Firstly, in light of the results of the referendum, we can confirm that all of our Frameworks and Contracts have been procured in accordance with the Public Contract Regulations, the UK’s response to EU procurement regulation.
It is our view that in the short term, there are unlikely to be any changes and UK procurement will carry on as before. Meanwhile EP will continue to monitor the situation and respond to any developments as they occur, ensuring that we remain compliant with the relevant regulations at all times.
That said, on the 23rd June 2016 the UK voted to leave the EU. As this result was mostly unexpected it sent a shockwave through the economic landscape. Just as we might have said years ago, its probably best to ‘Keep calm and carry on.”
The big question everyone is asking is ‘What happens now?’. The consequences of the vote with regard to UK Public Procurement and the timeline of events appear reasonably clear.
The UK Government has to trigger Article 50 of the Treaty of the Functioning of the European Union. Theresa May has hinted that this will happen late 2016 or early 2017.
The UK from that moment will then have 2yrs to negotiate its terms of exit unless all 27 member of the EU vote to grant an extension, which is not realistic. UK procurement legislation will then be subject to whatever trade deals are agreed, although some time to re-draft or create the new rules is very likely.
The are no doubt numerous options available to the non-EU UK. There are four existing models available each of which could be adopted.
The UK could become a member of the European Economic Area alongside Norway. EU Procurement legislation would still be in force. This however does give the option for the UK to come to its own trade agreements with non-EU countries.
EFTA With Bi-Lateral Agreements
The UK could become a member of the European Free Trade Association alongside Switzerland. The repercussions here would likely be different. Switzerland we understand has negotiated over 120 separate independent bi-lateral treaties with the EU, and has effectively aligned with EU policy in some areas. Subject to the terms of agreement of these, the UK could still see the free movement of people and the EU procurement regulations, which Switzerland are subject to.
Whilst considerably more limited as it only covers the tariffs associated to non-agricultural goods. It would guarantee UK goods tariff-free access to the EU in return for the UK not imposing tariffs on good imported from the EU.
The EFTA only deals with removing tariffs and does not address non-tariff barriers in services or capital. Consequently, EFTA members still have to find alternative ways of integrating with the EU.
If the UK sits back and does nothing and no trade deals or arrangements were in place by the 2nd anniversary, then the World Trade Organisation option would come into force. The UK would then be subject to EU tariffs. The UK would also have to negotiate new free trade arrangements with non-EU nations. However under this option, the UK would not be subject to EU procurement legislation.
The following two years will certainly be interesting for public procurement. If we are not still subject to EU procurement laws the likelihood is that the UK will continue with its own set of legislation that has been designed to meet the requirements of the EU. our job now is to identify and press for the changes we deem important.
The first major big difference will be that the UK will be in complete control of its procurement legislation. Although due to political and economic pressure, that content may look and feel very familiar to those of us currently in the public procurement environment.
So – given the freedom to write the rules, what would you do?
Would you encourage us all to Buy-British? Buy-local? Have the world on an equal platform? or something more complex perhaps, like an evaluation model that includes for the economic consequences of awarding work to companies outside of the UK. Now that would be an interesting one to develop.