Public procurement law post-Brexit

Public procurement law post-Brexit

The Government has published the draft “Public Procurement (Amendment etc.) (EU Exit) Regulations 2019”.

The draft Regulations mainly deal with housekeeping issues post-Brexit in that they either remove or replace with domestic equivalents, references to the European Union, the Commission and EU Directives in current legislation. The draft Regulations also deal with the administration of any further amendments to procurement legislation.

The draft Regulations indicate that, for procurement law, it will largely be business as usual; but we set out some of the more notable proposed changes below.

Replacement of the OJEU and responsibility for review

One of the most notable proposed changes is that the UK will install its own “UK e-notification service” to replace the Official Journal of the European Union (OJEU). This would be a single, web-based portal which would be provided by or on behalf of the Cabinet Office. Notices would still be published so that they are freely accessible to the public.

The draft Regulations also transfer the Commission’s function to revalue the main financial thresholds, and review reports to the Minister for the Cabinet Office (MCO).  The proposal is that the thresholds would not change from the current applicable levels until at least 1 January 2020.

Application of the PCR (this section may be modified by supplementary regulations – please see the “further update” text below)

It is proposed that initially, post “exit day”, the Public Contracts Regulations 2015 (“PCR”) will continue to apply to suppliers from those EU Member States who were members prior to “exit day”, and to suppliers from signatory States of the GPA (the Agreement on Government Procurement between certain parties to the World Trade Organisation, signed in Marrakesh on 15/04/94).

However, the PCR obligations would immediately cease to apply (i.e. give rights and remedies) to suppliers from States who are signatories to “other international agreements”.

It is proposed that eight months following “exit day” the PCR obligations would also cease to apply to suppliers from signatory states of the GPA but would continue to apply to suppliers from EU Member States.

It should be noted that this provision anticipates the UK’s accession to the GPA by the end of this eight-month period and so, should this be completed, it is likely that obligations will continue to apply to suppliers from signatory states of the GPA after this date.

Joint procurements between EU Member States, equivalent certificates and standards

It is proposed that the obligation not to disqualify an economic operator on the grounds of failing to be a natural or legal person, as according to English law, would be removed.

In addition, provisions dealing with joint procurements with contracting authorities in other EU Member States will be removed.

There are also proposed changes in relation to recognising equivalent quality assurance certificates from bodies established in other EU Member States and specific environmental management schemes and systems.

The proposed amendments to the PCR would require reference to European standards but would not require contracting authorities to recognise equivalent certificates.

The draft Regulations also remove the presumption of suitability on the basis of official lists.

Abnormally low tenders and state aid

The draft Regulations would also remove the specific right to reject an abnormally low tender, on the basis that the tenderer has obtained State Aid, where the tenderer is unable to prove, within a time limit fixed by the contracting authority, that the aid in question was compatible with the internal market. It should be noted that the removal of this provision is in anticipation of a new UK State Aid regime in which the function for enforcement is to be conferred on the Competition and Markets Authority.

As can be seen above, the draft Regulations do not indicate any significant, or unexpected, changes in the current landscape of public procurement law. The Regulations are yet to be passed and so, further changes and amendments may yet be made. As so much is up in the air at present with Brexit negotiations these Regulations may well never see the light of day and may be a footnote in procurement law only. Or, they could apply from the proposed “exit day” (29 March 2019, 11pm)

The explanatory note to the draft Regulations notes that there are deficiencies in the legislation which have not been addressed by the draft Regulations. What these are is not clear. We would therefore expect further review of procurement law to follow in due course.

Further update 12 March 2019

The Amendment Regulations have now passed through both the House of Lords and the House of Parliament, receiving affirmation on 20 February 2019. The Amendment Regulations will therefore come into force on “exit day”, provided that they are signed by the Minister for the Cabinet Office.

The Public Procurement (Amendment etc.) (EU Exit) (No. 2) Regulations 2019 (“Amendment (No. 2) Regulations”) are now passing through the parliamentary process. These regulations propose that the rights of organisations from GPA countries under the PCR will apply for 18 months post “exit day” (rather than the 8 months allowed under the initial Amendment Regulations). The Amendment (No. 2) Regulations would also ensure the continued application of PCR obligations to suppliers from States who are signatories to “other international agreements” binding upon the EU Member States immediately before “exit day”. Such “other international agreements” are listed within Regulation 21 of the Amendment Regulations and include the agreement between the EC and the USA on government procurement as signed in Washington and Brussels on 30 May 1995.

In summary, the Amendment (No. 2) Regulations seek to change the interim/transition period from 8 months to 18 months after “exit day” and, where (under the Amendment Regulations) the PCR obligations would previously have ceased to apply to signatories of “other international agreements” post “exit day”, the PCR obligations will now also apply to such States during the 18-month interim/transition period. In effect, the procurement law position will therefore remain as is for non-UK organisations for 18 months post “exit day”.

Given the ease with which the initial Amendment Regulations were passed through both Houses, and the current political landscape, we expect that the Amendment (No.2) Regulations will also be passed in the coming weeks. If this is the case, the position post “exit day” will be amended as described in this further update. If you have any queries on the impact of Brexit on procurement practice, please contact one of our specialist team.

If you have any queries on the impact of Brexit on procurement practice, please contact one of our specialist team.