Category: European Union

The Post-Brexit Pivot

BrexitWhile an earlier post discussed how Britain’s procurement rules may evolve after Brexit, this post assesses how international procurement reform — specifically, the UK-based colleagues engaged in those reforms — may shift focus after the historic referendum.

First we must put Brexit into context, with regard to procurement law.  In 2014, the European Union revamped its procurement directives.  By U.S. standards, the EU directives are relatively short and straightforward.  For example, Directive 2014/24/EU, which covers most larger public purchases of goods and services, is less than 180 pages long, while by contrast the Federal Acquisition Regulation runs to thousands of pages.  Though the EU directives tend to place first emphasis on economic integration, not best value, the EU rules generally align closely with global best practices, and the EU rules conform with international trade agreements such as the WTO’s Government Procurement Agreement.

Although EU member states had two years to transpose the 2014 directives into their own laws, in less than a year the UK government enacted its new Public Contracts Regulations 2015.  The new UK law, it was noted by some, was an almost direct transcription of the governing EU directives, although the UK, as a member state, had more discretion to innovate.  Some suggested quietly that the UK government rushed the Public Contracts Regulations to avoid the coming storm over Brexit; subsequent events seemed to confirm that.

During the Brexit debate this year, those urging that Britain leave the European Union condemned the EU procurement directives as an example of intrusive regulation from Brussels.  The “Leave” campaign argued that “EU public procurement law imposes extremely onerous requirements on public authorities.”  Justice Secretary Michael Gove, a Conservative leader in the Leave campaign, joined the chorus; he argued: “If we Vote Leave we can scrap the EU’s foolish rules on how Whitehall runs procurement processes which add billions to the cost of Government every year.”

The Brexit vote thus left UK procurement law in a jumble.  Britain’s procurement law is today based on an EU governance model that many British voters have rejected, and on EU rules that Britain’s chief legal officer has called “foolish” — though the EU rules reflect, in the main, international best practices.  If Britain abandons sound procurement rules, it risks losing legitimacy in its procurement system; if Britain instead rewrites its procurement law, it may come full circle to a body of rules, shaped by international obligations and best practices, which looks much like what it already has.

While it is difficult to predict how future UK governments will untangle all this, it may be easier to discern what role the UK procurement community could play, post-Brexit.  Many of the world’s best procurement lawyers and academics work in Britain, and they may well pivot:  from voices inside the European Union, bound sometimes by norms of European economic integration, to strong voices in a more global procurement community, focused first on procurement as an instrument of best value for governments and their citizens.  If this shift does occur — if the British leaders in procurement do pivot to step beyond European goals, to more global concerns — Brexit ironically may have built a bridge, not a chasm.

– Chris Yukins

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 .

 

Procurement After Brexit: An American Perspective

BrexitBritain’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 .