If you’re not on the list...

Two weeks ago the Homes and Communities Agency released the guest list to an exclusive party that developers were falling over themselves to attend.

The hottest ticket in town gave them entry to the HCA’s delivery partner panel - which could have massive implications for the procurement process of future public sector housing contracts.
Demand was certainly high. The HCA received 132 submissions from a wide range of construction and development companies to the pre-qualifying process, eventually whittling the number down to 28 housing associations, house builders and consortia, which will be involved in developing HCA-owned land.

So why were builders so desperate to gain a place on the panel and what does the whole process reveal about the future of development?

The delivery partner panel framework will exist for three years and is split into three regional clusters - northern, central and southern panels - with the likes of Barratt Developments and Wates Living Space featuring on all three.

Five housing associations applied for inclusion. Family Mosaic, Gentoo Homes and Great Places were successful.

The HCA had originally expected to appoint between six and 12 members to each of the northern, central, and southern clusters, but eventually approved 17 to 18 members for each. It says this was due to the quality of the bids and more importantly the sheer number of applicants.

Simply put, having a spot on the panel will allow members to bid for available projects without having to go through usual procurement process, which can be a drain on resources.

‘This is a much faster way of getting development started onsite and it cuts out the procurement expenses so the transaction cost is lower for developers,’ explains Steve Carr, head of new business and economics at the HCA.

The three housing associations on the panel responded to the opportunity in a bid to develop the construction side of their business.

‘We saw the list of potential work stream the panel might cover and were certain we could add value to the panel,’ says Matthew Harrison, director of development for Great Places.

‘The spread of opportunities range from development to project management. There may be opportunities to help us expand our social housing stock and if they present themselves we will try to take those.’

Mark Clare, group chief executive of Barratt Developments, says it was determined to be included on the panel because more and more business will be done through this framework in the future.

‘Previously, developers have had to restate their credentials when bidding and this is done at a fair cost. Now, our credentials are accepted before we bid for a scheme so we can put our best foot forward - push on,’ he states.

Steve Trusler, strategy director at Wates Living Space, agrees the new framework will have a significant role in the way development projects are approached in future. ‘The Official Journal of the European Union process is an incredibly long, costly and intensive process,’ he adds.

Mr Trusler expects the outlay for developers to fall by nearly two thirds thanks to the new framework.

Long-term effect

While the HCA has the option to extend the three-year scheme to five years, many believe the framework could run beyond its original lifespan.

Mr Carr certainly hints at this. ‘We could have new players in the market we want to include by then, so a longer timeframe would constrain us,’ he says.

Although the panel members are not set in stone beyond the panel’s three-year course, it seems the concept is here to stay.

The panel was created to help developers access HCA sites through its public land initiative, but a number of as yet unnamed local authorities have shown interest in getting involved with the scheme and could use the framework for their own development.

To procure through the panel, interested public agencies will be required to sign a letter of agreement with the HCA and set up a separate framework contract between themselves and panel members.

The agency is expected to release eight to 10 sites as part of a £50 million injection from the government’s housing pledge, which could initially provide around 1,300 homes.

However, Mr Carr reveals the 40-odd local authorities interested in the panel could boost those figures, with their own land going through the framework.

He explains: ‘We are not sure yet how much their participation will add, but it is certain to boost overall numbers. It is a business model local authorities are very interested in using and they could even beat the HCA to using its own panel first.’

Inclusion on the HCA panel could become even more important to house builders after the European Union passed new laws on procurement that could prove problematic for public sector bodies and developers alike.

The Remedies Directive - which came into force on 20 December 2009 - makes it easier for losing bidders to challenge contracts that councils and other public bodies procured through the OJEU.

Before the directive was enforced, public sector bodies were only obliged to inform losing bidders about where their bids went wrong. However, now they must reveal to the losers how they compared with the contract winner. Procurement processes started after the new law became effective can now be challenged.

The change in law makes the HCA’s framework model even more important because successful bids from developers outside the panel can now be challenged, says Helen Meyler, partner at law firm Davies Arnold Cooper.

‘The framework should simplify and facilitate the bid process because the panel members will have already gone through the OJEU process to be there. The new European directive makes the traditional procurement process more risky for both the local authority and the developer.’

While it remains to be seen just how much land the HCA will release to its newly selected framework, it seems increasingly likely that inclusion on the panel will become ever more important over the next few years.

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