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Brexit and UK public procurement law

  • United Kingdom
  • Brexit
  • Competition, EU and Trade
  • Procurement strategies

07-08-2017

Following the June 2016 referendum on the UK’s membership of the EU, the UK government triggered article 50 of the Treaty on the Functioning of the European Union on 29 March 2017, thereby commencing the two-year formal process that will ultimately lead to the UK’s exit from the EU.

On the day the UK ceases to be an EU member, subject to the terms of an EU–UK trade agreement, or those of an interim arrangement, EU law will cease to be applicable in the UK. At the same time, and so as to avoid legal uncertainty, the UK government intends to introduce the Great Repeal Bill. This will repeal the European Communities Act 1972 (ECA), which is the legislation that gives EU law direct effect in the UK, and convert the body of existing EU law (including case law) into domestic legislation. This note considers the possible effects of Brexit on UK public procurement legislation. In brief:

  • It is likely that domestic procurement legislation will require certain amendments, at a minimum, as a result of the UK’s exit from the EU.
  • It is possible that even if the UK is no longer required to implement in full the EU procurement directives in its national legislation, the EU might nonetheless insist, as part of the new trade agreement with the UK, that UK procurement law ‘approximates’ EU procurement legislation. Depending on the specific terms of such a requirement this might leave little room to amend substantively the existing procurement legislation.
  • In circumstances where the UK is neither required to implement nor to approximate substantively EU procurement legislation, it would seem likely that, in due course, the UK would wish to explore the possibility of amending existing procurement legislation, so as to simplify procedures or introduce other flexibilities to the extent that this is deemed desirable and remains consistent with the requirements of the WTO’s ‘plurilateral’ Agreement on Government Procurement (GPA), including the requirement to maintain an effective remedies system.

Click here to read the full copy of Public Procurement, Getting the Deal Through.

The Great Repeal Bill

EU public procurement legislation is already implemented into UK law by means of secondary legislation. Accordingly, the expectation is that in seeking to ‘domesticate’ existing EU law by means of the Great Repeal Bill, existing UK procurement legislation would remain substantially the same on the first day of Brexit.

At the same time, it will be necessary to make some changes to reflect the UK’s new status as a country that is no longer a member of the EU. For example, procurement legislation currently provides that contracting authorities owe the same duty to suppliers from other member states of the European Economic Area (EEA), that is, the EU membe states plus Iceland, Liechtenstein and Norway, as they do to UK suppliers. Would this continue to be the case after the UK’s exit from the EU or would EEA members be accorded protection only to the extent that this is necessary to comply with the requirements of the GPA?

Similarly, the procurement regulations incorporate a number of provisions that reflect other single market requirements, such as in relation to technical standards or recognition of certificates from bodies in other EU member states. Would these arrangements continue after Brexit? What would be the status of the European Single Procurement Document, the self-declaration document that contracting authorities are currently required to accept as preliminary evidence that a supplier meets the relevant requirements to participate in a procurement process?

Would the special provisions of the legislation that regulate joint procurements involving UK contracting authorities and contracting authorities from other EU member states continue to be relevant? Incidentally, the UK’s exit from the EU is also likely to require some minor changes to the EU procurement directives, such as the deletion of the part of Annex I to Directive 2014/24, which lists the UK’s ‘central government authorities’.

Ultimately, the extent to which such changes might be necessary would depend on the terms of the agreement that would regulate the UK’s post-Brexit relationship with the EU.

A future UK–EU trade agreement

In this regard, it is worth noting that the EU’s relatively recent trade agreement with the Ukraine provides detailed provisions on public procurement. These essentially require the Ukraine to implement (with some small exceptions) EU procurement legislation in its laws. According to the agreement, in this process of ‘legislative approximation’:

due account shall be taken of the corresponding case law of the European Court of Justice and the implementing measures adopted by the European Commission as well as, if this should become necessary, of any modifications of the EU acquis occurring in the meantime … The European Commission shall notify without undue delay Ukraine of any modifications of the EU acquis. It will provide appropriate advice and technical assistance for the purpose of implementing such modifications.

