The United Kingdom Centre for Medical Research and Innovation

Choosing the short list of bidders | February 12, 2011

Note:  The document below (obtained under the FOIA)  opens a window on the way the latter stages of the bidding process were conducted.

Cluttons is a limited liability partnership of chartered surveyors.  Ralph Pearson is a partner. Atisreal International provides real estate property consultancy services in Europe. They  interviewed  bidders on behalf of the DCMS to compile the final  shortlist of five. The names of the shortlisted bidders were withheld by the DCMS.   Where a number such as [43] appears it refers to FOIA exemptions from the general need for disclosure.

It is very interesting to see that this document ends (see the very bottom of the document) by singling out UKCRMI (refered to as ‘The Partnership’) for special mention, viz:

“RECOMMENDATION

The Partnership (This is UKCRMI)

The financial bid of The Partnership is at too low a level for the Consortium to be recommended for shortlisting on a commercial basis.

They have confirmed this is their best financial offer.”

The fact that no other bidder is mentioned suggests that  Cluttons and/or Artireal had been pressed to find a way of justifying the selection of UKCRMI.

————————————————————————

From: Nanisha.Laudat@Cluttons.com on behalf of  Ralph.Pearson@Cluttons.com

Sent: 03 October 2007 11:28

To: [43]

Subject: Somerstown report on interviews with prospective purchasers

Attachments: Scoring spreadsheet for Somerstown – interview –

28.9.07.x1s; Summary of interviewees.doc

COMMERCIAL IN CONFIDENCE

John/Paul.

The interview process was completed on Friday afternoon and here is our report on the outcome.

It is structured as follows:

• Interviewed organisations

• Interview process

• Approach Co planning! public consultation

• Evaluation of proposals

• Results

• Recommendation

INTERVIEWED ORGANISATIONS

At the meeting held with DCMS on 12 September ii was agreed that following the evaluation of 28 proposals 9 of the organisations who had scored the highest following the submission of expressions of interest would be interviewed.

From this in the order of 5 organisations would be recommended for shortlisting and invited to make a formal financial proposal.

The 9 organisations involved have now been interviewed and comprise:

[43] Note by RH – all names redacted.

At interview [43] who were previously partnered by [43] arrived with a new partner [43] in the form of who had previously submitted a proposal but not scored sufficiently well to be included in the interview process.

INTERVIEW PROCESS

Interviews were held at the offices of Atisreal and Cluttons and for the most part lasted between I and 1.5 hours. They were structured in two parts. Firstly, various points were raised by ourselves to check and verify earlier assumptions. The areas covered were as follows:

• Background details to the company or consortium in question.

• Specific details on how the purchase would be funded,

• Conditionality.

• Development proposals.

• Clarification on overage/clawback.

• Extent of early consultation with Camden! local interest groups. •

Programme

The second part of the interview involved a presentation to the interviewee of the background to discussions with the British Library regarding the land swap and proposed new access road, the position with Union Railways. Easements, Cross River Train and issues relating to title, including the submission of a draft title report.

By way of a genera] comment the interviewing team (four or five were in attendance) were extremely pleased with the level of commitment and degree of detailed thought shown by each of the interviewees. In all cases senior people involved with the project attended, mostly with their architects and in sonic cases with a somewhat larger team of consultants.

 It is impossible to achieve total certainty on the willingness and ability of each organisation to complete a purchase, although the majority if not all of these organisations have the required resources.

It was also encouraging that no significant issues emerged in relation to background matters tabled on land swap, Union Railways, etc.

APPROACH TO PLANNING! PUBLIC CONSULTATION

A consistent theme running throughout the interviews was the approach of individual organisations to assumptions on the scale of development.

With one exception [43] each party proposed significantly larger massing than indicated within Camden’s Planning Brief, in some cases over double.

Either as a result of early consultation with the GLA or on the advice of planning consultants the interviewees proposed comparatively tall buildings (some 20 stories plus) along the eastern side of the site opposite the station but with much lower structures to Ossulston Street respecting the rights of light of the residents.

[43] and [43] who had both spoken with representatives of the GLA claim feedback to the effect this site is regarded by the Mayors Office as highly strategic and that comparatively high density development would be not only encouraged but required.

