The UK Government published a Green Paper earlier this week, proposing a number of changes to how the UK public procurement regime operates.
The end of the Brexit transition, and the Government Procurement Agreement
When the Brexit transition period ends at 11pm on 31 December, the UK will be free to set its own rules on public procurement (subject to the terms of any deal which may or may not be struck before the UK makes any changes). Currently UK procurement rules – predominantly the Public Contracts Regulations 2015 and, in Scotland, the Public Contracts (Scotland) Regulations 2015 – simply apply the EU Public Procurement Directive. In the immediate aftermath of the end of transition they will largely continue to follow those rules, subject to some amendments to reflect the UK’s new status outside the EU procurement regime (see our February 2019 post for an early overview of those amendments).
However, the UK’s freedom to set its own rules will still be somewhat constrained, as the UK will also become a party to the World Trade Organization rules on public procurement – the Government Procurement Agreement (“GPA”) – in its own right. The UK procurement rules are based on the EU procurement Directives, which in turn are compliant with the rules of the GPA. This means that UK businesses bidding for contracts outside the EU, and non-EU businesses bidding for contracts within the UK, will be able to carry on much as before. However, as the GPA is not quite as strict as the EU rules in certain areas, EU businesses bidding for UK contracts and UK businesses selling to EU authorities may notice more significant changes. These changes will come regardless of the terms of any UK-EU trade deal, as the UK continuing to be bound by the EU’s rules does not appear to have formed part of the negotiations.
EU procurement thresholds are already set based on the GPA thresholds and so there will not be any material change to what qualifies as an “above-threshold” procurement. However, below-threshold contracts are not covered by the GPA and so there is no requirement under the GPA to, for example, avoid discriminating in favour of domestic firms. The GPA also has a more limited scope when it comes to, for example, private utilities and government-subsidised contracts.
The proposed UK procurement reforms
The UK Government’s Green Paper proposes to take advantage of the switch from EU to GPA procurement rules to make a number of changes to the UK public procurement regulations. Those regulations apply to England, Wales and Northern Ireland, and to procurement in Scotland by authorities with reserved functions (e.g. the Ministry of Defence securing supplies for a Scottish base). The key proposed changes are:
- require compliance with the principles of value for money, the public good, transparency, integrity, efficiency, fair treatment of suppliers and non-discrimination (current EU law requires compliance with equal treatment, transparency, mutual recognition and proportionality but is not primarily concerned with value for money, public good or efficiency);
- replace the existing suite of different regulations for the public sector, utilities, concessions and defence contracts with a single set of procurement rules for all public contracts (albeit these will include specific rules for specific types of contract as required);
- replace existing procedures with three “simple, modern procedures” – an open procedure for off-the-shelf purchases (presumably akin to the existing open procedure), a flexible procedure that gives buyers freedom to negotiate (which would seem to replace the existing competitive dialogue and competitive procedure with negotiation options) and a limited procedure for urgent or emergency purchases;
- a single digital platform that allows suppliers to enter their details once and then bid for any public sector procurement opportunity (a sort of combination of the Official Journal of the European Union and the European Single Procurement Document);
- a new type of Dynamic Purchasing System that can be used for any type of procurement (the list of providers on such a DPS system is anticipated to be an “open” one that will change over time);
- a new requirement to publish contract amendment notices (to replace VEAT notices in amendment situations);
- automatic exclusion of bidders who do not reveal their ultimate beneficial owner(s) or whose beneficial owner would themselves be excluded, for example for previous criminal conduct (previously the EU courts have decided that it is only the eligibility of the bidding entity itself that matters);
- an ability for contracting authorities to include economic, social and environmental criteria that do not relate directly to the subject matter of the contract – part of the Government’s plan to send a “clear message” that buyers do not need to select the lowest price bid and ought to consider value for money more broadly, including social value objectives; and
- a faster system for legal challenges to procurement decisions, including the potential for a specialised procurement tribunal for low value claims and ongoing procurement exercises, capped damages, an end to automatic suspension in urgent situations (including a change to the current test on when the suspension can be lifted), and an end to the requirement for every bidder to receive an individualised debrief letter – this final set of proposals could make it significantly harder for aggrieved bidders to challenge procurement exercises.
The UK Government is consulting on the proposals until 10 March 2021.
The Scottish public procurement rules
Public procurement is a devolved matter, and the Scottish Government has so far not given any indication that it will take a similar path to that being consulted on by the UK Government. Indeed, there would be tension between such an approach and the Scottish Government’s policy desire to maximise ongoing alignment with EU rules. The Scottish Government may, however, explore taking a similar approach to social value objectives, even if only within the limits (as it sees them) of the EU procurement directives.
As a result, public procurement law in Scotland and the rest of the UK is set to diverge, and suppliers working across the UK will – notwithstanding the UK Government’s stated desire for simplification – face an even more complex task navigating the different sets of rules than before. To make matters more complicated still, given that the new UK rules will apply to UK Government bodies procuring goods, services and works in Scotland (and that the UK Government intends to spend more money directly in Scotland), Scottish suppliers may regularly need to deal with two increasingly different procurement regimes.
From the end of the transition period, new above-threshold procurement exercises will be published on a new UK-wide e-notification “Find a Tender” Service (to be referred to as “FTS”), a replacement for the OJEU/TED system currently used. An email from Public Contracts Scotland to users this month confirmed that procurements initiated after the end of the transition period will automatically be placed by PCS on FTS. The UK guidance suggests that most eSenders are also ready to switch from OJEU to FTS at the end of the transition period so can continue being used as before.
Procurement exercises that were commenced prior to the end of transition, meaning that a notice appeared on OJEU / TED, will continue to have notices published in OJEU as well as on FTS (and PCS where applicable) and be governed by the pre-transition rules. It will therefore be necessary for authorities and bidders to navigate multiple procurement regimes for some time to come.