Deed of Variation of Leisure Management Services – Agency Model

{
  "awards": [
    {
      "hasSubcontracting": true,
      "id": "063117-2025-1",
      "relatedLots": [
        "1"
      ],
      "status": "active",
      "suppliers": [
        {
          "id": "GB-FTS-163261",
          "name": "Sports and Leisure Management Limited (Everyone Active)"
        }
      ]
    }
  ],
  "buyer": {
    "id": "GB-FTS-5427",
    "name": "Westminster City Council"
  },
  "contracts": [
    {
      "awardID": "063117-2025-1",
      "dateSigned": "2025-10-08T00:00:00+01:00",
      "id": "063117-2025-1",
      "status": "active",
      "value": {
        "amount": 146480000,
        "currency": "GBP"
      }
    }
  ],
  "date": "2025-10-08T09:28:50+01:00",
  "description": "The Council appointed SLM to provide the leisure services pursuant to the contract and leases for the management and operation of the Council\u0027s leisure centres.\nThe contract term is 10 years from 1 July 2016. The Council will be entitled at its absolute discretion to extend the term for a further period or periods of up to 5 years making a total possible term of 15 years.  The Council has decided to extend for a further 3 of 5 years and may at its absolute discretion extend for a further 2 years.\nThe Council intends to enter a deed of variation with SLM to modify the Contract to appoint SLM as the Council\u2019s Agent.\nThe Deed of Variation will set out the scope of the agency appointment and the extent to which SLM will act as the Council\u2019s agent.  SLM shall be appointed as the Council\u0027s agent to provide the leisure services and maintenance of the Council\u2019s facilities but shall continue to carry out other services (specifically, the provision of food, beverages and retail services) as an outsourced supplier to the Council.\nThe Deed of Variation does not materially alter the risk position of the parties.\nThe Agent shall receive a variable management fee and reimbursement for its operating costs in providing the agency services.\nThe Council is guaranteed a minimum return of the revenue received each year on the Council\u2019s behalf having regard to the operating costs and management fee payable to the Agent.\nThe Agent shall have a licence to occupy each of the Council\u2019s facilities.",
  "id": "063117-2025",
  "initiationType": "tender",
  "language": "en",
  "ocid": "ocds-h6vhtk-05aa25",
  "parties": [
    {
      "address": {
        "countryName": "United Kingdom",
        "locality": "London",
        "postalCode": "SW1E 6QP",
        "region": "UKI32",
        "streetAddress": "64 Victoria Street"
      },
      "contactPoint": {
        "email": "edesveaux@westminster.gov.uk"
      },
      "details": {
        "classifications": [
          {
            "description": "Regional or local authority",
            "id": "REGIONAL_AUTHORITY",
            "scheme": "TED_CA_TYPE"
          },
          {
            "description": "General public services",
            "id": "01",
            "scheme": "COFOG"
          }
        ],
        "url": "http://www.westminster.gov.uk"
      },
      "id": "GB-FTS-5427",
      "identifier": {
        "legalName": "Westminster City Council"
      },
      "name": "Westminster City Council",
      "roles": [
        "buyer"
      ]
    },
    {
      "address": {
        "countryName": "United Kingdom",
        "locality": "Hinkley",
        "postalCode": "LE10 3EY",
        "region": "UKF22",
        "streetAddress": "2 Watling Drive, Sketchley Meadows"
      },
      "details": {
        "scale": "large"
      },
      "id": "GB-FTS-163261",
      "identifier": {
        "id": "02204085",
        "legalName": "Sports and Leisure Management Limited (Everyone Active)"
      },
      "name": "Sports and Leisure Management Limited (Everyone Active)",
      "roles": [
        "supplier"
      ]
    },
    {
      "address": {
        "countryName": "United Kingdom",
        "locality": "London",
        "postalCode": "WC2A 2LL",
        "streetAddress": "Strand"
      },
      "id": "GB-FTS-4468",
      "identifier": {
        "legalName": "High Court"
      },
      "name": "High Court",
      "roles": [
        "reviewBody"
      ]
    }
  ],
  "tag": [
    "award",
    "contract"
  ],
  "tender": {
    "classification": {
      "description": "Sports facilities operation services",
      "id": "92610000",
      "scheme": "CPV"
    },
    "description": "Westminster City Council intends to vary its existing contract with Sports and Leisure Management Ltd (trading as Everyone Active) to implement an agency model for the delivery of leisure management services and appoint Sports and Leisure Management Ltd (trading as Everyone Active) as the Council\u2019s agent in delivering the leisure services at the Council\u2019s leisure facilities. Under the revised arrangement, Everyone Active will act as agent and the Council as principal. The services, facilities, and scope of provision remain unchanged. The purpose is to achieve VAT efficiency and consequently deliver improved financial returns. Everyone Active will guarantee an additional financial surplus to the Council each year. \nThe original leisure management services contract was originally procured under the Public Contracts Regulations 2006 and commenced on 1 July 2016. The opportunity to change the status has arisen during the course of the contract, while exercising allowable optional extensions under the Contract, following the successful litigation taken by Chelmsford City Council in 2022 and subsequent revised HMRC guidance in 2023 in relation to the VAT treatment of leisure services provided by local authorities.",
