Is Brexit Changing the Procurement Landscape?

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Everybody is asking the same question: IS BREXIT CHANGING THE PROCUREMENT LANDSCAPE? The latest decision of a new election adds further complications, which means we are unlikely to see the light at the end of the tunnel anytime soon.

Background

Those who thought that the referendum, which took place in June 2016, was the only step required to exit the European Union (EU) could not have been further from reality. Since the referendum the High Court heard a legal challenge, which denied the Prime minister’s authority to formally notify the EU of the UK’s firm intention to exit the Union. This decision was consequently appealed by the Government to the Supreme Court, which decided that Parliamentary approval was required to serve the formal notice. Parliament approved the decision to exit the EU and actioned Article 50 of the Lisbon Treaty in March 2017.

The current procurement regime in the UK is part of its internal legislation which arose from EU Directives; these have been implemented into UK law through the UK Regulations. As a result, the Leave vote has had no immediate impact on the legislative position in the UK and all the same provisions continue to apply, including the EU Treaty principles of equal treatment, non-discrimination, transparency, and proportionality, because they are contained within UK legislation.

Next steps would be for the UK to negotiate with the EU and to finalise an agreement setting out the arrangements for the withdrawal, taking into account the framework for its future relationship.  It is the framework for the relationship with the EU which is the deciding factor that will determine the Procurement regime required to trade with the EU member states.

Currently, the plan and details behind the withdrawal from the EU seem to be in a standstill, therefore the Prime Minister has decided to call for a General election, which seems to complicate and delay the terms on which the UK will be operating in the future.

What changes are likely in the longer term?

The public procurement legislation in the UK will be heavily influenced by the nature of any future trade agreements between the UK and the EU, and there are various options depending on the model.

  • The UK may decide to participate in the European Economic Area, known as the Single market, in which case the procurement regime would very likely remain the same.
  • The UK could rely on World Trade Organisation membership (WTO) and its participation in the Government Procurement Agreement (GPA), so change will most likely happen in the long term. In this case, renegotiation is likely to be necessary, to create a UK-specific schedule to the GPA, so even the shape of the UK’s WTO membership is unclear and complicated and may not allow for any flexibility.
  • A Separate  trade agreement may be negotiated, which  could be based on the framework that the EU utilises with other trading partners such as Norway, which would be more limited,  resulting in reduced coverage for the UK procurement regime and reduced access to foreign procurement markets.

All these options will depend of course on what the EU is willing to accept, and it is unclear at the moment what the definitive plan will be until a definitive plan is approved, which is likely to happen after the new government is formed. Once the plan has been drawn up and approved by Parliament we will be able to see the end of that tunnel, although it is uncertain whether there will be a bright light at the end of it waiting for us.

 

Natalia Rojas Alvarez
Head of Legal and Compliance
 
NHS South of England Procurement Services
Tel: 01489 779182
Natalia.rojas@soeprocurement.nhs.uk
 
 
Date: 20th April 2017