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29 Jan 2021

Public procurement regulation post Brexit - what you need to know

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For as long as most of us can remember, when the UK public sector purchases goods and services or procures works, it has had to follow rules underpinned by European Union (EU) law. So how has this changed now the UK is no longer part of the EU?  This is clearly an important question for UK public sector bodies as they will want to run compliant procurements. But with an annual UK public sector procurement spend of £290 billion, businesses that provide goods and services and carry out works in the UK public sector also need to get up to speed with the new regulatory framework so that they can compete effectively for their share of the market.

So what is the position since 1 January 2021? Unfortunately, the answer is not terribly straightforward from a legal perspective. But the good news is that the practical changes are not too significant at this stage. That’s not the end of the story though as the UK government has already signalled that some quite big changes are on the horizon.

This is the first in a series of articles that will look at the current (post Brexit) public procurement regulatory landscape and then look ahead to the policy drivers for future change. We will examine the impact of the post Brexit changes on particular sectors as well as focus on some of the more radical changes that the UK Government is proposing, particularly in relation to the remedies available for aggrieved contractors and suppliers.

In this article, we summarise the current regulatory framework and focus on the practical changes that contracting authorities and suppliers/contractors need to be aware of. 

Broadly the same, but a bit different…for now

Like many areas of UK regulation post Brexit, the current position on public procurement is basically staying the same until the UK decides to change it. As the UK historically implemented its EU law public procurement obligations through UK regulations (the principal ones being the Public Contracts Regulations 2015 (PCR 2015)), these continue to apply even though the UK has left the EU and the transition period has ended.

Some minor changes to the PCR 2015 have been brought in by the Public Procurement (Amendment etc) (EU Exit) Regulations 2020 (PPR 2020). The PPR 2020 remove all references to the EU and so, for example, the financial thresholds are no longer calculated in Euros. They have also removed the requirement to publish OJEU notices. Instead, contracting authorities should publish procurement notices on the Government’s new platform “Find a Tender”. This is worth suppliers and contractors noting too – they will need to register with Find a Tender to get notified of relevant opportunities.

It’s also important for contracting authorities and supplier/contractors alike to know that the remedies available for breach of the PCR 2015 are unchanged for now and that parties to public procurement disputes will still be able to rely on past judgments of the Court of Justice of the EU (CJEU); although future CJEU judgments will not be binding on UK courts.

There is then the issue of procurements that involve contractors and suppliers outside of the EU. As an EU member state, the UK was previously party to the World Trade Organisation’s Government Procurement Agreement (GPA). This applies to procurements involving suppliers from countries around the world that are parties to it. The UK is now an independent party to the GPA. It seems likely that this will be on the same terms as the EU, although we cannot be certain as the UK coverage schedules are yet to be published. If this turns out to be the case then procurements involving suppliers from other countries who are GPA parties will be largely the same as they were when the UK was party to the GPA through its EU membership. This means that UK companies can continue to bid for contracts in GPA jurisdictions and vice versa, in the same way as before 1 January 2021.

And last, but not least, there is the EU-UK Trade and Cooperation Agreement (TCA). Amongst many other things, the TCA defines the procurement relationship between the EU and the UK, and represents the only real change following 1 January 2021. Broadly, it covers the provisions of the GPA with some additions. Helpfully, the TCA rules do not really go any further than the PCR 2015 and so as long as contracting authorities continue to comply with these, they should be okay for now save for a few exceptions.

What do I need to know about Title VI (Public Procurement) of the Trade and Cooperation Agreement?

Title VI of the TCA covers procurements that are within the scope of the GPA plus a limited list of other procurements including some covered by the EU Utilities Directive and certain other services including hotel, restaurant, food, real estate and education.

As noted above, the TCA does not go much further than the PCR 2015 in terms of regulatory requirements, so what are the key things to be aware of?

One important provision is the non-discrimination principle expressed as a “national treatment obligation”. This states that a measure of either the EU or UK (as parties to the TCA) shall not result for suppliers of the other party in treatment less favourable than that party accords to its own suppliers. Of course, non-discrimination has always been a key plank of UK public procurement regulation, but it is worth noting this very specific requirement to ensure that UK suppliers and contractors cannot receive more favourable treatment than their competitors in the EU.

This non-discrimination principle also applies to “below threshold” procurements. The relevant thresholds here are the GPA ones and if the UK coverage remains the same as for the EU, these are: for goods and services contracts, EUR 139,000 for central government entities, EUR 214,000 for sub-central government entities and EUR 438,000 for all other authorities; and EUR 5,350,000 for construction services.

Another provision to note is a requirement that where a procurement specifies that suppliers or contractors have particular experience, the contracting authority cannot dictate that the experience is gained locally in that jurisdiction.

So for now at least, it’s largely business as usual. But the UK Government has signalled that it does plan to make some quite significant changes to the public procurement regulatory framework – as set out in its paper “Transforming Public Procurement” published on 15 December 2020. We will delve into these changes in a future article to follow very shortly.

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