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Brexit latest: No Deal Brexit and Procurement Legislation

With the Government maintaining that the UK with leave the EU on 31 October, whether or not a Withdrawal Agreement has been finalised, there may appear to be much uncertainty as to the position of legislation after that date, and what immediate effect that will have on trade and other areas of business. However, in procurement as well as in other areas, there are some clear guidelines as to what a ‘no deal Brexit’ would mean for day-to-day working practices. Here, Phillip Kinnell, Senior Procurement Consultant at the Procurement Advice and Support Service (PASS), details what we know about procurement legislation in the event of ‘no deal’ – in our explainer below and in our recent webinar.

Legislative certainty in the event of a no deal Brexit

What procurement legislation applies in the event of a ‘hard’ Brexit? Section 2(1) of the European Union Withdrawal Act 2018 states that ‘EU-derived domestic legislation, as it has effect in domestic law immediately before exit day, continues to have effect in domestic law on and after exit day.’ Section 3(1) similarly confirms the incorporation of direct EU legislation by stating that ‘Direct EU legislation, so far as operative immediately before exit day, forms part of domestic law on and after exit day.’ 

However, there are some incongruities between current legislation, such as the PCR 2015, and the changed environment that we will have following a no deal Brexit. To deal with this, the European Union Withdrawal Act 2018 preserves laws made in the UK that implement EU obligations, and provides the legal basis for making necessary corrections to the current procurement legislation that would otherwise no longer operate appropriately once the UK has left. 

The following paragraphs outline the main pieces of secondary legislation which set out the updates to UK procurement legislation.  

In England, Wales and Northern Ireland, the Public Procurement (Amendment etc) (EU Exit) Regulations 2019 and the Public Procurement (Amendment etc) (EU Exit) (No 2) Regulations 2019 set out the majority of changes to current procurement legislation in the event of a hard Brexit. 

In Scotland, the Public Procurement etc (Scotland) (Amendment) (EU Exit) Regulations 2019, the Public Procurement etc (Scotland) (Amendment) (EU Exit) Amendment Regulations 2019 and the Public Procurement etc. (Miscellaneous Amendments) (Scotland) Regulations 2019 carry out a very similar role.  

The required changes include the removal of references to the EU, the replacement of the OJEU with the ‘UK e-notification service’ (also known as the Find a Tender Service or FTS) and the right of the UK to set the procurement thresholds for the forthcoming change on 1 January 2020. 

Eight months after Brexit, the amendment regulations also remove conditions relating to the GPA (Government Procurement Agreement) and the ‘duty owed to economic operators from other member states’ as from that point the requirement to open up procurement in the UK to economic operators from other states will either not apply or will have be applied separately through a trade or other similar agreement. 

The Defence Regulations will be updated with the Defence and Security Public Contracts (Amendment) (EU Exit) Regulations 2019 which will bring in both pre-exit and exit-related amendments to the Defence and Security Public Contracts Regulations 2011. So while it’s not possible, or advisable, to cover all the changes here, I hope that the above links will help you determine how a no deal Brexit will affect any procurements that are commenced after a no deal Brexit. 

You can here Phillip discuss this and other aspects of post-Brexit procurement in more detail through a recording of our recent webinar, ‘What a No Deal Brexit would Mean for Public Sector Procurement.’ To view the full video, click here.

New report: Social value, supply chain ethics and procurement legislation

BiP Solutions is pleased to launch our latest market report, ‘Is Procurement Good Business? Social value, supply chain management, legislation and innovation in the current procurement landscape.’

This report examines three of the most pressing themes in contemporary procurement: social value, ethical supply chains, and the relationship between legislation and innovation. Aside from specific political events, these three themes are perhaps the major issues that have the potential to reshape how procurement is practised across the UK in the near future.

Following Procurex National 2019, the flagship event in the UK public procurement calendar, hosted by BiP Solutions, this report includes expert analysis and comment from procurement leaders from the day. The clear message from both attendees and the expert speakers at Procurex National is that legislation, like social value and ensuring an ethical supply chain, can prove to be a source of opportunity to procurement. Rather than stopping competition or innovation, or enforcing arbitrary boundaries, all three key themes can in fact make for better business.

  • Social value is not only a legal requirement, but is also increasingly weighed into procurement requirements in many different sectors. We discuss how organisations can shape their own ‘social value’ position.
  • Supply chain ethics are important in an ever-more transparent age. Learn how buyers can make sure ethical business is factored into every stage of the supply chain.
  • Legislation and innovation can seem like they are at odds in procurement, but we look at how procurement legislation can work to spur innovation and improve efficiency.

The report includes comment from figures including Malcolm Harrison, CEO of the Chartered Institute of Procurement & Supply; Simon Tse, CEO of the Crown Commercial Service; and Mark Roberts, Continuous Commercial Improvement Director at the Cabinet Office. The report also describes key ways in which BiP Solutions can help you get ahead in procurement by supporting you to stand out in terms of social value, ensuring a robust and ethical supply chain, and working in the best way within the legislation.

