Partnering and Frameworks Contents Commonhold & Leasehold - PowerPoint PPT Presentation

Partnering and Frameworks

Contents  Commonhold & Leasehold Reform Act  replacing simple consultation on building work  Long Term Agreements part of consultation process  Efficiency and reduced costs =  complex LTAs  Complex consultation arrangements  We will discuss  LTA models  Consultation requirement  Case law

Long Term Agreement Models  Wide Range of Models  Schedule of Rates  Partnering Contracts  Frameworks  Services and goods  Tendering Models  Price and quality balance  Quality thresholds  Multiple lots – reasonableness of costs

Why long term agreements?  Responsiveness  One stage consultation process on work  No tenders  Cost  Economies of scale  Supply chains  Price harmonisation  Delivery times  Site set up  Forward planning  Quality  Long term relationship with landlord  Retention of long term operatives and less sub contracting  Social and political aims  Local labour and apprenticeships eg

Disadvantages  Contract management more complex  Control of costs  Management of design  Section 20 process on agreements more complex  Consultation regulations don’t address all LTA models  LVT role in dispensation not reliable  Leaseholders have less clarity  Competition on costs isn’t clear  Short consultation process on work

Section 20 Consultation  Commonhold and Leasehold Reform Act 2002  Qualifying Long Term Agreements  over 12 months  costs over £100pa  recognised Local Authority position in distinguishing between OJEU and non OJEU contracts  Schedule 1  goods and services below c£174,000 not OJEU  Schedule 2  Goods and services over c£174,000 OJEU  Schedule 3  Qualifying Work under the agreement  Costs over £250

Notice of Intention  Describes the agreement  States the reason why it is necessary to enter into the agreement  why do we need a LTA  States why any qualifying work in the agreement is necessary  why do we need to do the work  Nominations from leaseholders  only if schedule 1, non OJEU agreement  Other requirements  who to serve on,  the notice period for observations,  control of the nomination process etc.

Proposal  Provide the proposal  Successful tender for schedule 2  At least 2 for schedule 1  Name address and connection  Financial details  Contract length  Summary of NOI responses.

Financial requirements  Cost details  Relevant contribution  Total expenditure as regards to the building  Unit, hourly or daily rate  Reason why cannot provide these rates and  Date by which can supply the estimate cost or rate  Cascade Principle  Dispensation only where all options are exhausted  Note that schedule 1 doesn’t allow date  Note that % rate is not included as option

Notice of Proposal  Served on leaseholders and RTA  Copy of the proposal  Or details of where and when available  Important in complex contracts  Invite observations and state the address and the date  30 day observation period

Following the notice  Respond to observations in 21 days  Schedule 2 only  Financial info 21 days after receipt  Where unable to provide in notice  Note Schedule 1 does not give the option to provide a date  Schedule 1 requires notice of entering into contract

What if you cannot comply with S20  Providing the rate  LB Southwark partnering contract S20  When is an agreement a contract  LAPN framework agreement  Principles for dispensation  Daejan Investments v Benson

LB Southwark Partnering  Major works partnering contract  5 contractors for borough  Term of 5years with option of 10 years  Tender evaluation on cost and quality  Allocation of lots on predefined methodology  Defined contract areas with a schedule of rates  Pilot projects for analysis of application of rates  Back up arrangements among the partners  Partnering overlay - included arrangements for  price harmonisation  management of the supply chain  community initiatives  Incentive schemes for non chargeable work

LB Southwark Section 20 Consultation  Section 20  detailed contractor for each area and back up  advised that the rates were available to inspect  gave dates for properties in the 2 year programme  gave date for contract end in 2020  Advised that did not consider this to comply  Dispensation sought  partnering overlay meant rates not fixed  schedule not comprehensive  dates for programme not available or fixed  Risk of challenge at a later date

LB Southwark S20 zA Decision  LVT refused dispensation  LBS would be able to comply at a later date  confusing decision that did not remove risk  appealed  Lands Tribunal  recognised the risk issue  all information available given and substantial info in the notice  Decision  only the current unit costs were required  rates did not have to be comprehensive, and  if they did it would open the way to rely only on the date  unconcluded view that end date of contract would be the applicable date if necessary  Dispensation not required

London Area Procurement Network (LAPN) Procurement alliance of 8 local authorities  affecting 125,000 properties  Individual contractors appointed for 4 year term  Framework contract with call offs for work as required  appoint framework contractor on rates  carry out mini tendering exercise on rates  invite outside tenders  no requirement on landlord to use the framework.  Dispensation Application  Not possible at this stage to identify the scope of work, the value  or the properties that it related to. Wished to rely upon schedule 3 consultation to give these details  LAPN contended that the frameworks were QLTAs to which S20  referred Therefore no requirement to provide 2 tenders, and no right of  nomination

LAPN S20zA decision – Not a QLTA Agreement in draft form  Cannot make a decision on a contract that isn’t finalised  No relevant costs under the agreement  Relevant costs only incurred under call offs  S20 does not apply  Frameworks may not be covered by OJEU  S20 is under schedule 1 with nomination rights  Insufficient nexus between the framework and call offs  Framework consisted of rights and obligations  Sufficient nexus means  precision regarding work to be undertaken  Precision regarding the price  Obligation on a contractor to carry out work  Contracting party is not the landlord  Contract is with LAPN not with the Local Authority to which  charges payable

Implications of LAPN  Qualifying Agreements must  Constitute a contract not a framework  Specific rates for properties  Contract must be with the landlord  Exclusivity of work  Operating Frameworks that are not QLTAs  No statutory consultation on agreement  Call offs are subject to schedule 4 consultation  Leaseholders have nomination rights  Framework contractors operate as an approved list

Does a framework become a QLTA?  Not a QLTA so no consultation requirement  If you consult anyway does it become a QLTA when work is carried out?  now it is a contract  there is sufficient nexus  it has been consulted on under schedule 2  If so does schedule 3 apply to the packages?  using pre established rates  using a mini tender – schedule 4  Risk on challenge

Daejan Investments Ltd v Benson & Ors (2011) Daejan Investments  landlord of a block of flats in Muswell Hill  Carried out S20 for major works  2 contractors in the running – Mitre and Rosewood  Daejan proposed to appoint Mitre as cheaper tender  provided Benson with only one of four tenders  at LVT pre trial review, before end of observations, advisedMitre  had been appointed LVT hearing  £280,000 charges.  limit would result in £1,250 recovery  Daejan argued financial consequences relevant  offered to compensate for any prejudice reducing works costs by  £50,000 leaseholders unable to identify what comments they would have  made

Daejan S20zA LVT Decision  Failure to comply  Significant prejudice of first importance  lack of opportunity to make observations was significant prejudice  curtailment of consultation itself amounts to significant prejudice except where the non- compliance is minor or technical  Prejudice not altered by compensation  Financial consequences to landlord irrelevant  Dispensation refused

Daejan Court of Appeal  Issues for consideration:  The approach to be adopted where prejudice is alleged  Are the financial consequences to the landlord relevant?  Is the nature of the landlord important to decision?  Daejan’s failing did cause significant prejudice  Not a technical, minor or excusable oversight  Loss of opportunity to comment was in itself significant prejudice  Financial effect irrelevant  LVT had not erred in treating Daejan more harshly than landlord  LVT not entitled to consider compensation