Article 50 has been triggered – What next for Procurement?

Alan Heron, Head of Procurement


Article 50 has been triggered – What next for Procurement?

This morning Theresa May took the long-awaited and significant step of officially triggering Article 50 of the Lisbon Treaty. This effectively sets in motion the process of realising Britain’s exit from the European Union.

So now that we face the reality of Brexit rather than the speculative position of the last 9 months, what does this mean for those involved in procurement activities? The honest answer is that nobody knows for sure!

We can however look at the potential impact in three key periods, namely:

Current Impact (the two year period between today and March 2019 when official negotiations will be concluded – a period during which the UK is still a member of the EU).

Immediate Impact of Brexit (the immediate impact of the UK no longer being a member of the EU - post 2019)

Long-Term Impact of Brexit (the longer term impact of the UK no longer being a member of the EU – 2020 and beyond)

Current Impact

The immediate implications are those which we know with the most certainty – and to be frank – they are largely innocuous. During this period there are no legislative impacts in terms of procurement. The UK procurement regulations (which are derived from the EU Directives) remain in full effect. Decisions of the European Courts continue to be binding on the UK courts. There is a feeling that UK courts may be less deferential to the European Courts, as UK judges may feel less constraint in practice, although this remains to be seen.

The fundamental EU Treaty principles of equal treatment, non-discrimination, transparency, mutual recognition and proportionality are enshrined in UK law, and therefore will remain unchanged.

Immediate Impact of Brexit

This is the period where a more significant degree of uncertainty begins to emerge. Although there will be no immediate impact on UK procurement legislation itself, some immediate practical issues and uncertainties will arise.

For example, the status of EU case law and recitals will be unknown. ‘Recitals’ are in effect guidance to the EU Directives which are used to provide additional commentary and interpretation of the EU directives themselves. However, they also include additional obligations. It is the recitals, not the legislation itself, which states that award criteria must be consistent throughout a tender process. It is EU case law, not the legislation which prescribes what information you must give an unsuccessful bidder. As such, if neither recitals nor EU case law are applicable, will this change how we approach these (and other) aspects of procurement?

Additionally, it is not known if the UK will be allowed to publish notices on the Official Journal (OJEU), meaning that procedures for contract notices, award notices etc., will become impractical and difficult to deal with.

Long-Term Impact of Brexit

For obvious reasons, the public procurement legislation will be heavily influenced by the nature of any future trade agreements between the UK and the EU. If the UK were to participate in the European Economic Area (EEA) then the procurement regime would very likely remain the same, but that is looking very unlikely at present, as the Government has opted for ‘hard’ Brexit. If instead, the UK relied on World Trade Organisation (WTO) membership and its participation in the Government Procurement Agreement (GPA), as Theresa May has indicated it might do, change is likely in the long run.

It is possible, even likely, that the UK will use the GPA legislation to underpin its procurement regulations post-Brexit, in a similar way that the EU directives underpinned them. The GPA does have some surprisingly rigorous procurement rules, however they would still allow the UK Government more freedom than they currently have under EU Directives.

Generally it is thought that the rules are to become simpler, retaining competitive procedures, but without the same level of detail that has been transposed as a result of the 2014 EU Directives. For example, some of the rules on contract modifications and on the requirements regarding transparency of evaluation may well be relaxed. Additionally although the GPA still has a remedies regime, it is significantly less detailed and prescriptive than the EU remedies. The UK could for example remove the automatic suspension of contracts, and ineffectiveness constraints we currently have under EU Directives.

No-one has a crystal ball that can accurately predict what will happen, everything is based on what little information and facts we have available. The only thing that is certain is that change is coming…

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