Brussels, 8 October 2009
Public procurement: Commission requests United Kingdom to review contracts for the provision of housing services awarded by Glasgow Housing Association without competitive tender
The European Commission has decided to send a further request to the United Kingdom concerning the award of a number of services contracts by the Glasgow Housing Association relating to the management of its housing stock. In the Commission's view, these contracts were awarded without a competitive tendering process as required under EU public procurement rules. This formal request takes the form of a "reasoned opinion", the second stage of the infringement procedure laid down in Article 226 of the EC Treaty. If there is no satisfactory reply within two months, the Commission may refer the matter to the European Court of Justice.
Public service contracts awarded without competitive tender
In the context of the social housing transfer process which is taking place in the city of Glasgow, the Glasgow Housing Association, a Registered Social Landlord, has awarded a number of services contracts to various Local Housing Organisations relating to the management of its housing stock, which are known as "Remodelled Management Arrangements" (RMAs). These contracts were awarded without a tendering process having been carried out.
The Commission considers that the RMAs constitute public service contracts and as such should have been awarded on the basis of an open and transparent tendering process in accordance with the requirements and procedures envisaged in Public Procurement Directive 2004/18/EC. The Commission therefore is of the opinion that in the absence of such a tendering process, the United Kingdom has failed to fulfil its obligations under the Directive.
Total public procurement in the EU – i.e. the purchases of goods, services and public works by governments and public utilities – is estimated at about 16% of the Union’s GDP. The open and transparent tendering procedures required under EU public procurement law mean more competition, stronger safeguards against corruption, and better service and value for money for taxpayers.
Under the EC Treaty, the European Commission has powers to take legal action – known as infringement procedures – against a Member State that is not respecting its obligations under EU rules. These procedures consist of three steps. The first is that the Member State receives a letter of formal notice and has two months to respond.
In case further compliance with EU legislation is needed, the Commission sends a reasoned opinion. Again the Member State has two months to reply. If there is no satisfactory reply, the Commission can refer the matter to the European Court of Justice in Luxembourg. It can also request that the Court impose a fine on the country concerned if it does not comply with the Court's ruling.
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