Under most construction contracts, the contractor takes on the ground conditions risk. However, a recent case has demonstrated that the risk can fall on the employer.
- Value for money — RPs are required to demonstrate compliance with the regulatory standards, under which they are required to “understand the costs and outcomes of delivering specific services and which underlying factors influence these costs and how they do so” (Regulatory Framework – Value for Money Standard). Contractors should be prepared to provide this information when contracting with RPs.
- Disposals of assets - consent needed — until 6 April 2017, RPs are required to obtain consent from their regulator for all disposals or charging of social housing properties. Even after 6 April, it is still likely that an RP will need to prepare a post-disposal report to the Homes and Communities Agency (HCA), meaning that the RP will still need to ensure that they comply with any HCA regulations. When you enter into a commercial contract relating to land or the development of such, you should be aware of the consent/reporting requirement, which may have additional time constraints.
- Best terms — Most RPs are also charities (either registered or exempt), and therefore any disposal should be for the best price and on the best terms reasonably obtainable (unless the disposal furthers the RP’s own charitable aims). The Governance & Financial Viability Standard prohibits RPs from entering into arrangements that inappropriately advance the interests of third parties (or could be seen to do so). This means that an RP has to be able to justify why they agree to onerous or unusual commercial terms.
- Probity requirements — RPs receive a significant amount of their income from public funds. This means that they are under increased political and public scrutiny, not only in relation to how they use their resources, but also in relation to the way in which they conduct their business. In particular, there are restrictions on their ability to contract with connected persons, and most RPs will have specific policies which set out the parameters within which they can contract externally. Such policies will set out the conduct that an RP expects to be demonstrated by its contractors, and they will expect you to have knowledge of, and comply with, their policies. You should also declare, where applicable, any connections with the RP’s directors or staff.
- Procurement — RPs are 'contracting authorities' for the purposes of European Union (EU) procurement law. This means that RPs are required to advertise contracts with a value over the relevant thresholds across the EU, and to carry out a formal Official Journal of the European Union (OJEU) compliant tendering process. The relevant thresholds are currently (excluding VAT):
- contracts for supplies and services: £164,176;
- contracts for works: £4,104,394; and
- concession agreements (works or services): £4,104,394.
The regulations are complex, but there are exceptions that allow RPs to enter into contracts without carrying out a full tendering procedure. This makes it worthwhile for you to explore whether any exemptions apply that might allow you to approach an RP with a proposal directly.
To find out more information relating to this article, please contact Laura Golightly.
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