27 June 2016
The UK has voted to leave the EU but what will be the effect on public procurement?
Well, for the immediate future there will be no change.
Until the exit is finalised the UK will continue to be required to comply with EU Public Contracts Directive 2014/24/EC which was transposed into UK law by the Public Contract Regulations 2015 (PCR2015). These regulations will continue to form the legal requirement to which public sector organisations in England Wales and Northern Ireland must adhere. Separate legislation exists in Scotland where the Public Contracts (Scotland) Regulations 2015 apply, and they will continue to apply, the same as the PCR2015.
So, there will be no change to the PCR2015 whilst the UK is a member of the EU. Once the UK government triggers Article 50 there will be a need, within two years maximum, to put into place the legal and constitutional infrastructure to take over when the EU arrangements cease. Alongside this the government will be wanting to negotiate trade deals with the EU and the wider world. There will be a need to manage public and international relations and monitor and manage international reaction to the process. In addition there will be the domestic 'day job'. Amongst all this it may well be that the government will put changes to the PCR2015 near the back of the queue. It may make minor amendment to remove the need to advertise Contract and Award Notices in the OJEU, but substantial change is unlikely.
The opening of opportunities to the whole of Europe may be changed; although this may be a requirement of the terms of any trade deal agreed with the EU anyway.
Unless some prohibition, or disincentive, were to be introduced European companies would still be able to bid for UK contracts. If favouritism for UK businesses is allowed, this may enable real measures to be taken to allow public organisations to support UK suppliers and businesses. This should be more pointedly in support of sectors, such as the steel industry, than previously possible. In the 'Procurement Policy Note: procuring steel in major projects' the policy explicitly allowed social value to be taken into account when tendering and was later promoted as the approach to be taken by the wider public sector in its procurement approach generally, however the policy is carefully worded to ensure adherence with Directive 2014/24/EC is maintained.
When you study the PCR2015 you may wonder what else needs to change anyway; much of the PCR2015 is about providing openness and equality of opportunity for businesses to compete for contract opportunities in the public sector.
It is always surprising how managers in the public sector respond to being told that the value of a contract is above the OJEU threshold. So many times their immediate reaction is negative; they ask how they can avoid the process; can they repackage the contracts; can they move it from services to works and so on. The reality is that if you are going to tender a contract, going through the OJEU process adds little in terms of timescales and the prospect of having a European company bid for anything other than the largest contracts is remote (certainly in the area of social housing, where I work, interest from Europe is minimal).
The outcome from all this is that any change to public sector procurement is some way off but even when it comes the change is likely to be small. What do you think?