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Housing Associations: why public procurement law at all?

Procurement law is changing. New European Directives and a Bill before the Scottish Parliament will alter and in some cases significantly increase its impact.  Now may be a good time to revisit the strange story of why housing associations have to comply with EU procurement law and to question whether they really need to be covered by it and the new Scottish legislation.  
Housing associations are not public authorities. That is why they are not listed in Equality Act (Specific Duties) (Scotland) Regulations 2012 (which contain provisions about procurement).  Unlike other “contracting authorities”, they are neither “financed, for the most part, by the State, regional or local authorities, or other bodies governed by public law”; nor do they “have an administrative, managerial or supervisory board, more than half of whose members are appointed by the State, regional or local authorities, or by other bodies governed by public law.”  They are “established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character” and they do have “legal personality”. But they are treated as “contracting authorities” and covered by European public procurement laws only because of the perception that they are “subject to management supervision by [the State, regional or local authorities, or other bodies governed by public law]”.  
For many years, there was doubt whether housing associations fell under the EU procurement regime at all. Were they really “subject to management supervision” by a public authority or did they just happen to have a regulator, not the same thing at all? Then came a European Court of Justice case, (C-237/99) about an “HLM” (a French social housing association). The Court held that the regulatory regime in France for HLMs  was so interventionist as to amount to management supervision. This meant that an HLM was a “contracting authority” under EU law even although it was not (and still is not) a public body under French law. The (now defunct) UK Housing Corporation decided that the same was true in the UK and issued a Press Release:
“The Office of the Deputy Prime Minister announced on 10 September 2004 that HM Government has accepted that the European Commission is correct in its view that registered social landlords (RSLs) fall within the definition of Bodies Governed by Public Law (BGPLs) as defined in the EC procurement Directives and must therefore comply with the Directives when conducting procurements.”
The Scottish regulatory regime, although different, contained essentially the same features as the regime in England & Wales.  Such is the story of why EU procurement law is today applied to housing associations in Scotland.
The new EU Directives will require to be implemented by mid 2016. The Procurement Reform (Scotland) Bill has also started its passage through the Scottish Parliament. This Bill will do two things:

create a new competitive procurement regime for procurements below the EU thresholds;

add “social” and “sustainability” requirements to all procurements, including those above the EU thresholds (where they will  sit alongside EU requirements).  

The threshold in the Bill for contracting authorities is £50,000 for (all) services and goods and £2,000,000 for (construction) works. The equivalent applicable EU thresholds for 2014 are £172,514 (or £111,676 for central – including, in this context, Scottish-Government-entities) for goods and most services and £4,322,012 for works. There will be a new EU threshold for procurement of “social services”. For non-contentious legal services there will be a new EU competitive regime with a threshold of £625,050. Contentious legal services will remain outside the EU competitive regime altogether.
It is true that, through Scottish Procurement Policy Note 4/2009, the Scottish Government has ensured that Scottish public authorities that procure goods or services valued at £50,000 or more have for some time followed processes that foreshadowed some of the Bill’s requirements. But for housing associations the compliance costs for below-EU-threshold and legal services procurements may be new and significant.
Now is an opportunity to debate and address these issues:-

should the supervisory regime for registered social landlords be lightened up into a purely regulatory regime, taking  housing associations out of procurement law altogether;

if not, could housing associations at least be excluded from the definition of  “contracting authorities” in the Procurement (Scotland) Bill/Act and so removed from its coverage?

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