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Brexit Implications for Procurement

  • Ireland
  • General

30-10-2018

As the pace of Brexit negotiations ramps up and exit day creeps ever closer, what should public bodies and businesses in Northern Ireland expect?

Every year, public authorities in the EU spend around 14% of GDP on goods, works and services. Sectors such as energy, transport, health and education, public authorities, including government departments and local authorities, are the principal buyers.

Public procurement refers to the process by which public bodies purchase works, goods or services from the private sector - schools or hospitals, office supplies or furniture or cleaning or facility management services.

Here, public procurement is controlled by several sets of regulations which transpose into domestic legislation the requirements of EU Directives on public procurement.

The principal aim of EU procurement law is to ensure that contractors right across the EU are able to bid for opportunities in other member states on a footing equal to that of national suppliers.

Transparency, equal treatment and non-discrimination are key tenets of public procurement law, which aims to remove impediments to access to public contracts across the single market and to eradicate protectionist policies such as 'buy national' campaigns.

So how will the process in NI be affected by Brexit and what are the impacts for local firms?

From the perspective of public bodies in NI purchasing goods, works or services over certain monetary thresholds on or after Brexit day, there will be little immediate impact.

There are two main reasons for this. First, under the European Union (Withdrawal) Act 2018, EU-derived domestic legislation will continue to apply in the UK. Consequently, public bodies in NI will continue to have to conduct their procurement processes in accordance with the regulations, until such times as the UK government decides to amend or repeal those regulations.

Second, under the withdrawal agreement currently being negotiated, EU law, including in relation to procurement. will continue to apply during the transition period, is set to run to the end of 2020 and possibly beyond.

After Brexit, the UK government will have more freedom to determine its own procurement rules, subject to the terms of any trade deals negotiated with the EU and other countries. While there has been talk of the disappearance in the post-Brexit UK of procurement law (and the red tape and bureaucracy seen as its correlatives), it is unlikely that the UK will abolish domestic procurement legislation any time soon, given the benefits it confers in terms of ensuring competition and value for money for the public sector.

From the perspective of business, what the future holds is far less clear, although Brexit is certainly likely to have big impacts for NI firms wanting to access lucrative public procurement markets in the EU.

When the UK leaves the EU, unrestricted access to the single market will be lost and with it the entitlement for UK firms to bid for public contracts led by authorities in the EU 27.

The terms of future access will depend on any trade deal negotiated between the UK and the EU. The shape of any future deal still remains unclear.

However, the UK has now applied in its own right to join the WTO's Government Procurement Agreement. The agreement commits signatories to opening up their public procurement markets to each other's contractors and to compliance with rules aimed at fostering fairness, non-discrimination and transparency in public procurement.

The EU, the US, Canada and Japan are signatories to the GPA. If the UK's application to accede to the GPA is granted, this will at least help to ensure access for UK businesses to larger global procurement opportunites.

Some further comfort for businesses can be dervied from the EU's guidelines for the framework for future EU-UK relations which lists access to public procurement markets as one area the EU wants to see covered in a future EU-UK free trade agreement. But these are uncertain times for firms seeking to win business with the EU public sector.

 

Written by Aine Smith, Specialist EU procurement lawyer, for Newsletter.

Disclaimer

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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