Brexit: what will the future of the UK’s public procurement regime resemble?

Head of Local Government at DWF, Michael Mousdale, writes for Local Government Lawyer.

This article was originally written for Local Government Lawyer

How could I not get hooked on procurement law? On my first day as an Articled Clerk in 1985 (for the modern generation that means trainee solicitor) my first job was to sit in on the tender opening of the bids for the donkey concessions on Weston-super-Mare Beach. My ignorance of the council's rules governing public tenders matched only my ignorance of the contractual terms applied to govern the welfare of seaside donkeys.

Since then, procurement has come a long way. April 2016 saw the beginning of the Concessions Directive, which would govern those donkey concessions were it not for the fact that the value of such fall well short of the 5 million euro threshold in the Directive  (donkey rides are not that financially lucrative). This was perhaps the final plugging of the gaps in a comprehensive body of law governing public procurement. Yet two months after introduction of this measure, the UK has voted to leave the European Union. What, realistically, is the future for procurement law in the UK?

Putting aside any period of transition and assuming the UK does not continue with the EU procurement regime by the backdoor of the European Free Trade Area, it is difficult to imagine that the UK government will allow a free for all on procurement post-Brexit. The UK's procurement legislation will still reflect the relevant European directives unless the UK government decides to deviate from this position. Indeed, there is every chance that they will simply leave the Public Contracts Regulations 2015 (PCRs) alone and only begin to tinker at some time in the future.

So what might a UK wide set of rules look like? Perhaps the start is to remember why we have EU procurement rules at all. Primarily they are a single market measure, aimed at preserving the fundamental treaty principles of a common market or free trade area. With such concerns no longer relevant, the main objectives of the public procurement regime will be to deliver value for money and to ensure due propriety in the award of public contracts. The current PCRs largely do achieve that in addition to preserving the all-important free movement considerations, so there is much already in place to deliver those objectives. 

However, this is an opportunity for the United Kingdom to look at enhancing certain policy objectives in procurement which under current EU law are at best a little ambiguous. In this respect the Social Value Act considerations may come to the fore as well as a more general overall prioritisation of the achievement of supporting local businesses. At the moment, authorities are still not wholly confident in applying the objectives of the Social Value Act to procurement decisions. Given recent events involving the steel industry, the Social Value Act may be looked at once again regardless of the referendum result.

Suppose the UK government chooses not to apply a national regime or at best a loose regime (perhaps akin to the Procurement Code structure in the US), then will we have a free for all? It is exceptionally unlikely. On a practical level, the UK government may sign up (once again) to the WTO's Government Procurement Agreement (GPA) – the underlying objectives of which mirror those stated within the current PCRs. The UK is a member of the WTO via its membership of the European Union but it was an original signatory to the GPA's predecessor, the General Agreement on Tariffs and Trade. Alternatively they may seek to impose regulations complying with the UNCITRAL Model Law on Public Procurement.

Regardless of what happens, every council will have its own rules. Those with long memories in local government will recognise that we always had a set of rules governing the tendering of public contacts long before we had ever joined the EEC (as it then was). We still have them in our contract procedure rules or standing orders. It was those rules which governed the letting of my donkey concessions, as it did all of the council's purchasing. 

At the moment, standard drafting for such is to default to compliance with EU rules once the relevant EU thresholds are reached, but if there is no national set of rules introduced to replace the PCRs councils would have to think about what rules they will apply to such higher value contracts.

Local government as a whole, coordinates its processes and procedures pretty well and Contract Procedure Rules are usually not that dissimilar from one council to another. But there can be quite stark differences too. That being so, much as the market might, post Brexit, welcome the abolition of a (perceived) bureaucratic procurement regime, it will be deeply unhappy if it is replaced with a piecemeal and inconsistent set of rules from one different contracting authority to another.

And finally, what might an enforcement regime look like in the post-Brexit world? It is hard to see the mechanics changing much. One would imagine that the High Court will continue to be the forum for resolution of procurement disputes. This would either be through the retention of a specific procurement challenge regime or through judicial review. But without a Remedies Directive to direct the rights challenge then we might lose traction in the drive to deliver compliance with the fundamental EU Principles as outlined in Regulation 18 of PCRs. 

However, as a general proposition, those EU principles are not that dissimilar from many general principles of public law relating to issues such as natural justice and bias, and outside of the regulated context, the Courts have already shown a willingness to apply duty of fairness on "contracting authorities" (see R v The National Lottery Commission, Ex Parte Camelot Group PLC [2001] E.M.L.R. 3 QBD 21/09/2000). In addition to which the GPA and UNCITRAL regimes would require such an approach.

Long ago, I applied the council's contract procedure rules to those donkey concessions, precisely so as to ensure that the council had got the best return it could on the concessions it was letting but also to ensure propriety in the award, removing any questions of bias or unfairness. If Brexit means we do also turn our back on a comprehensive procurement regime, we can still be reasonably sure that there will be no free for all in the letting of public contracts (with or without a national set of rules) and the Courts will remain as the forum for resolving disputes and complaints.

For further information contact Michael Mousdale »

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

Michael Mousdale

Partner - Head of Local Government

A Partner at the firm and Deputy Head of the Public Sector team, I specialise in local government and public procurement matters.