In terms of Camden Planners. the focus of future consultation would in most cases be restricted to the orientation of the scheme, mix of uses and issues such as public open space.

As agreed interviewed parties were encouraged to engage in early consultation with Camden and local interest groups.

Several organisations indicated they would wish to seek an early planning consultation but none considered it would be appropriate to engage with local interest groups until a sale had been completed.

EVALUATION OF PROPOSALS

A simplified scoring format was adopted compared to the one used for the initial assessment of expressions of interest.

Proposal were considered in relation to the following three primary factors:

Level of financial bid

50% of scoring was attributed to the level of the financial proposal which ranged from £65m to £105m.

This is significantly higher than the initial scoring level although as discussed with John we believe that determining value for the taxpayer should to a large extent relate to financial benefit in this particular case.

Also as discussed with John no marks have been attributed with reference to finding or financial rating as only organisations already able to demonstrate sufficient resource have been considered.

Overage/clawback

10% was awarded to the interviewee’s position on overage and clawback.

Most organisations made it clear they intended to build out the scheme rather than sell and were happy to accept clawback provisions involving 50% of any uplift (after holding and other costs) would be paid if the site is sold prior to obtaining a specific planning consent.

With overage, proposals varied considerably with each organisation willing to a greater or lesser extent to consider overage proposals based on the amount of accommodation for which planning consent is obtained above a benchmark, some on uniform basis and others with exclusions.

Reductions relating to the element of affordable.’ social housing.

Several organisations made specific proposals based on an amount per sq ft While others simply indicated their willingness to entertain any reasonable proposals you wish to impose.

Marks were awarded with reference to the following:

• The extent to which a specific proposal had been made and the level of that proposal. • General attitude to the principal [sic] of overage/clawback.

• The scale of development proposals. On this last point organisations proposing particularly large developments were marked low given the limited prospect for overage becoming payable while those with materially smaller schemes were attributed generally higher marks.

Deliverability

40% of the marks were attributed to deliverability. This was judged with reference to an amalgam of following aspects:

• Our assessment of the level of commitment of each organisation to completing a purchase.

• How they are funded (higher risk attributed to those dependent on ‘debt’ rather than ‘equity’) and the track record of completing on purchases of a similar scale without the benefit of a specific planning consent.

• The risk of development proposals not being supported upon further investigation leading to a reduction in bid level, prior to completion of a sale.

• The quality of scheme proposals.

• In ease of joint ventures, previous current experience of working together.

In the latter respect appropriate time was allotted to the consideration of individual scheme proposals.

All bidders could demonstrate significant consideration had been given to development proposals, including indicative plans, drawings and in one case [43] a model.

With the exception of The Partnership all proposals revolve around mixed use schemes ranging from 50:50 commercial/residential to others that had very limited commercial but a more significant proportion of student, hotel or other non commercial uses.

Other than in relation to massing all proposals could be argued to be broadly in line with the planning brief.

RESULTS

Using the scoring system described before the results are shown as per the original order in the first attachment and summarised as follows: On the left is the weighted score out of a maximum. of 100 points and alongside in brackets is the level of financial bid.

Score (Financial bid)

[43]75% (£102m)

[43]86% (£105m)

[43]56% (£81m)

[43]64% (£91m)

[43]19% (£65m)

[43]34% (£65m)

[43]68% (£90m)

[43]67% (£103m)

[43]22% (£75m)

Note by RH: all shortlisted bidder names chosen from those expressing an interest  redacted.

Shortly after the interview with [43] a revised financial bid of £lO3m was received as a result of input from their new commercial partner. On the basis the interviews held are integral to the selection process our recommendation is to allow this and the revised figure has been scored compared to the original financial bid of £71m Given the weighting in favour of price ti is not surprising the results are closely aligned. A summary of the main points arising out each interview is being prepared for your further background information and will be supplied shortly.

 RECOMMENDATION

The Partnership (This is UKCRMI)

The financial bid of The Partnership is at too low a level for the Consortium to be recommended for shortlisting on a commercial basis.

They have confirmed this is their best financial offer.

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