    "id": "ocds-h6vhtk-05aa25",
    "items": [
      {
        "deliveryAddresses": [
          {
            "region": "UKI32"
          }
        ],
        "id": "1",
        "relatedLot": "1"
      }
    ],
    "legalBasis": {
      "id": "32014L0024",
      "scheme": "CELEX"
    },
    "lots": [
      {
        "description": "Westminster City Council intends to enter into a deed of variation modifying its contract with Sports and Leisure Management Ltd (trading as Everyone Active) for leisure management services which commenced on 1 July 2016 to appoint Everyone Active as the Council\u2019s agent in delivering the leisure services at the Council\u2019s leisure centre facilities.",
        "hasOptions": false,
        "id": "1"
      }
    ],
    "mainProcurementCategory": "services",
    "procurementMethod": "limited",
    "procurementMethodDetails": "Award procedure without prior publication of a call for competition",
    "procurementMethodRationale": "This notice relates to the modification of an existing contract, not the award of a new contract. While the contract was sourced under PCR2006, the Authority considers the modification must be carried out pursuant to PCR2015 Regulation 72. A procurement procedure is not necessary given the award of the Deed of Variation is permitted pursuant to PCR2015 Regulation 72.\nThe modification may lawfully be agreed between the parties and implemented without the need to conduct a fresh procurement procedure.\nThe contract is for the operation and management of the Authority\u2019s leisure centres to ensure the Authority can provide quality and affordable leisure services for residents of Westminster, maintain facilities and make financial returns to invest in core services.  \nThe contract will be modified to adopt an agency model. Under the current contract, SLM acts as Principal in the supply of leisure facilities to the public. Under the new agency model, SLM would make supplies to the public as an Agent of the Authority. It is the Authority providing leisure services to the public through its Agent.\nThe proposed modification is not \u2018substantial\u2019 within the meaning set out in Regulations 72(1)(e) and 72(8) PCR2015. \n\u2022\tThe character of the original contract and services will remain substantially the same and is not rendered materially different from the original. \n\u2022\tThe modification concerns the same type, scope and nature of services at the same facilities to residents. The contract already provided operation of the leisure facilities, the modification establishes an agency model so SLM provides the Authority\u2019s statutory leisure services to the public on its behalf and other ancillary modifications. This generates VAT savings.  \nThe underlying contract is for a range of leisure centre operation, management and related services by SLM for the Authority. The original contract will be modified to an agency model. Under the current structure, SLM acts as Principal in the supply of public leisure facilities so that the Authority is not making the supplies of leisure services. Under the new agency model, SLM would make supplies as an Agent of the Authority.\nThe Authority is satisfied that the modification does not introduce conditions which would have allowed for (a) the admission of other candidates, (b) the acceptance of another tender or (c) additional participants in the procurement procedure - delivering the Council\u2019s statutory leisure services as agent rather than outsourced contractor will not affect the physical operation of the leisure centres and the change to an agency model for VAT purposes does not change the service requirement or how those services are provided. It is unlikely to have changed the outcome of the procurement. \nThe modification does not change the economic balance in favour of SLM in a manner which was not provided for in the contract. The Authority is satisfied that the agency model and VAT arrangement does not impact SLM\u2019s operating costs under the original contract. The agency model allows for a more certain financial position to the Authority and a greater surplus share than previously anticipated.",
    "procurementMethodRationaleClassifications": [
      {
        "description": "The procurement falls outside the scope of application of the directive",
        "id": "D_OUTSIDE_SCOPE",
        "scheme": "TED_PT_AWARD_CONTRACT_WITHOUT_CALL"
      }
    ],
    "status": "complete",
    "title": "Deed of Variation of Leisure Management Services \u2013 Agency Model"
  }
}