This article is the third in a series looking at the impact of Brexit on the construction industry.
One of the consequences of the UK's withdrawal from the institutions of the European Union is that the UK has the scope to change its public procurement rules. This will affect the way in which the public sector brings construction projects to market.
What has changed?
On 31 December 2020, the UK's implementation period with the EU came to an end. It was at this point that the UK left the EU's single market and customs unions ecosystems. This meant that the UK would, without action on its part, cease to be able to rely on the EU membership of the World Trade Organisation Government Procurement Agreement (the “GPA”). Broadly, this would have meant that UK contractors would lose the protections afforded by the GPA when bidding into overseas opportunities.
On 1 January 2021, the UK acceded to the GPA as a member in its own right and the Trade and Cooperation Agreement between the UK and the EU (the “TCA”) came into force.
In procurement terms, the TCA not only confirms the application of the GPA between the UK and EU, but also extends the types of contracts to which UK and EU businesses will have reciprocal access to - beyond the scope of the GPA.
What effect does this have on UK businesses tendering for contracts?
Outside of the UK
Access to markets of GPA countries outside of the EU will continue as before. So, for example, a UK business that has previously carried out government contracts in the US should see no difference to its market access under the GPA.
EU bidders bidding into UK public procurements will have fewer rights than before 1 January 2021. This is because the EU procurement regime no longer applies, replaced by the TCA and the GPA.
Access under the TCA is wider than reliance upon the GPA alone and so access to EU markets will continue largely as before. Although market access will not be quite as extensive as it was pre-Brexit, it is not expected that any difference will be felt by the construction industry. Of course, UK businesses may well experience wider barriers beyond procurement, when attempting to trade with the EU as a result of changes to import and export rules.
Within the UK
There is little immediate change to public procurement in the UK as a result of Brexit. Although the UK procurement rules are based upon EU Directives, they have been implemented into UK law by national legislation such as the Public Contracts Regulations 2015, the Utilities Contracts Regulations 2016 and the Concession Contracts Regulations 2016 (and the analogous legislation in Scotland and Northern Ireland). Save for a few changes, such as references to OJEU and the European Commission, these continue to broadly have the same full force and effect (although there are technical amendments which do affect the rights of enforcement of EU contractors, as set out above).
However, freedom from EU Directives does not mean that the UK has an untrammelled ability to reform its procurement legislation to suit its own circumstances. The GPA and TCA do impose some limitations on what can be changed
On 15 December 2020, a government Green Paper was released with several radical proposals for procurement reform including combining the current separate legislation for public, utilities and concession procurements into a single set of rules, and reforming the legal challenge process. Consultation closes on 10 March 2021 and responses are encouraged from any person or organisation impacted by public procurement in the UK.
Will the financial thresholds change?
No. The financial thresholds, that determine whether the Regulations apply to a supply, service or works contract, will not change. The thresholds are due to be revised as planned from 1 January 2022.
Where do I search for contract opportunities?
The main practical change for bidders looking to tender for UK pubic sector contracts is that all Contract Notices used to advertise new opportunities and Contract Award Notices used to declare awarded contracts are now placed on a UK notification system called Find a Tender (which will officially be known as the ‘Find a Tender Service’ or “FTS” for short). All suppliers wanting to bid for UK public contracts should register with FTS immediately.
FTS is not replacing (and neither will it be linked to) Contracts Finder (or Public Contracts Scotland/ Sell2Wales/ eTendersNI as applicable). So, bidders should continue to see above-threshold contract opportunities on Contracts Finder in addition to FTS, as per the requirements of the Public Contracts Regulations 2015. For below-threshold opportunities, these will continue to be advertised on Contracts Finder only.
EU opportunities will continue to be advertised via OJEU (Tenders Electronic Daily) along with notices that apply to UK procurements commenced prior to 1st January 2021. This is because any tender process or framework agreement ongoing at 31 December 2020 must continue to be conducted in accordance with the relevant EU rules applicable at the time the process was commenced.
What is planned for the future?
More fundamental reform of the procurement rules is in the pipeline. The extent to which some or all of these changes are adopted will depend both on the Green Paper consultation feedback received, and on Government bandwidth to draft new legislation at the same time as the myriad of other challenges it faces around coronavirus COVID-19 and Brexit.
For more information or advice please contact David Hansom or Hannah Chapelhow in Clyde & Co's procurement team, or your usual Clyde & Co contact.