How likely is it that similar provisions might be included in an agreement regulating the UK’s future relationship with the EU? It is relevant to keep in mind that the Ukraine’s approximation of EU public procurement law was linked to the reciprocal opening of the EU’s and the Ukraine’s public procurement markets to each other’s suppliers. It is also relevant that the Ukraine is a country seeking to strengthen its relationship with the EU as much as possible.

The UK’s position is obviously different, in view of Brexit. Also, if the UK were to remain a party to the GPA that would mean that it would continue to have at least some access to the public procurement markets of the EU (and indeed, the public procurement markets of the other GPA parties). The GPA is a voluntary agreement between certain members of the WTO that regulates the basis on which each GPA party grants access to its public procurement markets to the nationals of other GPA parties. It would seem likely that the UK will want to remain a party to the GPA as this would give UK suppliers some access to the government procurement markets of not only the EU member states but also those of the United States, Canada, Japan and South Korea. Access to the EU procurement markets would, however, be more restricted than now, given that the scope of the GPA is narrower than the scope of the EU procurement directives. That might mean that the UK would not be particularly interested in agreeing the type of detailed public procurement law provisions that have been incorporated into the EU’s trade agreement with the Ukraine with the EU.

Ultimately, these issues would be determined as part of the negotiations for a new agreement with the EU. It might be, for example, that continued public procurement law compliance with the EU acquis is one of the EU requirements for granting the UK continued access to any part of its internal market.

UK procurement law post-Brexit and GPA compliance

On the assumption that post-Brexit, UK procurement law would not need to comply with the EU procurement legislation but only with the GPA, it would seem likely that in due course the UK government would want to consider the extent to which this might permit the simplification of procurement procedures or the introduction of other flexibilities into the legislation.

An obvious example where an amendment is likely, in those circumstances, is in relation to the procedures that permit negotiations with bidders. At the moment, public procurement regulations permit negotiations in the context of a ‘competitive dialogue’, and a ‘competitive procedure with negotiations’, as well as in the context of ‘innovation partnerships’. It is possible that the UK might consider that these three procedures should be replaced by a new simpler negotiated procedure (of the type currently permitted under the more flexible procurement regime that applies to certain utility companies). Under such a procedure, a contracting authority would be at liberty to structure discussions with bidders in a way that meets its requirements for a particular procurement, subject to compliance with the principles of fairness and transparency.

In fact, the GPA rules would allow the UK to go even further so that, if deemed desirable, domestic legislation could provide that a contracting authority may reserve the right to carry out negotiations in circumstances where it appears from the evaluation that ‘no tender is obviously the most advantageous’ in terms of the specific evaluation criteria that had previously been disclosed. However, in considering its options in this regard, the government is also likely to be mindful ofpotential cost implications if it were to amend the legislation so as to make it easier for contracting authorities to negotiate contract awards.

There would be other areas too where the UK might decide to amend current public procurement legislation and still be compliant with GPA requirements. However, again, arguably there are limits to the extent to which the UK would deem it desirable to simplify legislation, even if on the face of it that might be permissible under the GPA.

For example, the GPA does not expressly require that there should be a standstill period, between the notification of the award decision and the conclusion of a contract. Be that as it may, it would seem unlikely that the UK would be minded to take away rights that bidders currently enjoy and remove provisions such as this that seek to ensure that public procurement in the UK is fair and transparent and underpinned by an effective remedies system. Among other things, such an approach is likely to affect adversely the confidence of the bidding community in the UK public procurement markets and be inconsistent with the ‘open for business’ message. It is for the same reasons that, post-Brexit, changes to the current procurement remedies regime should, in general, be limited, even if compliance with the EU procurement regulations is no longer required.

Overall, in the event that it is no longer necessary to implement EU procurement laws in the UK, it is likely that the government would seek to explore ways in which to make the procurement system more efficient. In this context, it would seem unlikely that any changes to current rocurement legislation would be such as to affect adversely the fairness and transparency of the system.

Finally, it is worth keeping in mind that since Scotland has its own procurement legislation, it might be that, in the event that it is no longer necessary to implement EU procurement laws in the UK, the Scottish government might decide to amend its own procurement legislation in a different manner to that of the rest of the UK, although again, it would be expected that the Scottish government’s approach would be consistent with the above conclusions.

Click here to read the full copy of Public Procurement, Getting the Deal Through.

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