UK-EU Trade and Cooperation Agreement: public procurement
On 24 December 2020 the UK and the EU agreed the terms of the draft UK-EU Trade and Cooperation Agreement (the TCA) which has been provisionally applicable since 1 January 2021 and was implemented in the domestic legislation under the European Union (Future Relationship) Act 2020.
The TCA consists of a Free Trade Agreement (with ambitious cooperation on economic, social, environmental and fisheries issues), a close partnership on citizens' security, and an overarching governance framework.
This insight considers what the TCA says about public procurement, and the landscape of procurement law between the UK and the EU, as well as how some of the issues identified in the TCA interact with recent policy and the UK's recent green paper on transforming public procurement (the Green Paper).
The TCA provides for a transparent and non-discriminatory framework of rules for trade in public procurement based on the WTO Government Procurement Agreement (the GPA). Whilst the UK was previously party to the GPA through its membership of the EU, it has (since 1 January 2021) been a party to the GPA in its own right.
The rules regarding public procurement are set out in Title VI of the TCA. Much of Title VI is aligned to the existing procurement landscape and is not unexpected. For example, Article PPROC.4 requires procurement documents for covered procurements (although the definition of covered procurements is different and excludes some health and care-based contracts) to be directly accessible by electronic means, free of charge and through a single point of access on the internet.
Additionally, where a contracting authority requires applicants to demonstrate prior experience (for example, at the selection stage), Article PPROC.7 requires the UK and the EU to ensure that contracting authorities do not require that such experience is obtained in the territory of the respective party.
There are, however, some areas of interest, and we would note the following aspects of the TCA in particular:
Article PPROC.1: Objective
Article PPROC.1 sets out the objective of the TCA and notes the ongoing requirement to comply with the principle of transparency. As with the current Green Paper, it is interesting to note our future with the EU is not just about access to markets but is also underpinned by the objective of ensuring the transparency of public procurement procedures.
Article PPROC.2: Scope of the TCA
At present, the scope of the TCA is set out in Article PPROC.2 which sets out which procurements are covered by the TCA. The TCA currently sets out that a procurement will be covered if it is caught by the parties GPA Annexes (or "Coverage Schedules"), or if it is listed in Annex PPROC-1 to the TCA.
Whilst it was a member of the EU the UK was covered by the EU's Coverage Schedules. However, the UK has now published its own Coverage Schedules under the GPA which can be found here. It is these Coverage Schedules which set out the scope of "covered procurements" in the UK for the purposes of the GPA.
Annex PPROC-1 brings into scope for the purposes of the TCA several areas that are not covered by the GPA, including:
- utilities procurements (covered by the Utilities Contracts Regulations 2016);
- hotel and restaurant services;
- food servicing services;
- telecommunication related services;
- real estate services on a fee or contract basis;
- other business services; and
- education services.
Of note, not all of the current "light touch" services are covered (most notably, health services).
Article PPROC.10: Environmental, social and labour considerations
Article PPROC.10 provides that the parties shall ensure that their contracting authorities are able to take into account environmental, labour and social considerations throughout the procurement process. Those considerations must be compatible with the rules established in Chapters 1 and 2 of the TCA, and they must be noted in the tender documents. This links in with some of the concepts set out in the Green Paper which considers the idea of the "public good".
What is not yet clear is how the extension of those ideas in the Green Paper will play into the wider UK-EU public procurement landscape (for example, the concept of award criteria not being linked to the subject matter of the contract in certain circumstances, or the concept of the most advantageous tender being identified by reference to wider impacts of a tender and not just considered from the perspective of the contracting authority). This will need to be kept under review as the Green Paper and the UK's procurement landscape develops further.
Articles PPROC.12 and PPROC.13: National treatment of "non-covered" procurements
Articles PPROC.12 and PPROC13 deal with the concept of national treatment beyond covered procurements. Of interest, Article PPROC.12 sets out that for non-covered procurements the UK shall accord treatment no less favourable to the most favourable treatment (in like situations) to suppliers of the UK (and vice versa).
Additionally Article PPROC.13 provides that for all procurements, the UK must not have in place measures which result in EU suppliers established in the UK receiving treatment less favourable than the treatment accorded to UK suppliers (and vice versa).
Query how these Articles sit with the Cabinet Office Procurement Policy Note 11/20 on reserving below threshold procurements which sets out that from 1 January 2021 contracting authorities are able to reserve below threshold (or "non-covered") procurements for local or UK suppliers, SMEs and social enterprises.
We are yet to see how this policy will interact with Articles PPROC.12 and PPROC.13 and we await further guidance on this point; for example, it may be that in the context of Article PPROC.13 this doesn't cause any issues in respect of EU companies established in the UK, but it may also be the case that there remains a test of cross-border interest. This test would effectively require a qualification of PPN 11/20 to say that contracting authorities can only reserve below threshold procurements to local or UK suppliers in accordance with its terms where there is no cross-border interest – is this what the UK Government intended?