Public procurement

1 July, 2016

The current situation:

Procurement rules set out how the public sector across the EU conducts its purchasing of goods, services and works. Their key aim is to ensure tender exercises are conducted in a fair manner and achieve value for money.

They allow UK businesses to tender for public sector contracts across the EU on a non-discriminatory basis. They have, however, been criticised for making the public procurement process lengthy and time consuming.

EU directives on public procurement have been implemented into UK legislation by a number of regulations.

 

What might change?

Nothing will immediately change and UK legislation will still apply on the same basis as that in the EU. The UK could theoretically repeal the public procurement regulations but this seems unlikely in the short-term as the UK needs rules governing how public sector contracts are awarded. Any government repealing them without a replacement would open themselves up to accusations of tolerating waste and inefficiency.

When Brexit negotiations commence, the UK will have several options. The UK could remain part of the European Free Trade Association (EFTA) or the European Economic Area (EEA). In these circumstances, the UK will be able to participate in the EU internal market by adopting all EU legislation, including the EU procurement rules. EU businesses would be able to tender for UK public sector contracts on the same basis.

Alternatively, the UK could leave the EU without a free trade agreement. This means the rules of the World Trade Organisation would apply. Finally, the EU is party to the Government Procurement Agreement (GPA), which allows access to the procurement markets of the contracting states. The UK could remain a signatory of the GPA. This would give the UK access to the EU, although it would not retain exactly the same rights as it currently has under the EU public procurement regime.

 

What impact could this have on UK businesses?

Nothing will immediately change for UK businesses and equal access will continue to apply across the EU. The eventual Brexit settlement will determine the long-term position.

If the UK remains part of the EFTA/ EEA then very little will change. Businesses will benefit from the same rights of access but equally will have to comply with the same procurement procedures.

Where the UK has no trade arrangement and does not remain part of the EFTA/EEA, the position is less certain. UK businesses could benefit from greater opportunities in the UK but experience more barriers when trying to secure EU public sector contracts.

 

What you need to be thinking about now:

In the short-term, businesses in the UK should consider any current public sector tenders. A change in the economy and potential future restrictions may make the contracts less viable. This will be of particular concern for long-term contracts (roughly 2019 and beyond) which looks to be the earliest date the UK would leave the EU.

UK businesses should be alive to increased opportunities within the UK itself, as EU companies may be reluctant to commit to long-term UK contracts.

They should also be conscious of EU and UK public sector entities using Brexit as an opportunity to change existing contracts. Any changes should be in compliance with existing EU procurement rules.

If you have a query about any aspect of procurement, please contact Tom Trowhill at  tom.trowhill@crippspg.co.uk or call on 01892 506 342