PPN 02/21 – WTO Government Procurement Agreement and the UK-EU Trade and Co-operation Agreement
On 19th February 2021, the Cabinet Office published its second procurement policy note of 2021. PPN 02/21 informs contracting authorities of considerations due to the UK's membership of the WTO Government Procurement Agreement (GPA) and actions required to apply the public procurement rules in the Trade and Co-operation Agreement (TCA).
PPN 02/21 is to be applied with immediate effect, and applies to all contracting authorities which come within the scope of the public procurement regulations (including the Public Contracts Regulations 2015 (PCR), the Utilities Contracts Regulations 2016 (UCR) and the Concession Contracts Regulations 2016 (CCR), as well as the equivalent regulations from 2006 to the extent that they are still applicable).
As set out in our earlier insight, the UK and the EU agreed the TCA on 24 December 2020 and it has been provisional applicable since 1 January 2021. The TCA was implemented into domestic legislation under the European Union (Future Relationship) Act 2020, although it is yet to be ratified by the European Parliament at the time of writing.
Separately, the UK has now acceded in its own right to the GPA (with effect from 1 January 2021) and has published its coverage schedules (as set out in Appendix 1 of the GPA) which define the UK's commitment with respect to:
- The procuring entities covered by the GPA;
- The goods, services and construction services covered by the GPA; and
- The exceptions to coverage.
PPN 02/21 confirms that the UK has committed to update the list of procuring entities covered by the GPA, as the list of central Government entities in Annex 1 of its coverage schedules to reflect that the identities of central Government entities have subsequently changed (due to mergers, name changes and transfers of functions amongst other reasons).
We have previously explored the content of the TCA in more detail, and PPN 02/21 summarises the content of the UK's commitments on public procurement in "Title VI (Public Procurement)" and "Annex PPROC-1: Public Procurement".
Of note, the TCA will provide market access beyond that required under the GPA, and will open up market access to a wider range of sectors and services (including the gas and heat sector, and for hospitality, real estate, telecommunications and education services).
It is worth noting that the UK's public procurement regime complies with the GPA and PPN 02/21 reminds contracting authorities that by fully complying with the domestic legislation they will comply with GPA requirements.
Additionally, following the domestic public procurement regime will ensure compliance with the TCA.
Of immediate relevance to contracting authorities, PPN 02/21 sets out the following considerations for compliance with the TCA:
- For procurements under the UCR, where only qualified suppliers are invited to submit a tender contracting authorities must ensure that the number of suppliers invited ensures genuine competition without affecting the operational efficiency of the procurement. This is a well established rule under the PCR, and contracting authorities are required to treat the UCR as though they have been amended to include such a requirement.
- Where a supplier submits an abnormally low tender, the TCA provides that contracting authorities may ask the supplier if their price takes into account subsidies. This is not set out in the PCR or the UCR, and contracting authorities should treat those regulations as if they have been amended to include the right to interrogate whether a price submission includes subsidies.
- Finally, the TCA provides that contracting authorities must treat EU-owned suppliers based in the UK no less favourably than they treat UK-owned suppliers based in the UK - this rule applies to all procurements (including non-covered procurements). PPN 02/21 reminds contracting authorities that this is already the case for covered procurements (through, for example, the principle of non-discrimination under regulation 18 of the PCR), but this does not currently extend to non-covered procurements and contracting authorities should treat the PCR and the UCR as though they have been amended to extend this obligation. That being said, there appears to be some divergence between this and the provisions of PPN 11/20 (reserving below threshold procurements) and it is yet to be seen how that will apply in practice.
In the meantime, contracting authorities should continue to apply the relevant domestic rules to their procurements.