Member Article

Earlier this month the European Commission closed an investigation into a development in the German City of Flensburg.  On the facts which the Commission eventually established it decided to close its file and take no further action, but it is the background which is interesting and provides a pointer to what best practice should be – particularly now that the Public Contracts Regulations 2006 have been in force for a number of years.

The Council had sold a piece of land to a private developer for construction of a building which would help regenerate a wider area.  The Commission objected to the fact that the Council had not advertised and tendered the accompanying development agreement.  In the end the Commission closed the file because the development agreement did not contain a binding obligation on the developer to complete the works, but only a right for the Council to buy the land back if the building was not completed – taking the view in consequence that the Council had not let a “public works contract” under the relevant Directive and procurement rules.

The importance of the exercise which the Commission undertook is that it shows, following other cases decided in Spring last year there is a real expectation within the Commission that such development arrangements are caught by the Directive and relevant procurement rules.  The lesson therefore is that except in clear cut cases where there are no works specified or the specifications are very loose, or advertising thresholds are clearly not met, best practice for a contracting authority is to recognise that a development agreement will most likely be a public works contract and accordingly the appropriate advertising and procedural steps should be followed.

 

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