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In housing, what happens in Scotland can be very different from what happens in England 鈥� a trend that has become even more marked because of devolved government. This is particularly true when it comes to policy and practice on procurement and partnering for registered social landlords.

The question of whether RSLs are subject to the European procurement regime has been the subject of much debate between the UK government and European Commission.

The commission believes RSLs should be subject to UK public procurement regulations. The UK government disagrees, but has decided not to push the issue (HT 10 September, page 14).

The 50% threshold

In England, the advice issued to RSLs was that if an individual building project involved high levels of public subsidy 鈥� the rule of thumb being more than 50% 鈥� the procurement regulations should be followed.

This would mean that, if the value of the project exceeded the relevant threshold, the construction work and appointment of the professional team must be advertised in the Official Journal of the European Union.

This view was taken because, in terms of the procurement regulations, a contracting authority is an organisation that, among other things, is 鈥渇inanced wholly or mainly by another contracting authority鈥�.

Other contracting authorities that are specifically named in the regulations include the UK government, government departments and local authorities 鈥� meaning that if an English RSL receives a significant amount of grant funding for a particular project, it must procure the work on the basis that the regulations apply to the project.

In contrast, the view of the Scottish regulator, Communities Scotland, is that all Scottish RSLs should work on the assumption that the procurement regulations apply at all times.

All the rules, all the time

Its view seems to be that, as the RSL sector receives a significant amount of state funding, all Scottish RSLs fall under the definition of 鈥渃ontracting authorities鈥�.

It is difficult to agree with this thinking. Many RSLs, particularly those set up to receive stock in a transfer, are funded mainly or entirely by private lenders, so there is no question of them being financed by an organ of the state. Why should they have to jump through extra procurement hoops?

Many RSLs are funded mainly or entirely by private lenders.
Why should they jump through extra procurement hoops?

Unfortunately, until the position becomes clearer at a UK level, Scotland is saddled with this guidance, which has been reinforced by the Scottish Federation of Housing Associations.

In recommending to its members that they should adhere to Communities Scotland鈥檚 guidance, the federation erred on the side of caution, rather than run the risk of members being sued by disappointed contractors.

The other procurement-related area where there is a major difference is partnering.

In England, different forms of partnering contracts have existed for a few years. Perhaps the best known model for a project partnering contract is PPC2000: its essence being that a project is done in a consensual way, with the construction and supply team sharing risk and reward, agreeing key performance indicators and incentives and resolving disputes in a constructive manner.

The use of such contracts in England is increasing, assisted by the Housing Corporation鈥檚 insistence that this type of practice should be a condition of funding.

Scottish partners

In Scotland, the experience is quite different. The use of genuine partnering contracts is rare. Even those projects that do purport to be based on partnering principles often amount only to a list of vague but laudable goals underpinned by a traditional building contract with all that brings in terms of adversarial disputes and allocation of risk between the parties.

It鈥檚 unclear why this should be. Perhaps the smaller scale of most Scottish RSLs and their projects militates against achieving many of the benefits that partnering contracts claim to produce. Certainly, the lack of any compulsion from Communities Scotland makes following the traditional routes an easy option for RSLs and the construction industry.

It is hoped that the Scottish experience will begin to catch up with what is happening south of the border.

The three stock transfers that were completed in 2003 now have their improvement programmes up and running, and there are more Scottish transfers in the pipeline. All this means there is now greater opportunity to procure construction work on a large scale and to make significant savings in delivering those programmes as a result. And that, of course, can only be to the benefit of tenants.