Following the decision in the European Court of Justice case of
Jean Auroux and Others v Commune of Roanne (“Auroux Case”), Steeles Law Head of Commercial Property
Michael Fahy comments on the Office of Government Commerce’s (“OGC”) guidance note on the application of the Public Procurement Rules (“PPR”) to development agreements.
Background
Where contracts are entered into with public bodies, over the threshold sum, that include public works or public works concession contracts, the procedures for tendering contained in the PPR must be complied with.
It is a safe assumption that many development agreements with public bodies have been entered into without complying with the PPR.
The Auroux Case concerned an obligation to undertake works some of which were for public use and others for the sale to third parties.
The ECJ ruled that this was a contract to which the directive applied and therefore should have been subject to a tendering process.
OCJ Guidance
As a result of the ruling in the Auroux case, there was some anxiety and uncertainty amongst public bodies and those entering into development agreements with them as to when the PPR applied.
In an attempt to clarify the position, OGC issued its guidance note on 16/10/09.
Whilst the guidance note is helpful, it is by no means definitive and includes several caveats making it clear that all contracts must be looked at on a case by case basis.
The gist of the guidance is that where a public body sets out specific and detailed requirements in a development agreement that it wants to be undertaken by a third party, the PPR will apply.
This is a simplification of the provisions in the guidance note and if more details are required, please contact us at the email address given.
Section 106 Agreements
Many Section 106 Agreements provide for works to be undertaken, at the request of the Local Authority, by a third party. There is still uncertainty on whether PPR applies to such agreements and this will be the subject of a further guidance note from OGC.