UK Public Procurement update for contracting authorities and utilities

21 January 2019

There is an update to this article, please click here to find out more.

What does a “deal” or “no deal” mean for you?

On 14th January, the Government published a guidance note providing information on public procurement procedures in the event of a “no deal” Brexit. The following day, the House of Commons voted against the Government’s proposed agreement for the withdrawal of the UK from the European Union.

The risk of an exit from the EU without an agreement in place on the transitional arrangements, means that organisations and business, including public authorities, utilities and their private sector partners, are necessarily focusing their attention on how to prepare for a “no deal” Brexit.

What is the legal position on public procurement after a ‘no deal’ Brexit?

In December 2018, the Public Procurement (Amendment etc.) (EU Exit) Regulations 2019 (the “Public Procurement Regulations 2019”) were laid, amending a number of statutes, most notably the Public Contracts

Regulations 2015, Utilities Contracts Regulations 2016 and the Concession Contracts Regulations 2016.

The Public Procurement Regulations 2019 are in draft form and intended for the most part to take effect on ‘exit day’ (29th March 2019) in the event of ‘no deal’ and are subject to change until they are “made”.

Despite affecting a number of existing statutes, and giving effect to certain EU regulations in domestic UK law, the proposed Public Procurement Regulations 2019 leave the UK public procurement regime largely unchanged. The proposed changes are aimed at allowing the current procurement regime to continue to work largely unchanged in a ‘no deal’ scenario.

Notable issues arising from the draft Public Procurement Regulations 2019 from exit day

  • Review of the financial thresholds above which procurements are caught by procurement legislation, will be carried out by the UK Cabinet Office, rather than the European Commission. The biennial review will aim to ensure that the thresholds correspond with those set in the World Trade Organisation’s Agreement on Government Procurement (GPA).
  • For the purposes of the UK’s suite of public procurement regulations, “economic operators” must be natural or legal persons as such is determined under the law of England and Wales, or as the case may be, Northern Ireland.
  • State aid will not be a justification for submitting an abnormally low tender. In explaining low prices, tenderers cannot give the possibility of the tenderer obtaining State aid as a reason. This is due to Article 107 of the Treaty on the functioning of the European Union no longer applying post-Brexit.
  • Economic operators who are entitled to remedies (such as interim injunctions and ineffectiveness orders) against contracting authorities and utilities in accordance with the UK public procurement rules, will be limited to those from
    • the UK and Gibraltar;
    • GPA states, if they have agreements with the EU before exit day confirming that the GPA would apply to a contract of the relevant description;
    • EU member states, if the EU had agreed with a GPA state before exit day confirming that the GPA would apply to a contract of the relevant description.
  • E-notices will need to be sent to a new UK e-notification service rather than placed in the European Union’s Official Journal or its online service TED.

 How can you prepare?

  • E-notices: If you use a third party “e-Sender” to post OJEU notices, check that they are on track to integrate their service with the new UK e-notification service from 29th March.
  • If you currently directly submit OJEU notices, keep an eye on imminent announcements of a new UK e-notification service, and once available, ensure you are registered to use the new service immediately from 29th March.
  • You may also want to ensure that key suppliers and partners are aware of the change; and you should continue to use Contracts Finder and equivalent domestic procurement portals
  • Standard form contracts: It is not too early to check that any template or standard form contracts your organisation routinely uses, contain appropriate clauses to deal with the raft of amending legislation that will come into effect to address the impact of Brexit on domestic law. In some cases, a simple boilerplate clause will suffice. In contracts that contain references to more technical pieces of legislation, a more detailed legal analysis may be required.

What about a procurement which started before but continues beyond 29th March?

  • The procurement will need to comply with the new Public Procurement Regulations 2019 from 11pm on 29th March.
  • This could mean placing a further contract advert in the UK e-notification service, even if an OJEU notice had already been placed.

The bottom line

If the UK exits the EU on 29th March with no “deal” in place, it is anticipated that contracting authorities and utilities will need to comply with the new Public Procurement Regulations 2019 from 29th March. As above, the key practical change is that you need to gear up to comply with the new notification requirements when these are published.

Procurement regime if a deal is agreed

If a deal is agreed, the existing UK procurement rules will be preserved under the European Union (Withdrawal) Act 2018.  This means that the current public procurement regulations will remain broadly unchanged until 31 December 2020 when the implementation period is due to expire, and any procurement procedures which commenced before that date will remain subject to the existing regulatory regime up to award.

Further advice

For advice and assistance on procurement and contracting compliance in light of the withdrawal of the UK from the EU, please contact one of our team whose details are listed below.

[1] See: https://www.gov.uk/guidance/public-sector-procurement-under-the-eu-withdrawal-agreement

 

This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published.

« Back to news index

Register for updates

Click here to register »

Share this news

© Copyright 2019 Sharpe Pritchard