HM Insights

Brexit: what could it mean for the red tape of public procurement?

The UK's vote to leave the EU will have ramifications for almost every aspect of our lives and public procurement, where the vast majority of our national rules are derived directly from EU law, is no exception. Although we have been assured that "Brexit means Brexit", at the time of writing we are no clearer on what it will actually look like.

Brexit Commercial Contracts Scotland

The overall relationship which the UK has with the EU will govern the basic legal framework for public procurement.

The overall relationship which the UK has with the EU will govern the basic legal framework for public procurement.  If we have an EFTA style arrangement, such as Norway's relationship with the EU, we are likely to be required to implement the EU public procurement rules in the UK as part of that.  If the UK's arrangements with the EU are such, however, that we are not required to implement EU laws, the UK (and Scotland, as procurement is largely a devolved matter) could repeal the national laws which implement the EU rules.

It is unlikely, however, that the UK would end up in the situation where there was no regulation of public procurement because:

  • WTO rules would still require some form of open access to public projects for overseas companies (although the requirements would be less stringent than those imposed by the EU);
  • If the UK was to exclude EU bidders from UK procurement exercises, this would likely lead to the EU excluding UK bidders from EU procurement processes, which may not be desirable;
  • Public bodies have a "best value" obligation and procurement exercises are an effective way of demonstrating this, as well as assisting with demonstrating anti-bribery and competition law compliance;
  • The UK Government and particularly Holyrood have in some instances elected to impose procurement obligations beyond those required by EU law, for example for social or environmental reasons – there is no indication that they would wish to reverse this position 

Public procurement is all about obtaining value for money.  The considerable uncertainty surrounding Brexit means that the effect on tender prices and other terms is uncertain.  Possible consequences for contracting authorities are:

  • Whether suppliers from other countries will still wish or be commercially able to trade in the UK at all, potentially reducing the pool of suppliers;
  • Whether tender prices could decrease as a result of changes to employment legislation.  In particular, if the EU-derived TUPE rules are repealed or significantly amended, this could lead to a reduction in the prices at which suppliers are willing to bid;
  • Whether tender prices could increase to reflect a lack of low-cost labour if immigration to the UK is significantly curtailed; and / or
  • If tariffs are to be imposed on goods from overseas, this may well drive up tender prices

While it is difficult to predict how Brexit may affect public procurement law (and indeed any other aspect of UK law, there may be some curtailing of the remedies which are available to aggrieved suppliers for breach of the public procurement rules by public bodies. 

This in itself may lead to public bodies taking a more relaxed approach to compliance with the procurement red tape, but it is almost certain that the red tape will not disappear overnight.

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