OJEU rules explained

In a recent article for Estates Gazette, Kate Johnson, a solicitor in our commercial property team, looks at the Official Journal of the European Union (OJEU) regulations and how these affect collaborations between public and private sectors which are gaining popularity as local authorities seek to unlock the value of land it holds whilst retaining control of what is developed.

The OJEU rules regulate the purchasing by public sector bodies and certain utility sector bodies of contracts for goods, works, services or supplies (known as public works contracts).

Kate says “The key differential under the OJEU rules is that local authorities entering into a joint venture for purely investment purposes does not constitute a procurement of a public works contract. If an authority wants to avoid the requirements of the regulations imposed by OJEU, the following points should be noted:

A pure “land deal” is excluded from the rules unless it is coupled with an obligation or undertaking to provide works or services of economic benefit to a contracting authority.

Even if the sale or lease agreement includes desirable development objectives, or a buy-back option in the event of such objectives not being met, it will still not be a public works contract under the regulations.”

Any contract in default of the regulations could be set aside and/or damages awarded against the procuring authority in favour of affected third parties. It is therefore vital to ensure that any assessment of whether or not a development agreement or “land deal” falls outside of a public works contract, and therefore outside the OJEU process, is correct.

The full article can be found in Estates Gazette magazine, 8 August, p44-46.