Implications of Brexit for regulated procurement

Written on 13 Aug 2018

Is any new EU legislation expected to come into force and effect before the end of the transition period?

There are no major legislative changes to public procurement law proposed at EU level that are likely to come into force before the end of the transition period.

Is a new regulator needed, or do additional powers to be given to an existing regulator?

A new regulator will not be needed to regulate public procurement post-Brexit. Remedies for breach of the regime will continue to be a matter for the High Court.

Is there an existing “equivalence” or “recognition” regime for recognising Third Country regulatory regimes?

The EU is a signatory to the WTO Government Procurement Agreement. The GPA is a multilateral agreement by which signatory states provide access to suppliers/contractors from other signatory states to tenders for certain types of public contracts on a reciprocal basis, depending on which schedules to the GPA the states sign up to.

The UK government has indicated that the UK intends to sign up to the GPA in its own right after Brexit. If so, this would provide UK suppliers/contractors with access to tenders for EU public contracts broadly similar to that which they currently enjoy.

Does current UK government policy mean that (subject to the terms of a future trade agreement between the UK and the EU) material changes to regulation or enforcement are likely post-Brexit?

In theory, after the UK leaves the EU, it will no longer be bound by EU procurement rules, so would be free to change procurement rules to ‘cut red tape’, to reduce bureaucracy, to assist SMEs and, potentially, to favour domestic suppliers/contractors.

However, any future trade deal between the UK and the EU may well include a term providing for continued (fair) access to each other’s markets. As noted above, the UK also intends to accede to the GPA, which would require it to continue to provide access to other signatory states.

There may, though, be scope for the UK to make some changes, such as to the remedies regime, or to make further provisions to support SMEs or take further account of social and economic factors, which could support local suppliers/contractors.

What should businesses be doing now to prepare for Brexit?

For businesses that tender for public and utility contracts in EU Member States, but are not domiciled there or do not currently have a registered base there, a failure by the UK and the EU to reach a deal that covers public and utility procurement would, on the face of it, mean they may not be able to bid for those contracts after the end of the proposed transition period (or sooner, if the Withdrawal Agreement is not ratified).

If the UK becomes a signatory to the GPA though (as discussed above), there may not be any significant changes to procurement rules in the short term.

In order to preserve the right to bid for future public and utility opportunities in the EU in the event of a hard Brexit, businesses could consider setting up a registered office in another EU Member State.  If the Withdrawal Agreement is ratified, such alternative arrangements for bidding for future EU opportunities would not need to be in place until 31 December 2020. However, as we are not likely to get certainty on the Withdrawal Agreement until late 2018, businesses may wish to explore contingency plans now.