Procurement in a nutshell – the Brexit White Paper
17th February 2017
The Government has now published its White Paper on "The United Kingdom's exit from and new partnership with the European Union".
The document is intended to provide both the Parliament and the British public with a clear vision of what the Government seeks to achieve in its Brexit negotiations with the EU.
The White Paper sets out twelve guiding principles which form the Government’s priorities and approach to “forging a new strategic partnership between the United Kingdom and the EU”.
The first stated priority is providing certainty and clarity to the public over the UK’s exit from the EU.
The question we ask in this week’s update is: to what extent does the White Paper provide certainty and clarity as to the future of the UK’s procurement law rules?
Prior to the publication of the White Paper, Prime Minister Theresa May had stated that the model envisioned for a future relationship between the UK and the EU precluded membership of the single market.
This is confirmed in the White Paper, along with the Government’s intention to pursue “an ambitious and comprehensive Free Trade Agreement”, which corresponds with the Government’s rejection of the free movement of people.
The document has also confirmed the Prime Minister’s willingness to walk from the negotiating table if there is no offering good enough for the UK’s national interests, with Theresa May stating that “no deal is better than a bad deal”.
At a political level, commentary has highlighted the somewhat conflicting nature of the Government’s objectives. Dubbed the “have our cake and eat it approach”, the Government’s intentions assume that the UK will be successful in securing a “bespoke” deal with the EU which is distinct from all other formal arrangements which the EU has with non-EU States.
The approach has been criticised for its failure to take into account the inevitable need to make concessions during the multifaceted negotiations.
Nevertheless, in regard to public procurement, the expressions from the Government indicate three broad scenarios related to the possible negotiating outcomes which are explained below.
1) A UK-EU free trade agreement (FTA)
It cannot be said with certainty what the features of a tailor-made FTA between the UK and the EU would be. The EU’s policy is generally to allow access to European markets on the basis of a procurement regime that is modelled largely on its own. Usually, little allowance is made for a less stringent or transparent process.
Moreover, on the matter of “securing the freest and most frictionless trade possible in goods and services between the UK and the EU”, the Government states in the White Paper that the FTA “…may take in elements of current Single Market arrangements in certain areas as it makes no sense to start again from scratch when the UK and the remaining Member States have adhered to the same rules for so many years.”
This suggests a prospect of continuity in terms of procurement regulation in the UK. There would be little need for reform other than to the extent that the Government opted to deviate from the “copy-out” approach, which is perceived as restricting the UK’s ability to adopt better procurement practices.
2) No UK-EU free trade agreement
In the event that the UK and the EU fail to complete an FTA, access to procurement markets may still be possible under the WTO General Procurement Agreement (GPA). This would operate in the context of the UK and the EU and also between the UK and other signatories of the GPA.
Presently, the UK’s membership of the GPA is derived from its status as a member of the EU. If the UK is required to re-apply for party status under the GPA, depending on the negotiating stance of the existing party members, there could be a range of possible consequences for procurement regulation in the UK, including:
- extended coverage of procurement legislation to currently unregulated areas;
- retaining the current procurement rules; or
- retaining the current procurement rules with the ability of reform to achieve more flexibility in the design of transparent award procedures.
3) Unregulated international trade
The final possibility is that the UK fails to reach an FTA with the EU and also loses its GPA status. Such a “Hard Brexit” would technically mean a loss of access to EU procurement markets and either a total or partial loss to worldwide procurement markets.
The Government has given reassurance that in the event of no deal it will ensure that “economic and other functions can continue…by passing legislation as necessary to mitigate the effects”.
The Government’s green paper “Building our Industrial Strategy”, published in January 2017, was said by some commentators to signal the adjustment of the procurement rules in accordance with a strategy of “Buying British” following the UK’s departure from the EU.
While this ‘no deal’ scenario would provide the opportunity for complete reform of the UK public procurement rules including the closing of markets to non-domestic bidders, this could be particularly harmful to the UK’s public sector.
Indeed, isolating the UK’s public procurement markets would be an undesirable policy choice by being at odds with the vision of building a “stronger, fairer, more Global Britain”.
Why is this important?
Despite stating the importance of providing “business, the public sector and the public with as much certainty as possible” regarding the Brexit process, the government’s White Paper has had limited effect in doing so.
The publication has only advanced the understanding of what Brexit means (other than Brexit) to a limited extent. The uncertainty regarding the future of procurement law within the UK endures.
However, the White Paper has revealed that a second White Paper on the Great Repeal Bill (which will remove the European Communities Act and convert the body of existing EU law into domestic law) will provide “more detail” about the Government’s approach.
The Government has stated that the content of the Great Repeal Bill will be set out “in due course”. It remains to be seen whether continued political pressure will be sufficient to cause the Government to flesh out its plans in a way that will create a clearer picture for the future of UK procurement law post-Brexit.
Please see below for some useful publications:
How can I find out more?
If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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