Out-Law Analysis 3 min. read

BREXIT: Changes to procurement regulations unlikely in aftermath of vote regardless of result, says expert

FOCUS: It is unlikely that there will be significant changes to public procurement regulations in the UK in the short to medium term after the UK's referendum on EU membership regardless of the result.

This is part of Out-Law's series of news and insights from Pinsent Masons lawyers and other experts on the impact of the UK's EU referendum. Sign up to receive our Brexit updates by email.

Within the UK, the EU procurement regime is now well established as the framework within which utilities and public bodies must conduct their purchasing. Whilst initially perceived as unwieldy and restrictive, such purchasers are now well versed in the need to navigate the procurement pitfalls and increasingly look to the regime to maximise competition, achieve value for money and, particularly in light of the reforms introduced by the new EU procurement directives, seek to achieve social benefit and innovation in their purchases.

With the Brexit referendum looming on 23 June then, the question for many, whether those who embrace the regime, or those who might see an EU exit as a welcome escape from the perceived complexity and onerous restrictions of regulated procurement, is what impact the UK's withdrawal from the EU might have on procurement regulation?

Although there are a large number of unknowns that could shape what the answer is, a change of tack on procurement policy is unlikely to be pursued by policy makers in the UK in the immediate months and years after any 'out' vote.

Whilst the Treaty on the Functioning of the European Union and directives from which the procurement rules in the UK derive would cease to have effect, an 'out' vote would have no immediate impact on the validity of UK procurement laws. In England, Wales and Northern Ireland the main rules are the Public Contracts Regulations 2015 and the soon to be Utilities Contracts Regulations 2016 and Concessions Contracts Regulations 2016. Although still rooted in EU law, different rules apply in Scotland.

Until repealed or reformed, this legislation will continue to regulate purchasing. Moreover, in the aftermath of an 'out' decision, reform of procurement law seems unlikely to be top of the government's 'to do' list.

There was no single consolidated set of public procurement rules in place  in the UK before the first tranche of EU legislation was implemented, but there was nevertheless a pre-existing regulated procurement regime. This included compulsory tendering for local authorities, for example. Like the EU system, these rules existed to achieve best value for money when expending public monies and to ensure accountability and freedom from bribery and corruption. It is highly likely therefore that, even if the existing regime were to be repealed, another very similar regime would take its place.

It is unlikely that the public sector, nor indeed those who supply to it, would embrace an unregulated approach to procurement.

Whilst at a practical level there may be a mixed appetite for procurement regulation, this has not been reflected in how EU law has been implemented in the UK. In fact, quite the contrary. The UK's approach has been to go beyond the minimum requirements set by EU law. An example of this is the incorporation of the 'Lord Young reforms' in the Public Contracts Regulations and use of the Cabinet Office standardised pre-qualification questionnaires in England and Wales, and the steps being taken throughout the UK to encourage the use of social objectives in purchasing.

If the UK votes to leave the EU the UK would still need to have some form of continued relationship with the EU and this might, in some scenarios, mean adopting EU procurement rules.

If the UK adopted a similar relationship with the EU to Norway and Iceland and became a member of the European Free Trade Association (EFTA) – the main benefit being so that it could gain access to EU free trade agreements – the UK, as an EFTA member, would still need to adopt the EU procurement rules. In that scenario, not only would the UK still be stuck with the current rules, as a non-EU member state, it would have no influence on their content.

Whilst there is uncertainty over what the consequences of an out vote might be, from a procurement perspective at least, it seems highly unlikely that the procurement landscape will change quickly. Like it or loathe it, for the foreseeable future at least, procurement regulation seems here to stay.

Kerry Teahan is an expert in public procurement at Pinsent Masons, the law firm behind Out-Law.com

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