Britain’s historic vote to leave the European Union will have a profound impact on public procurement law, both in the European Union and around the world. The impact may not be catastrophic — like Norway, the United Kingdom may choose to remain in the European Economic Area which would keep the UK in the single market and bind it to existing European procurement directives — but the indirect impact, in a diminished role for the British in European procurement policy, could prove quite serious.
As the Freshfields procurement law group (historically one of the leading groups in Europe) has noted, if the UK stayed within the European Economic Area, Britain would remain part of the single European market and European procurement rules would continue to apply to UK public procurement. From the Freshfields page:
What if the UK leaves the EU, joins the European Free Trade Association and remained a member of the European Economic Area (EEA)? (the Norwegian option)
There would be no impact on current applicable public procurement law. Under the EEA Agreement, non-EU states that join the EEA still participate in the EU’s internal market by adopting all the relevant EU legislation, apart from that on fisheries and agriculture. This means that the EU’s public procurement law will continue to apply.
Should Britain not join the EEA, as senior London barrister Michael Bowsher QC has noted, in order to protect its own exports Britain might find itself forced to provide reciprocal access to its procurement markets, under the World Trade Organization’s Government Procurement Agreement (GPA) or otherwise. Under these scenarios, Britain still would follow international best practices for open markets, but UK procurement law likely would follow a separate path — a less European path — of development.
The indirect impact of Brexit on global procurement policy also should not be underestimated. Britain will have no direct say in writing the European Union’s procurement rules, which have played an increasingly important role in shaping global best practices over the past few decades. Moreover, as Michael Bowsher points out, in important part because of British resistance the European Union has stopped short of adopting proposed barriers to other nations (such as China and the United States) that the EU accuses of protectionism; with Brexit, the British voice will be muted, and those EU procurement barriers may well rise. That, in turn, will make it more important for the United States to conclude the Transatlantic Trade and Investment Partnership (TTIP) with the EU, to reinforce U.S. access to European procurement markets.
Finally, Britain is home to many of the world’s brightest lawyers and academics in procurement law. Their role in helping the European Union shape flexible, common-sense procurement rules focused on achieving best value will almost certainly be diminished, and that, one might argue, will be a loss for everyone.
Editor’s note: On September 19, 2016, these Brexit developments will be discussed at our annual conference on transatlantic procurement at King’s College London; GWU Law School is a co-sponsor. Attendance is free, and further information is available at http://www.eventbrite.co.uk/e/opening-transatlantic-procurement-markets-tickets-25739851589 .
Totally agree, see you in September!
UK law firm Addleshaw Goddard distributed this today:
BACK TO BLACKPOOL?
No doubt we will all be bombarded in the coming weeks by opinions on the consequences of yesterday’s Brexit vote for a whole range of business types and across a swathe of legal issues. So here is AG’s contribution on the implications for procurement law.
The first and most obvious point is that there is a period of at least two years, which David Cameron suggested this morning will not even start until he leaves office in October, during which the existing regime will continue in full force and effect.
We expect that thereafter procurement law in a recognisably EU-inspired form will continue in force in the UK for the following reasons:
– the suite of UK regulations are now English law, and will remain in force until repealed; we don’t expect their repeal to be at the top of the post-EU reform agenda;
– as shown by the fact that one whole Part of the Public Contracts Regulations 2015 consists of procurement provisions inspired by a domestic agenda (rather than copied out from the EU Directives) and other examples such as the Single Source Contracts Regulations 2014 in the defence sector, there is almost certainly a need for domestic procurement law to subsist even if Government were to decide to abandon or radically modify the EU procurement regime;
– it has always been slightly ironic that other commonwealth countries have developed a procurement law outwith EU treaty principles and based on English case law; even if not gifted from Brussels, there is a need, heightened by the scale and complexity of major government procurements, to provide a legal system within which those procurements can take place, and disgruntled bidders can seek redress;
– we see well-organised private sector organisations choosing to lay out the detailed basis on which they will conduct complex procurements: there is an expectation that rules will be laid down and followed and that there will be a defensible rationale for the award decision. The Blackpool and Fylde Aero decision considered the contractual implications of a failure by a public authority to comply with the rules it had laid down for a competition. That case has proved an awkward bedfellow to the EU procurement rules, especially given the much longer limitation periods for contract-based arguments arising from tender processes. We may all be reviewing those commonwealth authorities in the days and weeks to come;
– businesses dealing with the EU will of course still have to compete in tender procedures governed by EU procurement rules, and the same is true in the many other states which have adopted a procurement law based on EU law or the UNCITRAL model law, often because doing so has been a requirement of funding from supranational bodies such as the EBRD;
– the UK may be expected to seek to join the WTO Agreement on Government Procurement (signatories to which include Canada, Japan, Korea, Hong Kong, Singapore, New Zealand and the United States). The GPA mirrors many of the EU rules, for example thresholds, the bodies and types of contracts that are covered and the concepts of openness, fairness and transparency.
So what can we say for certain?
There are at least two years to go under the recently-adopted UK regulations;
Any change is unlikely to come rapidly even at the end of that period;
In our view, the UK will continue to have a recognisable system of procurement law, either based strictly on EU law and principles or enshrining many of the principles with which we have grown familiar in the past few decades.
So, in the words of Douglas Adams, Don’t Panic, and watch this space.
For further information please contact:
Jonathan Davey 020 7544 5442; Amy Gatenby 020 7544 5450;
Michael Rainey 0161 934 6736