How Will Brexit Affect Public Procurement?

With the process of Brexit shrouded in uncertainty and indecision, its long-term impacts and knock-on effects remain as confusing as ever. Even as serious discussions get underway, progress has been slow, which means a final deadline hasn’t been set, leaving question marks over many processes and policies, including that of public procurement.

As of right now, like most things concerned with Brexit, the impacts created by the decision to leave are merely subject to speculation and conjecture. At the minute, and with Brexit becoming more and more complicated by the day, there is no evidence to accurately demonstrate how it will affect public procurement. Whenever the Brexit process comes into effect, there are possible outcomes – both immediate and long-term – that might arise upon leaving which we’ll attempt to illuminate here.

The Possible Outcomes on Public Procurement

Much like the process of Brexit itself, opinions differ over the effects it may well have on public procurement. Assuming everything goes ahead as planned, international law firm, Bird & Bird contends that while there will be no immediate impact when Britain exits the European Union, other side-effects could take place as a result.

The website states that, in the event of changing European case law, key issues regarding EU case law such as professional misconduct, unsuccessful bids and low tenders, will be as significant as Supreme Court decisions later down the line. Additionally, UK authorities may no longer be able to publish notices in the Official Journal (OJEU), making procedures for contract notices and contract award notices, among other things, a lot harder to comply with. Furthermore, will non-UK bidders be able to claim protection under the Regulations?

As for long-term change, the site believes there could be greater freedom over procurement. Contract modifications and the requirements relating to transparency of evaluation “may well be relaxed”. Additionally, if the UK withdraws from the WTO, something it says likely won’t happen, it could be in a position to “rewrite the rule book”, though a free trade agreement with the EU could limit this. Either way, TwoBirds maintain that current policy reasons might safeguard the more salient elements of procurement legislation.

UK & European flags for brexit

On the other hand, Public Sector Executive noted that if we are subject to a European Economic Area-style agreement, we would have much less influence over procurement regulations, which “could be a big loss”. The likelier outcome however, is a more limited agreement than the EEA, which would include current public procurement rules. Public tenders will be something the EU hopes for, since this is included in all trade agreements, even with those outside of the European Union. So, while recent agreements with Canada and Singapore among others aren’t entirely comparable to the EU’s single market, almost all of them include provisions on procurement. It is the EU’s preference, they say, to base its trade agreements on their own rules where possible.

PSE also theorises that the UK will attempt to shy away from trade agreements on procurement, either with the EU or other partners, and will be free to create their own agenda. However, the likelihood of this is slim. Not only will the EU not be prepared to discuss this, but it would cut off the UK industry’s own access to large foreign markets. As with much of the effects surrounding Brexit, they maintain that it will be “business as usual” when it comes to public procurement for the next few years. Everything is still very much in the air, so whatever form the system will take, things remain “largely matters for speculation”.

Continuing the theme of uncertainty, Stone King notes the “extent to which Brexit will affect the public procurement rules in the long term remains unknown”, though they also point to potentially more flexibility when it comes to implementing and amending public procurement legislation.

With regards to the Public Contracts Regulations of 2015, things will remain largely unchanged in the short term. Furthermore, equal treatment, transparency and non-discrimination are key principles of both public trade and procurement, all of which are safeguarded by UK law. Whatever the terms of Brexit, they note that a departure from the EU is unlikely to result in changes to these principles.

That said, if they aren’t amended, how will they be interpreted? As with many areas of procurement law, regulations are open to a large amount of interpretation. The website notes that “UK courts must currently look to the jurisdiction of other courts in Europe” in these instances but upon exiting the EU, they could well be more open to moving away from the courts in Europe and adopt a more flexible approach as a result.

As it was mentioned before, Stone King bring up the issue of the Official Journal’s role in all of this. If UK contracting authorities are no longer able to publish OJEU notices, then how will they remain compliant? Procurement regulations need to be upheld, and contract opportunities must be published – what questions will arise in this regard in the absence of our own contracting authorities?

It is largely believed that the UK will remain involved with the Agreement on Government Procurement (GPA) as dictated by the World Trade Organisation. Stone King note that this would limit the extent to which the UK will be able to dictate their own provisions on public procurement.

Brexit negotiations written on mountain road sign. Hard Brexit concept. At the top of the agenda. Mountains in background.

Since the UK is a part of this agreement via its EU membership, the Trade Bill will allow the UK to become an independent signatory to the Agreement. However, since many of the rules under this Agreement correspond with the rules under the EU procurement directives, it follows that amendment to UK procurement law will remain comparatively limited.

Since the provisions of Brexit haven’t been fully decided, it’s difficult to ascertain exactly what will become of public procurement in its aftermath. However, we’ve seen there are several possibilities, some more likely than others, which could come into effect and alter the course of the procedure later down the line.

Procurement in the Public Sector: A Guide for Negotiators

The process of procurement: How to effectively execute acquisitions

The differences between public and private procurement

The legal framework of procurement in the public sector