The Office of Government Commerce (OGC) has updated its guidance on development agreements and procurement law in the wake of the Court of Justice’s decision in Case C-451/08 Helmut Muller.
It updates the initial guidance note of October 2009 which was issued because of interest by local authorities and others in the context of European Court of Justice (ECJ) cases, in particular Case C-220/05 – Jean Auroux and others v Commune of Roanne.
The updated guidance sets out some of the circumstances which may reduce or increase the likelihood that a development agreement will be subject to the public procurement rules.
In addition, guidance is given on the application of the public procurement rules to section 106 agreements which takes into account Helmut Müller.
The note says that based on its understanding of case-law and the Commission’s decisions, the OGC suggests that a “development agreement” between a public body and a developer may be less likely to comprise a public works or works concession contract, if it meets some of the following characteristics:
The proposed development, or a significant part, is to be undertaken at the initiative and autonomous intention of the developer.
The development agreement is ancillary to a transfer or lease of land or property from the authority to the developer, and is intended to protect the interests of a contracting authority which is the lessor or otherwise retains an interest in the land or property.
The development agreement is based on proposals put forward by the developer, rather than requirements specified by the contracting authority.
There is no pecuniary interest passing from the contracting authority to the developer as consideration for undertaking the development, either through direct payment or indirectly.
The development agreement does not include specific contractually enforceable obligations on the developer to realise a work or works.
The development does not consist of or contain works for the direct economic benefit of the contracting authority.
The involvement of the contracting authority consists only in the exercise of statutory land-use planning powers.
