The Impact of Brexit on UK Local and Central Procurement Practices

As we all no doubt recall the campaigners to leave the EU repeated the notion of “taking back control” as one its main arguments. It is therefore ironic that one of the most important controls of how the UK government spends tax payers’ money will not be one of those controls the UK will take back in the short or even longer term.

There may be many diverse opinions about the relative merits and risks of leaving the EU. There is however, a consensus about the potential impact upon UK public procurement in the short to medium term. The consensus (unsurprising) is very little. I am afraid that those who voted for Brexit who were expecting a great “liberalisation” of the procurement rules are going to be bitterly disappointed. It is going be, as with many, many other EU regulations and controls “business as usual” for many years to come. There are several reasons for this lack a seismic shift in UK local government procurement practices.

Firstly, most legal experts predict it will take years to underdo and replace the numerus EU laws, directives, regulations and controls that have become enshrined in our legal system. The UK needs to have a robust procurement process if it still wants to trade with other EU member states and so therefore the priority to change or reform the procurement directives is very low on the governments list.

Most of the world’s highly developed economies apply the EU basic procurement principles (or very similar) and I doubt that even the most ardent Brexit advocates would not wish for the UK to be ranked alongside Afghanistan and Somalia as the world’s most corrupt public sector procurement activities due to the lack of a robust procurement process. If we go back in the mist of time, the UK “Treasury Rules” that governed UK public procurement were not fundamentally different in ethos from those of the Directives. In other words, we have always had some form of procurement regulation.

Even more ironic that the UK was very influential when the latest set of procurements directives were developed, so presumable they contain many elements that we would wish to keep in place, post our exit from the EU. It is also widely accepted that savings can be made in the UK public spend, but abandoning competition and transparency is not one of them.

The UK would need to maintain the EU procurement directives if we wish to remain party to the Government Agreement on Procurement (GPA) which is an WTO multi-national legal or trade agreement between countries, it is an agreement between more than two countries, but not a great many, which would be multilateral agreement. It is interesting to note that efforts to make the EU procurement directives more “liberal” were limited by the terms of the GPA. By remaining party to the GPA it would give UK companies access to EU and some other countries like the USA, Canada and Japans public procurements projects.

The EU Directives also include the Remedies Directive whereby contractors can challenge the decisions made by public bodies, will need to remain in place. This is because removal of this could lead to a lack of contractor trust and confidence in the process and therefore a reluctance to invest and bid which would reduce competition and increase costs. China for example, was deeply shocked by our decision to leave the EU and its implications for its investments in the UK in terms of being able to fairly bid for UK government contracts.

There has much discussion about trade agreements with counties like India. A trade agreement means both parties would derive benefit. Recently the EU tried to negotiate a trade deal with India, but the agreement was vetoed by the UKs then home secretary (Teresa May) because India wanted a relaxation of the UKs immigration rules! No doubt they will want the same when the UK comes to the negotiation table.
In summary, there is a strong case for the UK to seek to maintain many of the features of the current EU Procurement Directives and in the longer terms to develop similar rather than different procurement policies and practices and thus follow where Brussels leads.

© Dr Ray Carter 2017

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