Deed of Variation of Leisure Management Contract

Concepts

• town
• recreation, culture and sport
• leisure facilities
• leisure management contract
• leisure management limited
• the leisure management contract
• sports and leisure management limited
• the future management
• variation
• the authoritys nine leisure facilities

Location

Hertfordshire:

Description

St Albans City and District Council (the Authority) intends to enter into a deed of variation with Sports and Leisure Management Limited (the Contractor) in relation to the Leisure Management Contract for the Authority's nine leisure facilities dated 31 October 2022 (the Underlying Contract), for the adoption of an agency model for the future management of leisure facilities.

Award Detail

CPV Codes

• 92000000 - Recreational, cultural and sporting services
• 98330000 - Physical well-being services

Legal Justification

This VTN gives notice that the Authority is entering into a deed of variation (the "Contract") to make certain changes summarised in this VTN. A procurement procedure is not necessary on the basis that the award of the Deed of Variation of the Underlying Contract is permitted pursuant to Regulation 72 of the Public Contracts Regulations 2015. The Underlying Contract concerns the provision of a range of operation, management and related services, by the Contractor, in relation to nine sports and leisure facilities and two theatres. The Underlying Contract will be varied for the adoption of an agency model for the future operation and management of the nine sports and leisure facilities s. Under the current structure, the Contractor acts as Principal in the supply of leisure facilities to the public, so that the Authority is not making the supplies of leisure services. Under the new agency model, the Contractor would make supplies to the public as an Agent of the Authority. This modification is being made in accordance with regulation 72 of the Public Contracts Regulations 2015. Namely, the proposed modification is not substantial within the meaning of regulation 72(8) on the basis that: 1. the modification does not render the Underlying Contract materially different in character - the proposed modification remains limited to the same type, scope and nature of services, where the services will be delivered to the same facilities. The modifications only concern contractual changes to establish an agency model for VAT purposes so that the Contract to provide leisure services to the public on the Authority's behalf and other ancillary modifications. 2. the Council has satisfied itself that the modification does not introduce conditions which would have (a) allowed for the admission of other candidates, (b) allowed for the acceptance of another tender, or (c) attracted additional participants in the procurement procedure - the change to an agency model for VAT purposes does not change the service requirement or the way in which those services are provided, and is unlikely to have changed the outcome of the procurement. 3. The modification does not change the economic balance in favour of the contractor in a manner which was not provided for in the contract - The Authority has satisfied itself that the new agency model and VAT arrangement does not impact on the Contractor's Operating Costs and Management Fee under the Underlying Contract, which remains reflective of market costs and does not amount to an over-compensation of the services to be provided. The agency model will allow for a more certain financial position to the Authority and will provide a greater surplus share than previously anticipated. 4. As per our comments at 1. above, the modification does not extend the scope of the contract. For the reasons set out above, the proposed modification does not constitute a substantial modification and is permitted by regulation 72 of the Concession Contracts Regulations 2015.

Other Information

** PREVIEW NOTICE, please check Find a Tender for full details. ** The Authority appointed the Contractor to provide the leisure services pursuant to the Underlying Contract and Leases for the management and operation of the Council's leisure portfolio. The Authority intends to enter a deed of variation with the Contractor to modify the Underlying Contract, the effect of which will be the following: • To identify the agency agreement between the parties, the extent to which the Contractor will act as the Authority's Agent, and areas where it will act as Principal; • The Operator shall be appointed as the Authority's Agent to provide the Leisure Services and Maintenance Services (together the "Agency Services") but shall continue to carry out other services (specifically, the provision of theatre management services, food, beverages and retail) as an independent supplier to the Authority (the "Supplier Services"); • The Restated Leisure Management Agreement does not materially alter the risk position of the parties; • The Agent shall receive a variable Management Fee for its services to the Authority as Agent and reimbursement for its Operating Costs in providing the Agency Services on behalf of the Authority; • The Authority is guaranteed a Guaranteed Minimum Return ("GMR") having regard to revenue received by the Authority and Operating Costs and Management Fee payable to the Agent; and • The parties have agreed that the Agent shall have a licence to occupy each of the Leisure Facilities.