diff --git a/elements/os-apply-config/install.d/10-os-config-applier b/elements/os-apply-config/install.d/10-os-config-applier
index 8836635c9..4f90ed724 100755
--- a/elements/os-apply-config/install.d/10-os-config-applier
+++ b/elements/os-apply-config/install.d/10-os-config-applier
@@ -5,6 +5,11 @@ install-packages python-pip python-virtualenv
 
 virtualenv --setuptools /opt/stack/venvs/os-apply-config
 
+# bug #1201253 : virtualenv-1.10.1 embeds setuptools-0.9.8, which
+# doesn't manage correctly HTTPS sockets when downloading pbr from
+# https://pypi.python.org/simple/ if using http_proxy and https_proxy
+# envvars
+/opt/stack/venvs/os-apply-config/bin/pip install -U 'setuptools>=1.0'
 /opt/stack/venvs/os-apply-config/bin/pip install -U os-apply-config
 
 ln -s /opt/stack/venvs/os-apply-config/bin/os-apply-config /usr/local/bin/os-apply-config
diff --git a/elements/os-svc-install/bin/os-svc-install b/elements/os-svc-install/bin/os-svc-install
index 78c9644b7..fe9810401 100755
--- a/elements/os-svc-install/bin/os-svc-install
+++ b/elements/os-svc-install/bin/os-svc-install
@@ -32,6 +32,12 @@ function python-install() {
     reqs=""
   fi
 
+  # bug #1201253 : virtualenv-1.10.1 embeds setuptools-0.9.8, which
+  # doesn't manage correctly HTTPS sockets when downloading pbr from
+  # https://pypi.python.org/simple/ if using http_proxy and
+  # https_proxy envvars
+  pip install -U 'setuptools>=1.0'
+
   if [ -n "$reqs" ] ; then
        $pip_install -r $reqs
        # FIXME: pip requires doesn't include MySQL-python