Cardiff Council

County Hall, Atlantic Wharf

Cardiff

CF10 4UW

UK

Telephone: +44 2920873732

E-mail: corporate.procurement@cardiff.gov.uk

NUTS: UKL22

Internet address(es)

Main address: https://www.cardiff.gov.uk

Address of the buyer profile: https://www.sell2wales.gov.wales/search/Search_AuthProfile.aspx?ID=AA0422

II.1.1) Title

II.1.2) Main CPV code

92000000

II.1.3) Type of contract

Services

II.1.4) Short description

This notice relates to a proposed arrangement between the Cardiff Council (“Council”) and Academy Music Group (“AMG”) in respect of St David’s Hall (“Venue”) in Cardiff city centre.

The proposed arrangement will involve the grant of a 45 year lease of the Venue at a peppercorn rent to AMG. Under the lease AMG will be obliged to repair and maintain the Venue, ensure its long-term future and that it remains open for the benefit of the people and City of Cardiff. The Council may also receive a share of Venue profits over the lifetime of the lease. AMG, as tenant will operate the Venue as an independent commercial enterprise in accordance with the lease requirements. The lease will have positive obligations imposed on AMG to deliver a range of services in operating the Venue including continuing the classical programme as described in more detail below.

Continued below in II.2.4) Short description.

II.1.6) Information about lots

This contract is divided into lots: No

II.1.7) Total value of the procurement

Value excluding VAT: 45 000 000.00  GBP

IV.1.1) Type of procedure

Award of a contract without prior publication of a call for competition

Justification for selected award procedure:

The procurement falls outside the scope of application of the Directive

Explanation:

The Council has structured the arrangements as a grant of a lease which does not involve an acquisition activity governed by the Public Contracts Regulations 2015 (as amended) or Concession Contracts Regulations 2016.

The Council has obtained valuation advice in respect of the proposed disposal and will grant the lease for peppercorn rent. The market value of the rent acknowledges and takes into account the substantial building liability and remedial works that AMG will be required to take on as tenant of the Venue.

The lease does oblige AMG to address defects, repair and maintain the Venue, but these are incidental and ancillary to the lease arrangements because: (i) the estimated value of the works at 38mGBP is small compared to the estimate potential value of the operator opportunity over 45 years of the lease; (ii) the main purpose of the transaction is to transfer the Venue to an independent operator and not the securing of the works; and (iii) AMG has a broad discretion to determine the manner, timing and specification of the works as a tenant of the Venue. Furthermore, it is not practical for the works to be severable to be delivered by an alternative contractor given AMG’s occupation and operation of the Venue.

If AMG does not manage and repair the defects so that the Venue is safe and operational, the Council can terminate the lease or procure the delivery of those works at AMG's cost. AMG may voluntarily elect to carry out other works (including alteration upgrades, enhancements and other repairs and maintenance as may be needed) at the Venue in accordance with its own requirements.

The lease also requires AMG to keep the Venue open in a safe and operational condition in line with industry standards and as required by all statutory and licensing requirements. This is a standard commercial tenant requirement and does not amount to a services contract under the procurement rules.

The lease also requires AMG to maintain the classical music programme at the Venue and to provide the Services for those events and accommodate a community programme.

Continued in VI.4.3).

IV.1.8) Information about Government Procurement Agreement (GPA)

The procurement is covered by the Government Procurement Agreement: Yes

Academy Music Group Limited

003463738

211 Stockwell Road

London

SW9 9SL

UK

NUTS: UKI

The contractor is an SME: No

VI.4.1) Review body

VI.4.3) Review procedure

Precise information on deadline(s) for review procedures:

In accordance with Regulations 88 – 104 (enforcement of duties through the court) of the Public Contracts Regulations 2015 (as amended) and Regulations 49 – 64 of the Concession Contracts Regulations 2016.

Continued from Annex D4:

The Services that the Council requires AMG to provide (based on the minimum 80 day classical/community programme above) amounts to approximately 22% of the event days available in each year. The Council’s assessment of the estimated gross revenue potential for AMG for the Services during these days is estimated to be in the region of 750,000GBP per annum, before taking into account the costs incurred in providing those services and other general costs associated with operation and maintenance of the venue.

The Council considers that the obligation to provide a classical programme and supporting Services is incidental/ancillary to the main purpose of the transaction, for similar reasons to those given above because: (i) the value is small compared to the potential value of the operator opportunity; (ii) the main purpose of the transaction is to transfer the Venue to an independent operator and not the securing those activities; and (iii) these requirements would not have been pursued if the Venue was not being disposed of.