contract value.
The following other modifications will be made to the phase 1 lease in accordance with Regulation 72(1)(e), being non-substantial changes (as defined by Regulation 72(8)):
— a change permitting that, where an assignment of the lease to an investor has taken place, the investor shall then be permitted to also charge the lease to a party providing additional funding for the development (and subsequent required non-material drafting changes, e.g. to definitions etc to amend the remainder of the lease to reflect this change);
— a change allowing any permitted assignee and/or permitted charge to have 40 days (not 20 days) to step-in in the case of developer default and a consequential change removing the obligation on the part of that stepping-in permitted charge to have taken possession;
Prior to this change the developer was only obliged to pay the minimum payment on achieving the minimum development threshold


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