Official UK procurement notice
Basildon Hospital main entrance and retail facility
Authority: Mid and South Essex NHS Foundation Trust (Central government)
What is being bought
Published requirement descriptionMid and South Essex NHS Foundation Trust ("MSE") intends to enter into a series of leasing arrangements with Noviniti Dev Co 8 Ltd ("Noviniti") and WHSmith ("WHS") in respect of a retail development ("the Development") at Basildon Hospital, Essex ("the Hospital") with WHS as Noviniti's initial tenant and retail operator. MSE has structured the contractual arrangement as a land transaction exempt from the Public Contracts Regulations 2015 (PCR) and the Concession Contracts Regulations 2015 (CCR).
Noviniti has an option to draw down a 35-year ground lease ("GL") of the site in exercise of an option agreement ("OA") with MSE. The GL has break clauses in favour of MSE after 2 years (so MSE can recover the site if the Development is not commenced) and 30 years from practical completion of the Development.
CPV: Construction work · Construction work for buildings relating to health · Entrance hall construction work · Hospital facilities construction work · Retail trade services
The lotProcurement structure
single lot · no lot value publishedLot #1MSE now intends to enter into a tripartite Agreement for Underlease with Noviniti and WHS
MSE now intends to enter into a tripartite Agreement for Underlease with Noviniti and WHS. In this agreement WHS commits to accepting the grant of a 15-year underlease (with rent obligations to Noviniti) on practical completion of the retail facilities. MSE (as head landlord) will have insurance obligations owed to WHS and a repairing covenant for the retail facilities. MSE may step-in to take the underlease if WHS fails to enter the underlease at practical completion. MSE may enter an Overriding Lease (to become WHS's landlord) if WHS becomes insolvent or defaults on its Underlease, in order to maintain the rental payments to Noviniti. MSE may enter a 15-year Reversionary Lease (with rent obligations to Noviniti) to take effect from the expiry of WHS's underlease. MSE may instead direct these leases be granted to an alternate operator if MSE guarantees rent.
There will be some office space and common parts delivered as part of the scheme. Additional information: Please see Voluntary Transparency Notice of 22.3.2021 for details of option agreement and ground lease www.find-tender.service.gov.uk/Notice/005723-2021 ↗
Procedure terms & legal framework
From the official record · publisher note attached- Procedure method
- Award procedure without prior publication of a call for competition
- Legal basis
- CELEX · 32014L0024 Public Contracts Regulations 2015 (Directive 2014/24/EU)
- Procurement category
- Works
- Notice status
- Awarded without competition
- Procurement threshold
- Unspecified in notice
- Regulatory regime
- Standard
- Commercial structure
- Stand-alone contract (no framework)
- Competition type
- Direct award (no call for competition)
- GPA / WTO covered
- Unspecified in notice
- Recurring procurement
- Unspecified in notice
- First published
- 22 Jul 2021, 18:48 BST
- Last source update
- 22 Jul 2021, 18:48 BST
- FTS notice number
2021/S 000-017414- Classification (CPV)
- Delivery area
- Official registry OCID
ocds-h6vhtk-02cb74Find a Tender
- Why no open competition
- The procurement falls outside the scope of application of the directive
- Published justification
MSE considers that the arrangements fall within the land exemption under Regulation 10(1)(a) Public Contracts Regulations 2015 and/or Regulation 10(11)(a) Concessions Contracts Regulations 2015.
The GL can only be drawn down by Noviniti when acceptable planning permission is secured. As the planning application is an agreed document under the OA and defines the permitted alterations under the Licence for Alterations the Trust has had input to the details of the Development.
On execution of the GL Noviniti is not obliged to undertake the Development. Once Noviniti serves notice electing to carry out the Development this engages enforceable obligations for Noviniti to carry out and complete the Development for MSE under the terms of the Agreement for Lease and the Licence for Alterations.
Under a separate 15 year lease between MSE and WHS of additional space at the Hospital, MSE secures an annual income of rent from the separate lease and a turnover share from retail carried out in the additional space and at the Development.
At practical completion MSE guarantees to meet the payment and performance obligations of WHS for the 15-year term of the Operator Lease; any alternate tenant it nominates to take the Reversionary Lease; any other costs which Noviniti may incur in relation to the Development for 30 years. The guarantee protects Noviniti's investment where MSE does not itself enter the Reversionary Lease, Step-In Lease and/or Overriding Lease.
MSE holds that there is no works contract for lack of an enforceable obligation and Noviniti is able to "walk away" from having to deliver the Development and/or MSE is able to award the Development on the basis that Noviniti has an exclusive right to the land conferred under the GL pursuant to Regulation 32(2)(b)(iii) Public Contracts Regulations 2015.
To the extent that the overall scheme could be considered a mixed contract of works and a land transaction, MSE holds that the land element is the main object of the arrangement
MSE holds that there is no works concession contract as there is insufficient transfer of operating risk to Noviniti in exploiting the works.
- Review procedure
In accordance with Chapter 6 of the Public Contracts Regulations 2015 (as amended) (Regulations 88 to 104) or Chapter 2 of the Concession Contracts Regulations 2016 (Regulation 49 to 64).
Publisher note: The estimated value in II.1.7 and V.2.4 represents the estimated rental returns to Noviniti. V.2.1) Date of contract award decision: The Trust Investment Group recommended approval of the scheme on 15 July subject to a further approval on 29 July 2021 with documents to be signed immediately after that.
Commercial outcome & contract awards
Published awards, contracts and bid statistics, not a forecast| Awarded to | Value | Date | Status |
|---|---|---|---|
| Noviniti Dev Co 8 Ltd | £10,650,000 † | — | Awarded |
Contracts
Contract 017414-2021-1 · Noviniti Dev Co 8 Ltd
- Signed
- 15 Jul 2021
- Value
- £10,650,000
- Status
- active
Contracting authority & participating public bodies
Dispute resolution & review bodies
- Royal Courts of JusticeReview body
Bidders & participating suppliers
1 commercial party on the notice- Noviniti Dev Co 8 LtdAwarded supplier
Official documents & specifications
Official links; attachments are not copiedNo document links were published on the notice.