Preparing for public procurement post-Brexit

Blog Authors: Graeme Young, Partner and Shona Murphy, Associate – CMS UK

The UK left the European Union on 31 January 2020. Under the terms of the EU-UK Withdrawal Agreement, the current EU public procurement rules have continued in force in the UK during an 11 month transition period. That transition period expires on 31 December 2020. While the UK may still be able to agree a limited form of Free Trade Agreement (FTA) with the EU by the end of this year, it seems unlikely this will include any specific provisions on public procurement. That being the case, we can now expect to transition to the “no deal” set of rules that has been legislated for by both the UK and Scottish parliaments. In this article we set out the key provisions and practical implications for public sector procurement.

UK governing legislation post-transition period – “no deal” amending legislation

The political declaration agreed between the UK and EU as part of the Withdrawal Agreement set out the basis on which the two parties were to negotiate the terms of the future relationship. Paragraphs 46 and 47 set out the intention of each party to reach an agreement on public procurement which builds on their obligations under the WTO’s Government Procurement Agreement (the GPA).

On the basis that there is going to be “no deal”, at least as regards public procurement, both the UK and Scottish governments have published legislation amending the current regulations to reflect the decoupling of our domestic regime from the EU.

As a result, in England, Wales & NI, the Public Procurement (Amendment etc.) (EU Exit) Regulations 2019 and Public Procurement (Amendment etc. (EU Exit) (No.2) Regulations 2019 (‘the amended Procurement Regulations’) will come into effect on 31 December 2020, at 11pm. Other procurement legislation has also been revised including the Defence and Security Public Contracts (Amendment) (EU Exit) Regulations 2019. Similarly, in Scotland, an essentially equivalent set of amending regulations will come into effect.

Ability for UK businesses to tender for contracts across the EU – the GPA

Through its EU membership, the UK was previously a party to the GPA. The UK Government has taken steps to ensure the UK continues to be party to the GPA, but as an independent member. In February 2019, the UK secured agreement to join as a party in its own right, and formally acceded to the GPA on 7 October 2020.

As a result, UK businesses will retain rights to compete for public contracts across the EU, albeit on a more limited basis than before (as we discussed previously here). The position is complex, but scope of procurement covered under the GPA is narrower than the scope of covered procurement under the EU procurement directives, specifically in relation to the utility sectors, coverage of private utilities, the defence sector, some services and concessions and certain private contracts subsidised by government. The GPA also does not include below-threshold procurement.

The accession to the GPA also means that, outside of the EU, UK businesses will retain their ability under the current GPA rules to tender for public contracts in other GPA member countries, including the United States, Japan, South Korea and Canada.

Ability for EU-based businesses to compete for UK contracts

Post-transition, businesses based in the remaining EU-27 or other EEA country will be treated as an “economic operator from a GPA state” when competing for UK public sector contracts. As a result, they will have corresponding but more limited rights to be treated fairly to the extent that the GPA applies to the contract they are competing for.

Advertising of notices – “Find a Tender”

The amending UK legislation includes decoupling the advertising of notices from the Official Journal of the European Union (OJEU). Contracting authorities and utilities will no longer be required to publish notices in the OJEU. Instead, from 1 January 2021, notices will be published on a new UK e-notification system, “Find a Tender”.

Where a contracting authority uses a third party ‘eSender’ to publish its procurement notices, it will now need to ensure that these eSenders can publish notices to Find a Tender. Any requirements to publish notices on other platforms such as Contracts Finder, MOD Defence Contracts Online, or devolved administration systems such as Public Contracts Scotland will remain unaffected.

The requirement to have recourse to e-Certis, the EU’s online database of documentary evidence required in each Member State, is to be removed, as are references to the EU’s State aid regime.

Transitioning the transition – position for “in flight” procurement and framework agreements

All contract award procedures commenced before the end of the transition period will continue to be subject to EU law even after the end of the transition period. EU law will also continue to apply after the end of the transition period to the award of call-off contracts from framework agreements which were either established before the end of the transition period, or which were established following a procedure which started before the end of the transition period. This means that EU law will potentially continue to apply in respect of call-off contracts for several years.

Who takes over the role of the European Commission under the current regulations?

The amending UK legislation transfers the European Commission’s supervisory functions in public procurement to the Cabinet Office (for England & Wales), and the Scottish Government (for Scotland). Those central government bodies will now be responsible for reviewing the financial thresholds for procurements and updating procedures for the electronic communication of tenders.

Future divergence?

In the longer term, the UK Government has made clear statements that it intends to make changes to the public procurement rules, with Boris Johnson in 2019 stating he would like to “fundamentally change” them to “back British business”^[1]. The Cabinet Office is currently consulting stakeholders on future changes to the rules including on transparency, evaluation and award criteria, and remedies and procedures, with a Green paper expected either later this year or early next year. Similar policy discussions are understood to be taking place within the Scottish Government. Assuming the essential structure of the rules in terms of open, fair and transparent tendering of public contracts remains in place, there is certainly an opportunity to clarify and simplify a number of the provisions in the current set of UK regulations, including aspects of the remedies regime.

 

This article was first published on 26 October 2020 at www.cms-lawnow.com.