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
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
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
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
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
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
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.
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.
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
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
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
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
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
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
£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
Daejan Supreme Court
Dispensation on conditions
LVT has power to grant dispensation on terms that
it sees fit
Can require landlord to reduce recoverable costs Can impose conditions that landlord pays costs LVT to assess tenants reasonable costs In urgent cases dispensation on condition of
truncated consultation process
Approach to prejudice
Factual proof of ‘relevant’ prejudice lies with tenant Relevant prejudice where non compliance caused
the landlord to incur unreasonable costs or carry
Tenants have an obligation to identify observations
they would have made
For landlord to rebut allegations of prejudice
Daejan Implications for future
‘But for test’ – what would the tenant have done
under compliant procedure
Dispensation likely to be granted more frequently Recoverable costs reduced to compensate
prejudice
Landlords likely to have to meet their costs and
reasonable costs of tenants in opposing
How does this apply to QLTAs Is there any advantage in proactive applications Can landlords balance consultation and prejudice?