What Effect will Brexit Have on the Public Procurement Rules?

The extent to which Brexit will affect the public procurement rules in the long term remains unknown, and will ultimately depend on the UK’s continuing relationship with the EU. Once the UK is outside of the EU, it may have greater flexibility when it comes to implementing and amending public procurement legislation. Parliament may, for instance, take steps to reduce the scope for any potential challenges to public sector organisations under public procurement legislation.

It is unlikely that the Public Contracts Regulations 2015, which encompass the EU procurement directives, will see any immediate alterations. In addition, the principles of equal treatment, transparency and non-discrimination are key principles of public trade and procurement and are enshrined in UK law. A departure from the EU, however dramatic, will not seek to amend these principles, though may raise questions regarding how the principles are to be interpreted.

There are many areas of procurement law, though, where the regulations are open to a considerable degree of interpretation. In interpreting these regulations, UK courts must currently look to the jurisdiction of other courts in Europe. However, on leaving the EU, the UK courts may be more willing to diverge from the decisions of courts in Europe and adopt a more flexible approach.

Along with case law, the recitals to the procurement directives are used to interpret public procurement law and in some instances include important additional information. These directives will not be included in the European Union (Repeal) Bill and therefore may not apply following the UK’s withdrawal from the EU.

Questions have arisen as to the role of the Official Journal of the European Union following the UK’s withdrawal from the EU. If UK contracting authorities are no longer able to publish OJEU notices, questions need to be answered regarding how contracting authorities remain compliant with the procurement regulations and where contract opportunities will need to be published.

Commentators have suggested that the UK’s withdrawal from the EU may lead to the UK adopting changes to procurement legislation with the aim of increasing flexibility in areas such as the modification of contracts, which are currently rigidly governed. In the future, it could be easier for contracting authorities to make changes to contracts without embarking on a new procurement exercise.

In the long-term, the impact of the Brexit decision on public procurement regulation in the UK will depend on the UK’s relationship with Europe. Continued access to the single market, for instance, is likely to require full application of EU procurement regulation. It is also expected that membership of the EEA would require compliance with EU procurement law.

In addition, if outside the single market, it is anticipated that the UK will remain party to the Agreement on Government Procurement (GPA), a World Trade Organisation (WTO) agreement, which would limit the extent to which the UK can rewrite the rule book on public procurement. The UK currently participates in the GPA by virtue of its membership of the EU; however, the Trade Bill makes provision for the UK to become an independent signatory to the Agreement. Many of the rules under this Agreement correspond with the rules under the EU procurement directives and accordingly the scope for amendment to UK procurement law is expected to be limited.

Finally, even if public procurement legislation is amended considerably in order to increase flexibility, academy trusts should note that the Academies Financial Handbook requires academy trusts to ascertain value for money. This requirement is most clearly met by some form of competitive tender process and benchmarking exercise.