Alex Beal
The European Commission has recently called into scrutiny the award of a number of service contracts by Glasgow Housing Association.
Play by the rules
GHA transferred the management of a number of its properties to six housing associations during March and July this year. It is alleged that GHA is in discussion with a further 21 housing associations with regard to a similar arrangement.
Since 2004, housing associations have been deemed to be ‘bodies governed by public law’ and are therefore required to comply with procurement rules, where applicable.
The EC questioned whether GHA had failed to adhere to these rules and has requested that the UK government provides further information showing how the contracts were awarded.
Upon review of the contracts by the EC, it was confirmed that they were public service contracts, given they involved property management services. GHA should, therefore, have awarded the contracts following the open and transparent tendering process prescribed for under the Public Procurement Directive 2004/18/EC.
In accordance with the directive, GHA was obliged to advertise the contracts in the Office Journal of the European Union. The alleged failure to advertise and follow the prescribed contract award route will be central to the commission’s investigation.
Although breach of duty under the directive is not a criminal offence, the repercussions for non-compliance can be severe. In this case, for those contracts that have been entered into, the only award available is damages for companies that believe they would have won the contract had it been properly advertised. At present the court cannot order the contract to be overturned.
However, GHA has four potential transfers planned for this calendar year. These transfers could face annulment, depending on the EC’s findings.
Although isolated, this case should serve as a warning to all housing associations. In the current climate of caution with regard to the procurement regime, associations would be well advised to toe the line when it comes to these obligations.
Alex Beal is a solicitor specialising in commerce and technology at Lawrence Graham LLP
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