FIN26073 Gadeon House Pathology Main Contractors

The Royal Devon University Healthcare NHS Foundation Trust (RDUH) have sought to lease available space on the Lower Ground and Ground Floor at Gadeon House, Grenadier Road, Exeter from the Council to establish a regional Pathology Laboratory. Gadeon House is held within the Council’s Investment Portfolio. The RDUH will be providing £2.5m towards the costs of turning the office accommodation into a laboratory and associated space but are seeking a contribution of up to £7.5m from the Council to complete the fit-out works.

In order to fund the £7.5m the Council would need to secure prudential borrowing the repayment of which would be fully serviced across the duration of the lease term. The lease with the RDUH is for a term of 25 years has a break clause option after 15 years and has been agreed at Market Rent. If the break option is enacted this would require the RDUH to repay any outstanding balance on the borrowing taken by the Council.

The Council will enter into a Operated Healthcare Facilities Agreement with RDUH that will ensure a range of building related services are provided on site.

The Council will appoint Devon Contractors to facilitate the building contract fit-out works via a direct award under the Procurement Act 2023 (PA23) Schedule 5 13(a) “the goods, services or works to be supplied under the public contract are strictly necessary for reasons of extreme and

unavoidable urgency” and 7(b) "the supply of goods, services or works by the existing supplier which are intended as an extension to, or partial replacement of, existing goods, services or works in circumstances where—

(b) the difference or incompatibility would result in disproportionate technical difficulties in operation or maintenance

7(b) is applicable due to the fact that RDUH have already appointed Devon Contractors to complete some elements of the work and it requires a consistent approach throughout the life of the project.

The urgency was unforeseen by the Council but is justified as follows:

The office accommodation has been openly marketed following vacant possession over two years ago. The Royal Devon University Healthcare NHS Foundation Trust have expressed an interest in leasing the available space at Gadeon House at market value but due to the intended use have asked the Council to provide a financial contribution in order for fit out works to be undertaken. Without the availability of the prudential borrowing it is highly unlikely the lease would be taken up