The Government has published the draft Public Procurement (Amendment etc.) (EU Exit) Regulations 2019 ("Regulations"), addressing a number of legal deficiencies which would otherwise arise when the UK leaves the EU. The Regulations are expected to come into force on 29 March 2019 and apply in two tranches, at exit day and eight months thereafter. These changes to public procurement law apply to public, utilities and concession contracts and will be of relevance to all public sector bodies and potential suppliers in the UK.
This most notable amendments resulting from the Regulations are that:
- UK public bodies will no longer be required to publish notices on Tenders Electronic Daily ("TED"), the European database. Instead, a new UK e-notification service will be launched. Note, however, that this is separate to Contracts Finder (on which UK public bodies are also obliged to publish notices) and UK public bodies will still be obliged to publish on Contracts Finder despite this new e-notification service.
- The existing templates for notices (eg. contract notices and contract award notices) will be replaced by new templates in line with the new e-notification service.
- References to thresholds for full application of the respective public procurement legislation (eg. for works exceeding £4,551,413 and goods and services exceeding £181,302 under the Public Contracts Regulations 2015 ("PCR 2015")) will now be specified in sterling and set by the Cabinet Office as opposed to the European Commission (which currently sets the thresholds in Euros every two years, with the current period expiring on 31 December 2019).
- Other references in the existing public procurement legislation to the European Commission (for example in relation to preparation of Regulation 84 procurement reports and reports where an authority uses the negotiated procedure without prior publication) and EU Procurement Directives from which the UK Regulations derive will be amended to refer to the Cabinet Office and the European Union (Withdrawal) Act 2018 respectively.
- UK public bodies will no longer need to require bidders to explain prices and reject tenders which appear to be abnormally low where the bidder has received State aid, as was previously required under the PCR 2015.
- The Regulations will apply to procurements commenced after 29 March 2019 and also ongoing procurements commenced prior to 29 March 2019 unless an amendment in the Regulations relates to something which occurred before the Regulations came into force.
- In anticipation of the UK acceding to the WTO's Government Procurement Agreement ("GPA") itself, bidders from GPA countries will enjoy the same rights and remedies as UK bidders for eight months from the UK's exit from the EU. After these eight months have elapsed, provisions protecting these rights and remedies of GPA countries will be removed from the existing public procurement legislation (unless the UK accedes to the GPA and subsequent law provides that this protection for GPA countries will be maintained).
It is important to keep in mind that the existing public procurement regime remains unchanged on the whole. Rather than materially varying the underlying public procurement regime, the intention of the Regulations (in line with the European Union (Withdrawal) Act 2018) is only to remove inconsistencies which will arise as a result of the UK leaving the EU. For example, in relation to threshold values, the European Commission ensures that the thresholds correspond to those laid down in the GPA, so it is likely that the UK Cabinet Office will follow the same approach, meaning there will be consistency between EU and UK threshold levels (and therefore effectively little practical change to the current position). Similarly, it is logical that the UK Cabinet Office now sets requirements in place of the European Commission.
The Regulations do not specify the European Commission's role (if any) in investigating procurement breaches in the UK following Brexit. However, there are express provisions within the Withdrawal Agreement to protect the rights of EU-based bidders at the end of the proposed transitional period, so we would expect there to be greater scrutiny from Central Government into procurement processes conducted at this time.
It is likely that any (potentially) material further amendment of the existing regime will follow the UK's formal accession to the GPA, which it currently intends to do, in its own right, following its exit from the EU (NB. the UK is currently an effective subscriber to the GPA via its EU membership).
If you wish to discuss the potential impact of Brexit and the Regulations, or any other procurement consideration, in relation to a project on which you are currently working, you should contact a member of our national Public Sector Commercial team.