Concession award notice
Results of the procurement procedure
Section I: Contracting
authority/entity
I.1) Name and addresses
Mid and South Essex NHS Foundation Trust
Basildon University Hospital, Nethermayne
Nethermayne
SS165NL
UK
Contact person: Tracey Leforte
Telephone: +44 1702508120
E-mail: tracey.leforte1@nhs.net
NUTS: UKH37
Internet address(es)
Main address: https://www.mse.nhs.uk/
I.4) Type of the contracting authority
Body governed by public law
I.5) Main activity
Health
Section II: Object
II.1) Scope of the procurement
II.1.1) Title
Basildon Hospital main entrance and retail facility
II.1.2) Main CPV code
45000000
II.1.3) Type of contract
Works
II.1.4) Short description
Mid and South Essex NHS Foundation Trust ("MSE") has entered 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 2016 (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
II.1.5) Estimated total value
Value excluding VAT:
10 650 000.00
GBP
II.1.6) Information about lots
This contract is divided into lots:
No
II.1.7) Total value of the procurement
Value excluding VAT:
10 650 000.00
GBP
II.2) Description
II.2.2) Additional CPV code(s)
45214710
45215100
45215140
55900000
II.2.3) Place of performance
NUTS code:
UKH37
Main site or place of performance:
Basildon Hospital, Nethermane Mayne, Basildon. SS16 5NL
II.2.4) Description of the procurement
MSE has entered 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.
II.2.7) Duration of the contract, framework agreement, dynamic purchasing system or concession
Duration in months: 180
II.2.13) Information about European Union funds
The procurement is related to a project and/or programme financed by European Union funds:
No
II.2.14) Additional information
Please see Voluntary Transparency Notice of 22/03/2021 for details of option agreement and ground lease - https://www.find-tender.service.gov.uk/Notice/005723-2021
Section IV: Procedure
IV.1) Description
IV.1.1) Form of procedure
Award procedure without prior publication of a concession notice in the cases listed below (please complete Annex D4)
Justification for selected award procedure:
The procurement falls outside the scope of application of the Directive
Explanation
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 2016.
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.
IV.1.8) Information about Government Procurement Agreement (GPA)
The procurement is covered by the Government Procurement Agreement:
No
Section V: Award of contract
Title: Basildon Hospital main entrance and retail facility
A contract/lot is awarded:
Yes
V.2 Award of contract
V.2.1) Date of conclusion of the contract
15/07/2021
V.2.2) Information about tenders
Number of tenders received: 1
The contract has been awarded to a group of economic operators:
No
V.2.3) Name and address of the contractor
Noviniti Dev Co 8 Ltd
The Stables, Churchfield Farm, Harley Way.
Oundle
PE8 5AU
UK
Telephone: +44 1832575983
E-mail: jonathan.houlston@noviniti.co.uk
NUTS: UK
The contractor is an SME:
No
V.2.4) Information on value of the concession and main financing terms (excluding VAT)
Total value of the concession/lot:
10 650 000.00
GBP
Any other details relevant to the value of the concession according to Art. 8(3) of the directive:
The estimated value in II.1.7 and V.2.4 represents the estimated rental returns to Noviniti.
Section VI: Complementary information
VI.4) Procedures for review
VI.4.1) Review body
High Courts of Justice
The Royal Court of Justice, The Strand
London
WC2A 2LL
UK
VI.4.3) Review procedure
Precise information on deadline(s) for review procedures:
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).
VI.5) Date of dispatch of this notice
10/10/2021