Public procurement in post-Brexit UK

Cabinet Office Minister Lord Agnew recently said that the end of the transition period provides “an historic opportunity to overhaul [the UK's] outdated public procurement regime”. Those comments, set out in the UK Government's green paper on transforming public procurement, suggest that contracting authorities and prospective suppliers should expect major reforms to be proposed in the months ahead.

However, here we look at what the end of the Brexit transition period and finalisation of the new trade deal between the EU and UK means for public procurement in the UK in the short term.

The Public Procurement (Amendment etc) (EU Exit) Regulations 2020

Even before the UK and the EU had reached an agreement on a trade deal, legislation was laid before the UK Parliament to provide certainty for ongoing procurements at the end of the transition period.

The Public Procurement (Amendment etc) (EU Exit) Regulations 2020 (“EU Exit Regulations”) were signed into law on 19 November 2020. This had the effect of ensuring that the UK procurement regulations would align with the transitional provisions on public procurement as set out in the ratified Withdrawal Agreement. 

The schedule to the EU Exit Regulations confirms that amendments made to the UK procurement regulations will not affect any ongoing procurement procedure commenced before the end of the transition period at 11pm GMT on 31 December 2020. Ongoing procurement will also not be impacted by amendments within the EU Exit Regulations, or by future legislative changes such as the proposed reforms in the recently published green paper.

These regulations also clarify that procurements for framework agreements which were commenced before the end of the transition period will continue to be bound by EU procurement law as transposed into UK law. The same also applies to subsequent call off contracts which are awarded under those framework agreements.

With regard to changes brought about by the EU Exit Regulations, the main difference is that procuring entities are required to publish notices on the new UK e-notification service called Find a Tender (FTS) instead of in the OJEU. The EU Exit Regulations also amend specific EU references within the legislation such as:

• replacing the "ESPD", for European single procurement document, with "SPD";
• transferring certain supervisory powers from the European Commission to Cabinet Office;
• omitting provisions on joint cross border procurement with EU member states; and
• deleting the exclusion ground which specifically relates to fraud affecting the EU’s financial interests.

In relation to the Utilities Contracts Regulations 2016, the existing market exemptions that were previously authorised by the European Commission will continue to apply in respect of certain contracts in the electricity, oil and gas sectors.

The procurement thresholds remain the same as they were before the end of the transition period, given that these thresholds are set under the WTO’s Agreement on Government Procurement.

At the same time, as a result of the EU Treaties ceasing to have direct effect in the UK, other than Northern Ireland, below-threshold procurements no longer need to comply with “general EU Treaty principles”, irrespective of whether these contracts would be of cross-border interest to suppliers in an EU member state. The only exception relates to Northern Ireland. By virtue of the Northern Ireland Protocol, general EU Treaty principles continue to apply to below-threshold procurements which are of cross-border interest and which involve the provision of goods into Northern Ireland.

Agreement on Government Procurement

The WTO’s plurilateral Agreement on Government Procurement (“GPA”) involves most of the world’s major economies, including the EU, US, Japan and South Korea. The Agreement essentially commits its signatory parties to guaranteeing fair and transparent public procurements and to treat suppliers from fellow GPA countries in the same manner as domestic suppliers for all covered procurements.

While the UK was an EU member state, it had GPA procurement access-commitments as well as enjoying GPA procurement access-opportunities for its suppliers by virtue of its EU membership. The UK is now a party to the GPA in its own right.

Accordingly, UK suppliers will continue to have access to global public procurement opportunities, while GPA suppliers will continue to have access to most of the UK above-threshold public procurement contracts.

EU-UK Trade and Co-operation Agreement

The EU-UK Trade and Co-operation Agreement (“TCA”) was agreed between UK and EU negotiators on 24 December 2020. Its provisions are now binding under domestic law by virtue of the European Union (Future Relationship) Act 2020.

Under the TCA, both the UK and EU committed to offering increased access to each other’s procurement markets and to enhance the transparency of public procurement procedures. Accordingly, the TCA builds on the procurement access commitments of each party under the GPA, so that EU and UK suppliers now have access to each other’s procurements in the gas and heat distribution sectors, and contracts awarded by private-sector utilities that act as monopolies, as well as services contracts for hospitality, telecommunications, real estate and education.

Public contracts which are outside the scope of GPA and TCA arrangements include those that relate to healthcare services and defence. This means that UK suppliers do not enjoy guaranteed access to these contracts in EU or other GPA procurements. Equally, EU and other GPA suppliers do not have automatic access to UK public contract opportunities in these sectors.

The TCA includes additional rules beyond the requirements in the GPA that must be applied to all covered procurements in the UK and EU. This includes:

• ensuring that procuring entities conduct covered procurement by electronic means to the widest extent practicable;
• ensuring that where procuring entities require a supplier to demonstrate prior experience, they do not require that the supplier has such experience in the territory of the procuring entity, be it either the UK or EU;
• ensuring that procuring entities are permitted to take into account environmental, labour and social considerations throughout a procurement procedure; and
• ensuring that there will be an effective domestic review procedure for dealing with disputes.

Finally, the TCA confirms that, with regard to any procurement, irrespective of coverage obligations, UK suppliers established in an EU member state must be treated no less favourably than domestic suppliers, and vice versa for EU suppliers established in the UK.