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EU strikes new blow for councils’ construction

But following a landmark decision by the European Court of Justice (The Roanne Case), many local authorities are adopting an overly cautious interpretation of the EU procurement rules. Many councils are now too afraid to proceed with development agreements and are re-tendering projects. In the case of new development opportunities, some councils are choosing to go through the lengthy and bureaucratic process just to be on the safe side.

With the regeneration sector already on its knees due to the current financial turmoil, the BPF wants clarity on how the OJEU process should work to avoid unnecessary and expensive procurement.

Usually the council will choose its development partner through an informal selection process where a number of developers are invited to express an interest. Occasionally a council may directly nominate a development partner without a selection process; where, for example, that developer controls the majority of a proposed development site.

If OJEU procedures are not clearly understood they have the potential to delay or even halt large-scale urban regeneration projects. Local authorities and developers will be extremely wary of proceeding with development unless they know they are not infringing EU procurement directives.

The BPF is keen to explore what can de done to solve the problem, to ensure that regeneration projects are not unduly delayed.

Guidance should make clear the circumstances in which a partnership between a local authority and a developer might require a tendering process via OJEU.

It should spell out that there should be no need for a tendering process when the local authority effectively has only one credible prospective partner, eg by virtue of the partner owning a substantial amount of land within the development area. The guidance should also make it clear that there should be no need for a tendering process in circumstances where the bidding costs would be so disproportionate as to deter any credible partners from coming forward.

Liz Peace, chief executive of the BPF, said: “In the current economic climate there are few developers that can afford to get involved in a costly tendering process. If the knock-on effect of the Roanne case is to cause unnecessary re-tendering and an expensive procurement process then this is to the detriment of regeneration in the UK.

“We need clarity from the UK Government or even the EU as to what kind of project should go down the OJEU route. Local authorities need to be given the confidence that they won’t be caught out if they sign an agreement with a developer.”

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