This article was published prior to the publication of the post-Brexit agreement between the UK and EU which covers the relationship between the UK and EU following the end of the implementation period (commonly referred to as the “transition period”) created by the European Union (Withdrawal Agreement) Act 2020, and should be read in that context. For up-to-date commentary and information on our services, please see our Beyond Brexit page.
This article considers the potential impact of the current Brexit negotiations and the European Union (Withdrawal) Bill on present and future public procurement regimes.
The withdrawal of the UK from the EU will create uncertainties as to what happens to procurement procedures that are underway on the date of the UK's departure.
A recent position paper on public procurement published by the European Commission ("EC") seeks to provide clarification. The EC's position is that any procurement procedure on-going on the day that the UK leaves the EU should be carried out under the relevant provisions of national law applicable at the commencement of the relevant procedure and that these procedures should also continue to comply with the Treaty principle of non-discrimination.
Prior to the implementation of the EU procurement directives in 2006, the UK did not have any significant body of public procurement case law. When the EU's 2014 Public Procurement Directive was incorporated into domestic law in the form of the Public Contracts Regulations 2015, it was done so with very few changes. Therefore the UK's public procurement case law is primarily based on the EU's public procurement law as applied in the UK. This "copy-out" approach to the transposition of the 2014 Directive into the PCR 2015 means that public procurement procedures that are on-going at the time of Brexit are likely to remain unchanged. Furthermore the principle of non-discrimination that the EU wishes to continue to see observed in on-going procurement procedures is already enshrined in regulation 18(1) of the PCR 2015.
The EU (Withdrawal) Bill
The powers given to Government ministers to "correct" EU laws retained under the Bill that are incompatible with domestic law are extremely wide. These powers may be used to amend domestic regulations in order to limit rights of companies from EU Member States taking part in public procurements in the UK. Of course, this is dependent on whether or not the UK will remain a member of the European Economic Area (EEA). If the UK was to remain in the EEA, it would still have to abide by the EU's public procurement rules. However, because the EEA rules promote free movement, it is unlikely that the UK will remain in the EEA as free movement was a major influencing factor on the Brexit vote.
World Trade Organisation
Should the UK leave the EEA, public procurement procedure and any associated domestic law may be regulated solely by the principles of WTO agreements. Currently, the UK is party to the Government Procurement Agreement (GPA) through its EU membership. This is a plurilateral agreement negotiated under the framework of the WTO. Its aim is to ensure transparent and non-discriminatory government procurement procedures among its parties. After Brexit, the UK will have to apply to accede to the GPA as an individual member if it wants to retain the benefits that the GPA provides, such as access to foreign markets. This is also likely to include the negotiation of any UK-specific GPA schedules. The UK will most likely want such negotiations to take place sooner rather than later so as to avoid losing important procurement opportunities with current GPA parties and the increasing number of countries that are interested in acceding to the GPA, including China.
To summarise, the regulation of public procurement after Brexit will depend on whether the UK wishes to continue to be party to agreements entered into by the EU on its behalf. The future of public procurement regulation will most likely be determined by any future trade agreements with the EU. The EU generally insists on procurement rules being enshrined in its trade agreements and, pragmatically, the UK may decide to leave its current procurement regime largely unchanged.
Ensuring non-discriminatory, and transparent public procurement is the best way for citizens and tax-payers to obtain the best public goods and services available. By preserving the principles of EU procurement regulations and WTO agreements, the government can be confident that any future changes to the way public procurement is regulated in a post-Brexit UK is in the best interests of UK citizens.