UK Public Procurement update for contracting authorities and utilities (Update)

7 March 2019

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

On 14th January 2019, 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 to the transitional arrangements of an exit from the EU without an agreement in place 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 were laid in draft. At the time of writing, they had not been approved by Parliament, so are still only draft. Somewhat confusingly, further draft regulations have been laid, which would amend the draft regulations. The new draft regulations are the Public Procurement (Amendment etc.) (EU Exit) (No. 2) Regulations 2019. References in this article to the “Public Procurement Amendment Regulations 2019” are references to the first draft statutory instrument, as amended by the second. Together, they amend a number of statutes, most notably the Public Contracts Regulations 2015, Utilities Contracts Regulations 2016 and the Concession Contracts Regulations 2016.

The Public Procurement Amendment 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’. There is always the possibility that yet more draft amending regulations could be brought forward before then, but in this note we’ll assume that doesn’t happen.

Despite affecting a number of existing statutes, and giving effect to certain EU regulations in domestic UK law, the Public Procurement Amendment Regulations 2019 will 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 Public Procurement Amendment 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 (WTO) 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.
  • For 18 months, 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 those from

o   the UK and Gibraltar;

o   GPA states, if they have agreements with the EU immediately before exit day confirming that the GPA would apply to a contract of the relevant description;

o   EU member states, if the EU had agreed with a GPA state immediately before exit day confirming that the GPA would apply to a contract of the relevant description.

o   any country which immediately before exit day had entered into an international agreement (other than the GPA) by which the EU was bound to treat economic operators from such country participating in public procurements, no less favourably than those from the EU

Under the Public Procurement Amendment Regulations 2019, 18 months after exit day, only economic operators from the UK and Gibraltar would continue to be entitled to remedies available under the UK public procurement regime. The UK Government announcement on 27 February 2019 that the WTO has approved its independent membership of the GPA in the event of a ‘no-deal’ Brexit, suggests that further changes to the amendment regulations may be in the pipeline.

  • 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 Amendment 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 Public Procurement Amendment 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 terms of the deal, if it’s in the same form as the one rejected by Parliament in January. This would mean 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. [1]

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.

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