Grey area delays development

3 February 2009

03 February 2009 | Paul Snell

Unclear public procurement rules and cautious council buyers are delaying regeneration projects and harming developers, according to the British Property Federation (BPF).

The commercial property industry association said a judgement by the European Court of Justice (ECJ) had made local authorities "overly cautious" in interpreting procurement directives, holding up new developments, or putting deals that have been agreed out to market, "to be on the safe side". Prior to the ruling councils chose a single development partner informally or without a selection process.

"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," said Liz Peace, BPF chief executive.

The "Roanne case" was a judgement in 2007, where the ECJ ruled a deal signed between the municipal council of Roanne in France and a developer for urban development was a public works contract and should have followed procurement rules.

Anthony Woolich, head of the EU/Competition team at legal firm LG, said authorities were taking a broad range of approaches to the ruling, putting all works out to competition, or insisting on competitions for specific construction projects.

Peace added: "We need clarity from the UK government, or even the EU, as to what kind of project should go down the OJEU route [in light of this judgement]. Local authorities need to be given the confidence that they won't be caught out."

A spokesman for the OGC said there is plenty of advice on how to apply OJEU processes on the OGC website and if anyone in the public sector is unsure they should contact the OGC service desk for assistance.

Woolich said it was likely that future case law would provide buyers with further guidance as to which projects need to be put through the OJEU process.


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