Brexit - Public Procurement
Mutual and equal access to the EU internal procurement market?
It is most likely that 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. How this will materialize, is yet to be seen.
European Free Trade Association (EFTA)
The envisaged 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. Under the current situation, this seems unlikely in the near future.
Government Procurement Agreement (GPA) within the framework of the WTO
But even without membership of EFTA, after Brexit, 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 favorably 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 here), 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. The GPA parties accepted this application on 27 November 2018 (Accession Agreement GPA). Under the Accession Agreement GPA, the UK is covered under GPA as a member state of the EU until the date of its withdrawal from the EU (see below) or, should the UK and the EU conclude an agreement on a transition period (during which EU law still applies to and in the UK), until the expiry date of said transition period. The UK accession to GPA as an independent party will take effect thirty (30) days after the UK government submits its instrument of acceptance. However, this can only be done thirty (30) days before the UK ceases to be a member state of the EU at the earliest.
Future International Procurement Instrument (IPI)
In addition, the UK may possibly 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 here).
Future UK procurement law
Under the Revised European Union Withdrawal Act 2019 existing UK regulations on public procurement, which implement the current EU Directives, will continue to apply in the UK immediately after Brexit on 31 January 2020 until 31 December 2020 (the Transition Period). This includes public procurement procedures that are launched after 31 January 2020 but before 01 January 2021 and have not yet been completed on 31 December 2020. Completion means (a) the publication of a contract award notice or signing of the relevant contract; or (b) the decision not to award the contract.
In principle, the Transition Period can be extended with one (1) or two (2) years (until 31 December 2021 or 31 December 2022 respectively). Such an extension is not unlikely.
It cannot be excluded that after the Transition Period, UK procurement law will start to diverge from the EU Procurement Directives, thus increasing the bid cost for EU companies looking to work for UK contracting authorities.
Moreover, a new UK e-notification service (as an alternative to the EU Publications Office) should be ready for use by the date of the expiry of the Transition Period. The publication of further technical guidance about this e-notification service is anticipated during the Transition Period.
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. In the light thereof, during the Transition Period, the EU and the UK will probably include the future access to each other’s public procurement markets in their negotiations on a new trade agreement (unless parties decide GPA rules suffice).
- Bear in mind that after the Transition Period, EU procurement law will no longer be applicable when entering into a UK tendering procedure. However, GPA rules will most likely apply as from the end of the Transition Period.
- 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). Further technical guidance regarding this e-notification service is still to come.
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