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Brexit

Public procurement

Major implications

 

Mutual and equal access to the EU internal procurement market?

It is most likely that, regardless of the final form of Brexit, the UK will want to keep access to the EU internal procurement market for its local businesses.

Approximately one fifth of the EU GDP is made up of procurement of works, goods and services. Such access is usually based on reciprocity, meaning that Belgian (and other EU) companies will obtain the right to participate in UK tender procedures.

Furthermore, parties will want to ensure an absolute equality of bidders, meaning that Belgian tenderers will have to be treated on an equal footing with UK bidders and vice versa. 

European Free Trade Association (EFTA)

However, such mutual and equal access does not necessarily imply a bilateral agreement between the UK and the EU. If, for example, the UK should become part of the European Free Trade Association (EFTA), like, amongst others, Norway, it will automatically participate in the EU’s internal market and will be subject to the EU’s Public Procurement Directives (which apply to the entire European Economic Area). Of course, this means accepting the free movement of persons as well as of goods & services. 

Government Procurement Agreement (GPA) within the framework of the WTO

But even without membership of EFTA, the UK will become a fully independent member of the World Trade Organisation (WTO). WTO members can join the Government Procurement Agreement (GPA). All parties to the GPA must treat tenderers from other GPA parties no less favourably than domestic bidders. The GPA also sets out transparent and impartial procurement procedures, not unlike the EU Public Procurement Directives. Although limited to listed works, goods and services of a value exceeding specified threshold values and tendered out by well-defined contracting authorities within the GPA parties (for details on the so-called 'coverage schedules', see https://e-gpa.wto.org/), the GPA will guarantee both UK and Belgian companies access to a significant part of the local markets involved. 

In this context, The UK Government submitted its application to re-join the GPA as an independent party on 1 June 2018. This application has yet to be approved by the other GPA parties. In addition, the British Parliament retains the right to object to this re-entry and such an objection has statutory effect.  

Future International Procurement Instrument (IPI)

In addition, the UK will possibly also benefit from the yet-to-be-implemented International Procurement Instrument (IPI), a tool proposed by the European Commission to promote open access to public procurement markets around the world (for details, see https://ec.europa.eu/growth/single-market/public-procurement/international_en ). 

Future UK procurement law

Under the European Union (Withdrawal) Act 2018, existing UK regulations on public procurement, which implement the current EU Directives, will continue to apply in the UK immediately after Brexit.

A guidance of the Cabinet Office published on 14 January 2019, announces that the current regulations will be amended (in the near future?) in order to ensure they remain operable and functional at the moment of Brexit. The key difference for British contracting authorities would be the need to send notices to a to a new UK e-notification service (as an alternative to the EU Publications Office). This new UK e-notification service should be ready for use by exit date. From that date, non-UK bidders will also have to register on this platform in order to continue to receive publications and other tender information from the UK.

It cannot be excluded that future UK procurement law will start diverge from the EU Directives, increasing the bid cost for EU companies looking to work for UK contracting authorities.

However, as procurement of works, goods and services is essential to governmental operations, the UK will always need to apply an efficient legal framework, based on known principles such as transparency and workable competition. It is therefore unlikely that it will use this legislation to completely shut off its internal market to outside bidders. Such measures would undoubtedly result in higher prices and poorer quality. 

Procurement procedures in progress on exit date

A further technical guidance for the transitional period in the first quarter of 2019 will be published once the aforementioned UK platform is operational.  It is likely ongoing tender procedures will either still be subject to the EU Directives as translated into UK law or will be stopped.

 

To do

 

  • Bear in mind that there will no longer be a harmonized EU procurement law applicable when entering into a UK tendering procedure, unless the UK should become part of EFTA.
  • Take into account that future UK procurement law could diverge from the EU’s Public Procurement Directives in such a way that access for European bidders to the UK procurement market would be limited and/or would lead to an increased bid cost.
  • Contracting authorities subject to post-Brexit UK procurement law will have to post their notices to the new UK e-notification service and suppliers who wish to profit from UK tender opportunities shall need to access the new UK e-notification service (including registration).

 

If you have any questions, send us an e-mail (brexit@lydian.be)
or contact Jens Debièvre, + 32 2 787 90 85 or
jens.debievre@lydian.be

 

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