Norway – Non-residential property renting or leasing services – Hire of office premises for Kvæfjord municipality's administration

Kvæfjord municipality considers that the contract falls under the exception in the procurement regulations § 2-4 first section letter a, which states that the regulations do not apply to contracts for the hire of existing buildings or other real estate: The contract is for the hire of real estate, structured as a rent contract with ongoing hire remuneration. - The municipality ́s office facilities requirements are functional and of an ordinary character for office buildings, so that there is no building and construction contract. The premises shall meet the applicable public law requirements, including the Workplace Regulations as it applies to landlords. The landlord will choose the solutions to fulfil the requirements. The municipality does not have a decisive influence on the design of the construction works. The economic and technical risk for adapting the premises lies with the landlord. The lessor is free to choose contractors, consultants and sub-contractors, and the municipality does not participate in the engineering design services. The contract does not include elements that subtract it from a rent relationship. The municipality does not acquire ownership, does not participate in the engineering design services, does not require a detailed progress plan for the construction work, and does not have an influence on the landlord's choice of contractors or consultants. The municipality ́s property portfolio is significant compared to the number of inhabitants, and the municipal council has prioritised the reduction of the property area. The need for office facilities is therefore covered by the hire of existing buildings rather than property acquisitions or new buildings under municipal management. Rent gives the municipality flexibility to adapt the area need over time without binding further capital in the properties, and is in accordance with the municipality ́s goal of reducing the property costs. Reuse of the existing buildings is resource efficient and in accordance with the municipality ́s aim of reducing climate footprint. Kompella AS has available existing buildings at Trastad, which is suitable for the municipality ́s needs, located in close proximity to the municipally owned 'Social Building' (Markveien 5), which enables co-use with the existing buildings. Co-location gives practical and operational advantages for the municipality ́s administration and political activities and can ensure daily activity in the Social Building which contributes to taking care of the building through use. The landlord will carry out alterations and renovations of the existing buildings in Markveien 2, 4 and 6 in order to offer suitable office facilities. The adaptation work is the landlord's independent commercial assessment and it is carried out at the landlord's own expense and risk. The municipality has no influence on the landlord ́s choice of contractors, engineering designers or construction systems and it has not required the building ́s architectural structure or constructive systems. The adaptation work does not change the contract ́s overall character of being a rent contract. Kompella AS is 100 percent owned by Kvæfjord municipality. Ownership in itself is not an obstacle to the use of the rent exception. It is decisive if the contract really applies to the hire of real estate and whether the municipality has a decisive influence on the design of the construction works. The municipality has been conscious of keeping the requirements functional and handing over the engineering design services to the landlord, so that the ownership relation does not lead to real management of the construction work.