Building construction work

Tender description

On 1 March 2013, the Mayor and Burgesses of the London Borough of Tower Hamlets entered into a Development Agreement (‘DA’) with Folera Ltd to undertake the design, planning, construction (including enabling and site clearance) and then operation on a lease back (concession) basis of a number of facilities on two sites. The facilities comprised the refurbishment and conversion of Poplar Baths into a community sports facility including swimming facilities and 100 % affordable housing units to the rear and the construction of 100 % affordable housing and a community centre on the Dame Colet and Haileybury site on Ben Johnson Road. VEAT Notice 2014/S 072-123501 was published in respect of previous modifications to the DA. It is proposed that the DA is amended to provide that: (i) Folera Ltd is no longer responsible for delivering the leisure services on a concessionary basis; (ii) appropriate reductions to the unitary charge are made to reflect this change in risk allocation, from which the Council will financially benefit. This change will also allow the DA to be refinanced. The associated leisure services subcontract between Folera’s leisure services sub-contractor, Guildmore Ltd and the ultimate provider of the leisure services, Greenwich Leisure Ltd, will also be amended to reflect the associated amendments to the Development Agreement. The rights and obligations of Guildmore Ltd under that leisure services subcontract will then be novated to the the Mayor and Burgesses of the London Borough of Tower Hamlets. In addition, the lease/lease back structure has been replaced with the grant of a non-exclusive licence to Folera (and related parties) to access the relevant facilities to carry out the services. Following these changes, the Mayor and Burgesses of the London Borough of Tower Hamlets will continue to be in receipt of the same goods, works and services as were originally procured from the same consortium of economic operators performing the contract as originally successfully tendered for that contract. The Mayor and Burgesses of the London Borough of Tower Hamlets will derive economic benefit. The Mayor and Burgesses of the London Borough of Tower Hamlets do not consider that the changes to the DA constitute a substantial modification for the purposes of Article 72(4) of the Public Contracts Directive 2014 and therefore the changes do not constitute a new award procedure for the purposes of the Directive. In as far as it may be applicable the modification is also not substantial for the purposes of the Public Contracts Regulations 2006 or 2015 and associated case law. This is because the modifications do not: (a) render the DA and the associated arrangement materially different in character from the one initially concluded; the main object of the DA was the design, build and refurbishment of the facilities and the estates; (b) introduce conditions which, had they been part of the initial procurement procedure, would have allowed for the admission of other candidates than those initially selected or for the acceptance of a tender other than that originally accepted or would have attracted additional participants in the procurement procedure; the same consortium are collectively providing the same works and services on the same terms at a now reduced price; (c) change the economic balance of the DA in favour of the contractor in a manner which was not provided for in the initial contract or framework agreement; Folera will no longer be able to exploit the leisure services concession and the Unitary Charge payable by the Council to Folera will be reduced to reflect any reduction in risk and also from the refinancing; (d) extend the scope of the contract; the modification will reduce the scope; (e) replace the contractor to which the contracting authority had initially awarded the contract in other cases than those provided for under point (d) of paragraph 1; Folera will remain the party to the DA. In respect of the novated subcontract, Greenwich Leisure Ltd was also part of the original bidding consortium and the DA permits step-in to subcontracts in clear, precise language. Therefore, the Mayor And Burgesses of the London Borough of Tower Hamlets does not believe that the tests under Article 72(4) are met. Please also see VII.2.2 below VII.2.2) Reasons for the modifications Need for modification brought about by circumstances which a diligent contracting Authority/entity could not foresee (Art. 72(1)(c) of Directive 2014/24/EU [please tick box]. The DA includes clear, precise and unequivocal review clauses relating to the refinancing of the arrangement (and therefore Regulation 72(1)(a) of the Public Contracts Regulations 2015 also applies). However for the refinancing to become commercially viable it has been necessary to reallocate the risk relating to the provision of the leisure services part of the DA due to the unforeseen impact of the Covid-19 epidemic. Whilst the Council now takes on this risk it will be compensated by a reduction in the unitary charge and by the availability of new financing on more advantageous terms. Therefore, the Council considers that all parties will remain in positions which are no better no worse overall than that which they were in under the original award but in any event: — the changes are brought about by circumstances which the Council, acting diligently, could not have foreseen; — the changes do not alter the overall nature of the contract; and — there is no increase in value as a result.