ODPM set to drop fight against onerous European rules

The ODPM is set to abandon its quest to get registered social landlords exempted from tough new European procurement rules.

The confirmation of its decision was expected yesterday, but could be delayed by the timing of the anticipated Cabinet reshuffle.

The rules mean associations will have to advertise all contracts worth more than £3.834m for works and £153,000 for services in the European Union’s Official Journal (HT 9 January, page 11).

A source said the ODPM was opposed to the procurement rules but was forced to go along with them.

Government lawyers found that housing associations would not be considered public bodies, despite having to sign up to the public procurement rules, so their bank loans would not count as public sector borrowing.

Lawyers and housing associations have said this will add time and costs to the contracting process and could leave associations open to legal actions from unsuccessful bidders.

In addition, associations would have to re-tender a contract if the terms changed after the advertisement was published.

Charles Morrish, a partner in lawyer Trowers & Hamlins, said the new rules could add four to six months to the tender process as well as advertising and administration costs.

He added that the thresholds applied to the total price of the contract, not its cost per year. So a two-year services contract worth £100,000 a year would fall foul of the £153,000 limit.

Jim Coulter, chief executive of the National Housing Federation said: “There’s nothing we can do about this. We will provide advice to members on the process of procurement.” He added that Procurement for Housing, the NHF’s initiative with the Chartered Institute of Housing and HouseMark, would not be affected by the EU rules on services contracts.

David Orr, chief executive of the Scottish Federation of Housing Associations, said forcing RSLs to comply with rules aimed at the public sector threatened to erode their status as independent of government.

Keith Lindup, head of partnering and procurement at CityWest Homes, Westminster council’s arm’s-length manager, said associations would need to take on staff with experience of this type of procurement.