Download your full copy of the report here to find out how to maximise your opportunities by keeping abreast of the latest burning issues in procurement.

New EU Public Procurement Thresholds Coming Soon

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The current thresholds for contracts governed by the Public Contracts Regulations have been in place since 1 January 2016. They are due to change on 1 January 2018. This could mean changes are on their way for your business so make sure you are on high alert for when the new thresholds are announced.

To recap what the EU public procurement thresholds are, let’s look over the laws that you must consider when working with the public sector.

Public procurement law

Public procurement law regulates public sector purchasing and certain utility sector bodies.

When procuring goods and services over the financial threshold, the public procurement laws governing the process are the Public Contracts Regulations 2015 in England, Wales and Northern Ireland and Public Contracts (Scotland) Regulations 2016 in Scotland.

These Regulations transpose into UK law the agreements reached in the EU Public Contracts Directive (2014/24/EU).

The purpose of the Directive – and therefore of the Regulations –  is to open the EU’s public procurement market to competition. These laws stop ‘buy national’ policies and help to promote the free movement of goods and services between European countries, as well as non-discrimination between buyers and suppliers.

Find out more about procurement legislation in the Ultimate Guide to Winning Government Contracts.

What are procurement thresholds?

Obviously, it is not sensible to open every tiny procurement up to European competition nor to expect very small procurements by public bodies such as parish councils to be subject to the full set of Regulations. Therefore, a set of value thresholds has been put in place – the EU public procurement thresholds.

The EU public procurement thresholds are agreed by the European Commission every two years. Contract opportunities issued by buyers in any EU Member State which are valued at or above these thresholds must be submitted to the OJEU (Official Journal of the European Union) for publication throughout the European Union. This opens them up to suppliers throughout the EU.

These contracts are subject to the above-mentioned Regulations, which transpose into UK law the agreements reached in the EU Public Contracts Directive.

Contract opportunities valued below these thresholds do not have to be published outside their country of origin and are subject to slightly less stringent regulation.  The lower the value of the opportunity, the less stringent the requirements for competition and transparency surrounding the procurement.

When will the new procurement thresholds be announced?

The new thresholds are due to be announced any day as the current thresholds are only applicable until 31 December 2017. Keep up to date with the most recent procurement legislation on our website or follow us on LinkedIn or Twitter.

EU Referendum: Procurement Legislation Implications

Procurement Legislation

Rely on facts not feelings

On 23 June Britain will choose whether to remain in or leave the European Union. Although this is a decision not to be taken lightly, many companies are still unsure of the facts.

Deloitte’s 35th Quarterly CFO survey concluded that only 26% of CFOs said their companies had taken steps to prepare for the referendum result – a worrying figure considering the direct effect a Remain or Leave vote could have on UK business.

To help professionals understand how the vote will affect UK exports, trade arrangements, business finance, procurement legislation and jobs; procurement specialist BiP Solutions has created an impartial White Paper EU Referendum: The Ins and Outs for Business.

Here’s a sneak peek into the third chapter covering Procurement Legislation.

Procurement legislation simply means the laws that govern the buying and selling of goods; a subject close to the hearts of all professionals.

Remain campaigners claim deviating from the rules of the EU Procurement Directives could cause the UK to effectively exclude itself from the EEA single market and erode or even end London’s status as the financial capital of Europe, with strong negative impacts on the wider economy.

In its 2016 Report, The Economic Consequences of Brexit, the Organisation for Economic Co-operation and Development said: “A UK exit (Brexit) would be a major negative shock to the UK economy. In some respects, Brexit would be akin to a tax on GDP, imposing a persistent and rising cost on the economy that would not be incurred if the UK remained in the EU.”

However, Leave campaigners argue that a Brexit would give the UK a valuable opportunity to disregard some of the more costly aspects of EU procurement legislation and instead adopt a more business-friendly legal regime.

In its 2013 report, Our Global Future: The Business Vision for a Reformed EU, CBI said: “The impact of poorly thought-out and costly EU legislation is a major issue for businesses: 52% of businesses believe that, were the UK to leave the EU, the overall burden of regulation on their business would fall.”

Answering this claim, Remain campaigners in turn contend that many EU Directives are enshrined in UK law, so a Brexit is unlikely to alter the UK’s procurement habits.

Mills & Reeve National Head of Procurement Law, Ruth Smith, and Mills & Reeve Trainee solicitor Tom Benjamin wrote in Procurement Law Today: “Whilst the EU Treaty and EU Procurement Directives would no longer apply in the UK, an ‘out’ decision would have no impact on the validity of the UK legislation put in place to transpose those Directives.”

Even if regulatory reform were to top a post-Brexit government agenda, the Government would be unable to disregard EU Directives, should it wish to remain part of the EEA single market.

Should the UK leave the EU but wish to maintain its single market trade arrangement, it would still have to adhere to EU legislation, but would lose any power to shape this legislation.

Read more about the economic implications of the EU referendum, with EU Referendum: The Ins and Outs for Business.

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