Blog: What might Brexit mean for procurement?



Roger Cotton Brodies Brexit ProcurementRoger Cotton, a partner at Brodies, writes about the effect Brexit might have on the way the spending of public money is regulated. 

One way in which EU law seeks to preserve open trade between Member States is by regulating the way in which public money is spent.

That is the purpose of public procurement law, which lays down the rules under which public sector organisations and utilities such as essential infrastructure companies award their contracts for goods, services and construction projects.

To defeat the “buy national” preference which is a barrier to trade between Member States, public procurement requires opportunities to be advertised as part of a transparent, fair and open competition, with no discrimination based on nationality.

What some don’t like about procurement law is the myriad red tape and procedural rules which supplement those key principles. When bidders succeed in challenging the decisions of authorities, more often than not it is regarding a failure against a procedural rule, and not about the fundamentals of non-discrimination on the basis of nationality.

So what might life in procurement be like post Brexit?

Broadly it is likely to be much the same, though there are a number of areas that could change.

The first point is that Westminster and Holyrood could decide to repeal or significantly amend the national procurement laws which implement the EU procurement directives. However, that would not be mandatory. Remember that the new public procurement regime just introduced in Scotland is more stringent than is required at EU level.

Assuming there was a political appetite for significant change, what then? As much discussed by both campaigns in the run up to the vote, there would be a range of options in terms of how the UK negotiates its new place in the world.

For example, if the UK followed the Norway model it would be a member of the European Economic Area (EEA) and remain bound by the EU procurement directives. By contrast, if the UK adopted something like the Swiss model of bilateral agreements with the EU (see here for more on the different models) then the EU procurement directives would not apply. However, the UK would very likely have an obligation under those bilateral agreements to put in place a similar regime.

But so far that only looks at the UK’s relationship with the EU. The UK also has relationships with many other countries through its membership of the World Trade Organization (WTO). The UK is party to the WTO treaty governing Government Procurement (called the GPA) as are the other EU member states, together with Canada, China, Japan, Norway, Switzerland and the US (from a total of 46 countries).

Guess what the founding principles of the GPA are? Non-discrimination, transparency and procedural fairness. Sound familiar?

Those principles are supplemented by detailed procedural requirements regarding the procurement process, designed to ensure that procurement covered by the Agreement is carried out in a transparent and competitive manner.

So, unless the UK both failed to reach any agreement with the EU and pulled out of the GPA, it is very likely that we will continue to have national procurement legislation looking very similar to that which currently implements the EU Directives.