Ireland - Catering services - This is a Modification Notice for a Catering Services Concession

At the time of commencement of the contracts, Ireland was still impacted by the Covid-19 pandemic and severe restrictions had been imposed on social activities by the Irish Government. These restrictions had significant detrimental impacts on the catering agency services agreements. The Contracting Authorities and Fitzers Catering Ltd had not anticipated such an environment during the tender process in 2019. The Contracting Authorities are proposing to make modifications to the catering agency services agreements to facilitate further capital investment, amendments to the pricing methodology and to extend the duration of the concession by four years. In 2019, Leopardstown Club Ltd and Fairyhouse Club Ltd (the “Contracting Authorities”) conducted a public procurement process under Directive 2014/23/EU and the Irish EU (Award of Concession Contracts) Regulations 2017 to award catering services concessions at Leopardstown and Fairyhouse racecourses. The services fell under “social and other specific services” and therefore the process was subject to the “light touch” regime under the Directive, meaning the process was subject only to Articles 31(3), 32 46 and 47, allowing for a negotiated phase and a request for “Best and Final Offer” prior to contract award. Fitzers Catering Ltd was identified as the successful tenderer and the Contracting Authorities entered into catering agency services agreements with Fitzers Catering Ltd. These catering agency services agreements cover all of the terms of the concessions including in respect of services, capital investment, concession fees and a term of up to ten years. The contracts commenced in June 2021. In the first half of 2022, Levy Ireland Ltd acquired Fitzers Catering Ltd and is now the effective counter-party to the catering agency services agreements. Whilst the procurement does not come fully within Directive 2014/23/EU or the Irish SI 203/2017, the Contracting Authorities are publishing this notice for transparency purposes and to comply with general EU public procurement law obligations. The proposed modifications to the catering service agreement between the Contracting Authorities and economic operator include adjustments and corresponding modifications to: (a) amendments to the concession fees; (b) amendments to the annual service charges; (c) proposed capital investment by Levy Ireland Limited in the race courses; and (d) an extension of the term for performance. Concession Fees The concession fees in the catering agency services contracts currently reflect three thresholds of turnover per annum. An agreed percentage is reflected against each threshold and is used to calculate the annual concession fee. The parties are proposing to modify the Concession Fees by reducing the agreed percentages by one to two percentage points, depending on the threshold of turnover. These reductions are considered necessary taking in to account the reduced attendances at race meetings and in consideration of increased capital investment by Levy Ireland Limited. Service Fees The annual service charge to be paid by Levy Ireland Limited in respect of Leopardstown racecourse would not change. An annual service charge in respect of Fairyhouse racecourse would be introduced; this is a new charge and did not exist previously. This service charge will be payable by Levy Ireland Limited. Capital Investment Levy Ireland Limited has agreed to new capital investment valued circa €500,000 in Leopardstown and Fairyhouse racecourses to be completed and delivered within 12 months of contract modifications. Levy Ireland Limited have also proposed a further capital investment in excess of €500,000 on the basis that the terms of the catering agency services contracts are extended by four years (i.e. 4 years beyond the 10 year term). The Contracting Authorities will retain the benefit and the ownership of the capital investment on the expiration of the extended term. Extension of Term In return for the further capital investment, the parties are proposing to extend the catering agency services contracts by four years. This extension of the term is required to make the capital investment a viable proposition. Without prejudice to the position that the procedure comes within the “light touch” regime, the parties have considered the modifications in terms of Regulation 43 of the EU (Award of Concession Contracts) Regulations 2017. Modifications to the current contract are required to address the unforeseen impacts of the Covid-19 pandemic. The Covid-19 pandemic, and its impacts on society, were not foreseeable at the time of the tender process. This equally applies to the Irish Government’s response. The direct impacts were on-going in 2022 and the succeeding years and the nature of socialising has changed as a result. This included cessation of operations for Levy Ireland Limited, reduced operating capacity, loss of staff and the requirement to hire more expensive agency staff. Regulation 43(1)(c) of the EU (Award of Concession Contracts) Regulations 2017. The increase in value of the concession contracts does not exceed 50% of the value of the original concession contracts - Regulation 43(1)(c) of SI 203/2017. Further, the parties believe that the proposed modifications are not substantial. They do not change the fundamental nature of the original commercial arrangement, nor do they change the balance of the concession in favour of the concessionaire that was not provided for in the original contracts (Regulation 43(1)(e) of the SI 203/2017. Estimated total revenue from the Buyer before the modifications (taking into account possible earlier contract modifications and price adaptions and, in the case of Directive 2014/23/EU, average inflation in the Member State concerned) Value EX VAT €12M. The value of the modification €35.4M (This covers the Gross Value of the modification i.e. Gross Revenue from Concession, Service Charges and Capital Investment).