Deed of Variation of Leisure Operating Contract

Location

Romford

Description

London Borough of Havering intends to enter into a deed of variation with Sports and Leisure Management Limited (SLM) in relation to the Leisure Operating Contract dated 30 September 2016 in order to appoint SLM as London Borough of Havering's agent in delivering the leisure services at the London Borough of Havering's core leisure centre facilities. The core leisure centre facilities include: • Harrow Lodge Leisure Centre • Noak Hill Sports Complex • Central Park Leisure Centre • Rainham Leisure Centre • Sapphire Ice & Leisure The date of the proposed modification is 1 April 2026.

Total Quantity or Scope

London Borough of Havering intends to enter into a deed of variation with Sports and Leisure Management Limited (SLM) in relation to the leisure management contract (Contract) dated 30 September 2016 in order to appoint SLM as the London Borough of Havering's agent in delivering the leisure services at the London Borough of Havering's core leisure centre facilities.

Award Detail

CPV Codes

• 92000000 - Recreational, cultural and sporting services
• 79993000 - Building and facilities management services
• 92610000 - Sports facilities operation services

Indicators

Legal Justification

The procurement is a permitted modification of an existing contract. Explanation: This voluntary ex ante transparency notice (VEAT Notice) gives notice that the London Borough of Havering is entering into a deed of variation (Variation) to make certain changes summarised in this VEAT Notice. A procurement procedure is not necessary on the basis that the Deed of Variation of the Contract is permitted pursuant to Regulation 72 of the Public Contracts Regulations 2015. The Contract is for the operation and management of the London Borough of Havering's five leisure centres to ensure the London Borough of Havering can provide quality and affordable leisure services for the residents within the borough, maintain the facilities and provide a financial return to the borough to invest in core services. The Contract will be varied to adopt an agency model for the future operation and management of the five sports and leisure facilities. Under the current Contract, SLM acts as Principal in the supply of leisure facilities to the public. Under the new agency model in the Variation, SLM would make supplies to the public as an Agent of the London Borough of Havering so that it is the London Borough of Havering providing leisure services to the public through its Agent. This modification is being made in accordance with regulation 72(1)(e) of the Public Contracts Regulations 2015 on the basis that it is not substantial within the meaning of regulation 72(8). The proposed modification does not constitute a substantial modification and is permitted by regulation 72 of the Public Contracts Regulations 2015 because: (a) the modification does not render the Contract materially different in character. The Variation concerns the same type, scope and nature of services which will be delivered at the same London Borough of Havering facilities to the London Borough of Havering's residents. The Contract was already for the operation of the London Borough of Havering's leisure facilities and the Variation makes contractual changes to establish an agency model so that SLM provides the London Borough of Havering's statutory leisure services to the public on the London Borough of Havering's behalf and other ancillary modifications. This generates VAT savings. (b) the modification does not introduce conditions which would have (i) allowed for the admission of other candidates, (ii) allowed for the acceptance of another tender, or (iii) attracted additional participants in the procurement procedure. Delivering the London Borough of Havering's statutory leisure services as agent rather than outsourced contractor will not affect the physical operation of the leisure centres. 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. (c) The modification does not change the economic balance in favour of the contractor in a manner which was not provided for in the initial contract. The new agency model and associated VAT benefits does not impact on SLM's operating costs and management fee under the Contract, which remains reflective of market costs. The agency model will provide a greater return than previously anticipated. (d) the modification does not extend the scope of the contract.

Other Information

The London Borough of Havering appointed SLM to provide the leisure services pursuant to the Contract and Leases for the management and operation of the London Borough of Havering's five leisure centres. The Contract Period is 20 years from 1 October 2016 with a 5-year possible extension. The London Borough of Havering intends to enter a deed of variation with SLM to modify the Contract to appoint SLM as the London Borough of Havering's Agent. The Deed of Variation will set out the scope of the agency appointment and the extent to which SLM will act as the London Borough of Havering's agent. SLM shall be appointed as the London Borough of Havering's Agent to provide the leisure services and maintenance of the London Borough of Havering's facilities but shall continue to carry out other services (specifically, the provision of food, beverages and retail services) as an outsourced supplier to the London Borough of Havering. The Deed of Variation does not materially alter the risk position of the parties. The Agent shall receive a variable management fee and reimbursement for its operating costs in providing the agency services. The London Borough of Havering is guaranteed a minimum return of the revenue received each year on the London Borough of Havering's behalf having regard to the operating costs and management fee payable to the Agent. The Agent shall have a licence to occupy each of the London Borough of Havering's facilities.