eSignature Lawfulness for Procurement in United Kingdom

How to eSign a document: eSignature lawfulness for Procurement in United Kingdom

hello and welcome to our latest in the series for our regen videos um I'm Adam Hayward an associate director in the real estate team and uh today we will be talking about public procurement and how that affects regen schemes so as part of our work on regen schemes we often advise clients on a wide range of linked issues which Arise at different stages of the process every scheme is different so those issues vary from case to case but one topic which comes up quite regularly is the interaction of regen schemes with the public procurement regime this is a hot topic for for schemes brought forward with a public sector partner or where there's significant public money invested into the scheme and for most large schemes there is usually some form of relevant interaction with the council whether they're the landowner or maybe the JV partner or some other element and it's important that the council and the developers get the procurement process right to avoid any challenges that they might be in the future so today I'm joined by Laura Thornton an associate director in our public procurement team and she's going to talk about public procurement issues and how they may impact regen schemes so hi Laura first off could you please explain why the procurement rules May apply to regen schemes yeah thanks Adam warning everybody um first of all yeah there's a number of scenarios as Adam's just highlighted where public procurement might interact with a regen scheme I think the most common is where you have a public sector landowner looking to develop a site with a JV partner and that JV agreement will ordinarily be a public contract subject to the procurement regulations there's also scenarios where grant funding from a public body perhaps Holmes England will also bring the agreement within the realm of the public procurement regulations subject to the degree and scale of that funding so you'd need to comply then with the procurement regulations when you're setting up that JV or partnership agreement but also depending on what's procured at that stage and the scope of the procurement you may also be procuring partners and services down the line when you get to the stage of needing development management agreements and Estate Services so it can be relevant throughout the life of the regen scheme okay um so right we've got our JV established so should we just run through why procurement Still Remains well relevant to those schemes after that that's been established yeah absolutely so regen schemes by their very nature are long-term projects and often changes arise over time so even when there's an agreement put in place at the outset it may need to shift or be varied over the course of its um the building and the planning process um so there might be changes which result from perhaps shifting economic circumstances or maybe adjustments following the planning process it was very detailed and quite rigorous rules around when you can make variations to public contract and so developers should be very aware of um the restrictions that exist within that regime okay and so what is the position now if you need to have a change to a public contract yeah so as I say this is a really heavily regulated area the first question you need to ask yourself is whether that modification is a substantial change and what is substantial is set out in the regulations here um and it includes a number of factors but broadly where the variations would result in a contract of a materially different character to the one that was procured or importantly where there's been a change of economic balance in favor of the supplier so those sorts of scenarios you need to bring the change within what's called A Safe Harbor within the regulations there's two main safe Harvester are some frequently used here others do exist but these are the most relevant ones um the first is that the modification was permitted in clear and unequivocal review Clauses in the original contract the bar for those scores is being clear is quite High um you need to really make sure that you've set out exactly the sort of change that might be made and the circumstances in which it would be brought forwards um there's also a caveat that there needs to still be no change to the overall nature of the contract that Safe Harbor though has no value cap so it could be a doorway to quite um substantial Financial changes um so where there are potential changes during the life of the contract anticipated that's the most relevant Safe Harbor provided you can set out at the outset in sufficiently clear terms how those changes might might come forward the other say Father which is sort of the antithesis of that is where changes or the circumstances that led to the change weren't foreseeable by the diligent Contracting Authority the public body this Safe Harbor would enable an increase in value up to 50 percent but again it's subject to that caveat that there mustn't be a change to the overall nature of the contract there's care needed around this about the knowledge that a diligent Contracting Authority had or would have been expected to have at the outset so for example a change of economic conditions leading to a refocus of the development from commercial to residential might be something which couldn't have been anticipated earlier and that may have Arisen only after the agreement was entered into but equally it might have been something in contemplation for some time even just on a sort of risk that may arise basis so in order to rely on this Safe Harbor you need a really clear audit Trail setting out the thinking at all of the relevant times so that you can point back to the reasonableness of the fact that this particular change hadn't been anticipated earlier it what I'm taking from that is that you need to think about the deal at the outset but then you need to think about what could happen in the in the future during the the process because most of these regen schemes are years and years um that keep going down down the line um so just thinking about what could change build that into those initial discussions um and then you've got that that second limb of what just couldn't be foreseeable exactly really interesting um you also mentioned that the the law in this area is due to change so what what's what's coming down the line yeah sure so the procurement bill is before Parliament at the moment and it makes quite a few changes to this area so although the existing safe harbors will continue with some small adjustments there's going to be some new safe harbors and there's one which is I think of particular interest to developers which is the materialization of a known risk so this is quite a detailed set of rules you have to jump through hoops you have to get through to bring yourself within this Safe Harbor so you need to have identified the risk in your procurement documentation so you need to know about it the risk from the outset and then one of those risks you've identified has arisen but not as a result of either an act or a mission of the authority as a result of that the contract can no longer be performed to the satisfaction of the authority and then the modification that's made in response to the materialization of that risk can go no further than is needed to remedy the risk which is materialized so it's constrained in the extent of what you can change it also needs to be the case that further competition is not in the public interest and the modification doesn't increase the overall value of the contract by more than 50 so there are quite a lot of Hoops to jump through but we think risks like Market changes delay potentially unexpected ground conditions might be set out as risks at the outset to enable Reliance on that Safe Harbor down the line so it might be that we see publications of quite long lists of known risks to again build in the possibility of using that Safe Harbor down the line if things do change interesting and one of those changes expected to take place so it's obviously a bit dependent on parliamentary time the bills in the House of Commons now and it's currently expected to be enforced early 2024 um we're going to be keeping close eye on this topic at Osborne Clark and so please do come back look at our website there's going to be more updates published as the bill progresses and the changes are more crystallized yeah perfect thank you very much for that Laura and it it sounds as if uh it's probably a good idea for clients that are starting out on their regen schemes to speak to you and the the team because you're obviously involved in in so many so just getting those those thought processes um in place early on you might have a number of ideas that might apply to their their regen schemes um it's good to get you involved yeah but always having habitat as early as possible um so thank you very much Laura and we'll take it away from there