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What’s next for UK procurement law?
Trowers Public Insight

What’s next for UK procurement law?

Following the success of the "Leave" vote in the EU referendum, the UK must now negotiate the most complex divorce in European history.

So where does Friday's vote leave UK public bodies? Does an impending exit from the EU mean that the public procurement rules no longer apply?

The short answer is "No", and "Keep calm and carry on". The Public Contracts Regulations 2015 are UK law, and contracting authorities will continue to be bound by the requirements to advertise public contracts until this legislation is repealed or replaced. UK courts will continue to hear challenges for breaches of the Regulations, and disgruntled parties will still be able to report non-compliances to the Cabinet Office's Mystery Shopper service.

Some clients may be tempted to prolong upcoming procurements for a year or two, and wait until the UK government has negotiated the terms of a Brexit and any replacement regime. On this point, we may be waiting for some time. There is, as yet, no unified strategy on how the UK can leave the EU. The timeline and details of the exit negotiations are unclear, and as a Member exit is unprecedented in the history of the EU, it's unclear how the EU will respond.

Until the UK's position has been clarified, any delay to a procurement exercise may be viewed as an illegal attempt to avoid the scope of the current Regulations. Local authority and central government clients will also be subject to judicial review in respect of their procurement decisions – including the decision not to advertise a contract. Again, the safest approach is to continue to run procurement exercises in accordance with the Regulations.

If we fast-forward by a couple of years to a formal Brexit, it's possible that the current UK procurement regime may not be changed. The current Regulations came into law only last year, after the Government fast-tracked the implementation of the 2014 Public Contracts Directive into UK law. The Government heralded the new UK Regulations as a key part of its localism and efficiency agenda, and used the law change to implement Lord Young's proposals for making public procurement more user-friendly for Small and Medium Enterprises. Given the Government's enthusiasm for the current regime, it seems unlikely that they would rush into another law change.

If the UK Regulations are changed, then any replacement is likely to look very similar. If the UK was to enter into a trade deal with Europe, it would be expected to adopt the Government Procurement Agreement, and adopt a procurement regime that looked similar to the current Regulations. Any trade deal with non-EU countries such as the US or Canada would require a comparable set of procurement rules, and observe requirements of transparency, non-discrimination and equal treatment.

Public bodies negotiating contracts that are dependent on EU funding or grants may need to tread carefully over the next few years, and agree risk mitigation strategies in the event of the withdrawal of EU funding. Likewise, contracts relying on EU trade or freedom from tariffs and quotas will also need to make contingency plans.

Otherwise, it's business as usual for the public procurement sector. If you would like to know more or discuss any concerns about existing or future procurement exercises, please get in touch.

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