All public procurement procedures applied in member states are governed by EU procurement laws and principles which aim to promote fair competition between EU businesses in securing public sector contracts in EU countries.
One of many questions that arise following the referendum decision on the UK’s membership of the EU is: what effect will Brexit have on the regulation of public procurement in the UK?
In the short term
In England and Wales the EU Procurement Directives have been implemented through regulations, including the Public Contracts Regulations 2015, the Utilities Contracts Regulations 2016 and the Concessions Contracts Regulations 2016 (the “Procurement Regulations”).
The general consensus amongst practitioners is that the current Procurement Regulations will continue to act as the UK’s legislative framework until the terms of Brexit are known. Article 50 needs to be invoked by the UK giving formal notice to leave the EU, following which there will be at least two years of negotiations. In the meantime the Procurement Regulations apply and are in full force. Accordingly, contracting authorities (which include central government, local authorities and registered providers) will need to continue to comply with the Regulations and bidders can continue to enforce their rights under the Regulations if they believe there has been a breach.
So, at the moment nothing changes.
What happens once the UK has left the EU?
It is important to remember that the Procurement Regulations are all national laws, based on EU Directives. So, each set of Regulations would need to be actively repealed by the Government in order to lose their effect in the UK. Changing national legislation is likely to be a highly complex process, involving consultation.
The extent of any changes to the Procurement Regulations post-Brexit will depend on the outcome of the Government’s negotiations with the EU member states and what it wishes to achieve.
It has been suggested that the UK could adopt a similar approach to countries like Norway and Switzerland, opting to join the European Free Trade Association (EFTA) which promotes the free trade of goods and economic integration amongst its members. Should the UK elect to join the European Free Trade Association and then become part of the European Economic Area (EEA), nothing is likely to change. EEA countries have very similar procurement rules to the UK. This includes the availability of the remedy of a declaration of ineffectiveness for above threshold contracts.
As an alternative, the UK may look to enter other agreements with countries outside of the EU, like the recently established CETA agreement between Canada and the EU, or rely upon membership of the World Trade Organisation. Such arrangements are based on similar procurement arrangements to the EU and so there may well be less change in practice to the application of procurement regimes than anticipated.
Therefore, in our view, Brexit is very unlikely to mean the end of procurement regulation in the UK. There may be changes to existing procurement legislation following our exit from the EU, but these changes may not be that significant in practice.
For more information on public procurement please contact Kris Kelliher.