SPOTLIGHT

A zero sum game?

The number of SEND tribunal cases is rising and the proportion of appeals ‘lost’ by local authorities is at a record high. Lottie Winson talks to education lawyers to understand the reasons why, and sets out the results of Local Government Lawyer’s exclusive survey.

Making sense of Roanne

Two years after the European Court put a spoke in the wheel of many regeneration projects with its decision in the case of Auroux v Commune D'Roanne, the OGC has issued new guidance on how such schemes should be procured. Stephen Pearson looks at whether this will make it easier for projects to get under way.

Those of us dealing with development agreements (typically including retail and office developments) which are to any degree 'sponsored' by local authorities and other public organisations such as regional development agencies have been grappling over the last few years with the implications of the Auroux v Commune D'Roanne case.

For those who are not aware, this covered a situation where a local authority promoted what might be called an 'urban renewal' scheme incorporating leisure, retail and parking facilities. The authority did not "procure" the scheme in the ordinary use of the word, but did provide such things as guarantees to help support the development and masterplanned it.

This is not in any way an unfamiliar scenario to us in the UK, of course. Although the case is now some years old (the verdict of the ECJ being published in January 2007), and in some ways followed a line of earlier cases such as the La Scala decision which went back as far as 2001, it has gradually seeped into the psyche of those of us who are involved in advising on major developments.

Lawyers have been accused of promoting the case to enhance their involvement, and both local authorities and those funding major developments have understandably erred on the side of caution in insisting that major projects which seem to follow a similar scenario are procured under a full OJEU-compliant route to avoid the potential for challenge just as the final contracts are about to be signed. In some cases this has involved preferred bidders being subject to a re-procurement with attendant delays and cost – just as the property market collapsed.

After a very lengthy wait (and, we understand heavy lobbying from the developer sector), OGC have just issued new guidance which we understand has received the clearance of the European Commission in Brussels, who were reported to be unhappy at the outset that the UK were intending to give too wide a 'clearance' for authorities to sponsor developments without the OJEU regime applying at a time when the Commission are seeking to encourage full use of the EU Procurement regime in all appropriate situations. This is, of course why we about to be subject to the new EU Remedies Directive which will enhance the right to challenge procurement decisions after December 2009.

The guidance note (OGC Procurement Policy Note 11/09) has clarified the position slightly and, as an OGC note will receive attention. In some ways it may not go much further than some of us have already been advising, but is still appreciated.

Crucially, it states that a development is 'less likely' to comprise a procurement to which the OJEU regime applies if it meets some of a group of certain identified characteristics. These are:

  1. that the development is the autonomous initiative of the developer;
  2. the development agreement is ancillary or incidental to a transfer or lease of property from a local authority to a developer and is intended to protect that contracting authority;
  3. the development may be based on proposals put forward by the authority, but, the winner is not chosen by the authority;
  4. there is no money passing from the authority to the developer for carrying out the development, eg contributions towards finance or guarantees against losses; and
  5. there is no contractually enforceable obligation to complete works.

An interesting situation arises where (as is frequently the case) a development is partly a deal to develop land already owned by a local authority (typically under a long lease), but a substantial part of it is not – a judgement call will need to be made in terms of when the development goes further than something which is 'ancillary or incidental' – particularly if the authority wants to promote a "signature" development for the area rather than a standardised "retail shed" development.

The guidance is, as might be expected, very cautious and caveated and does stress, quite correctly, that any artificial arrangement intended to circumvent the application of the Public Procurement Rules is likely to attract legal challenge.

Understandably, the guidance is clear that it cannot state what is or is not lawful, only how developments are likely to be viewed.

We need to stress that no two projects are identical and objectively, both authorities and bidders need to look very carefully at what they are doing. All parties need to remember that the core determinant of whether a project is a "Procurement" in law or not is the wording contained in the Public Contracts Regulations 2006 which creates the requirement for a competitive process whenever a public authority requires the provision of works to meet "Specified Requirements".

Stephen Pearson is a partner of Freeth Cartwright.

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