Procurement and state aid update: preparing for Brexit

Business meeting 16 Print publication

21/09/2018

On 13 September 2018, the UK government published further guidance on the future of public procurement in the UK in the event of a “no deal” Brexit.

What next for UK public procurement?

Under current rules, all procurement opportunities that fall within the scope of the EU procurement rules are advertised in the Official Journal of the European Union (OJEU) via Tenders Electronic Daily (TED). This provides contractors with notice of new available opportunities and enables contractors to identify and bid for relevant contracts.

Procurement opportunities below the relevant EU thresholds can be advertised on a number of domestic UK portals including Contracts Finder, Public Contractors Scotland, Sell2Wales and eTendersNI.

In its guidance on “Accessing public sector contracts if there’s a no Brexit deal” available here, the UK government sets out its advice in relation to how existing bidders for UK public contracts and public sector buyers would be able to access and publish future UK public procurement contract opportunities in the event of a no deal Brexit.

Deal – if there is a Brexit deal UK public authorities might continue to be able to access the OJEU depending on the agreement that is reached in relation to public procurement;

No Deal – the UK would no longer be able or required to publish public sector contracts in the Official Journal of the EU via Tenders Electronic Daily (TED). The UK would then need to establish its own procurement database which would be used by the public sector to advertise tenders after Brexit. The guidance states that “a replacement UK-specific e-notification service will be made available.” All contracts that are currently advertised in the OJEU/TED would then be advertised instead on the new UK e-notification service.

In particular, the guidance states that in relation to public procurement:

  • public sector authorities which procure via OJEU/TED will be contacted to ensure that they are familiar with the new UK e-notification should one be required in the event of a no deal Brexit
  • private sector suppliers wishing to access relevant UK procurement opportunities will need to access the new UK e-notification service. Suppliers will able to continue to access Contracts Finder, Public Contractors Scotland, Sell2Wales and eTendersNI
  • private sector suppliers wishing to access contract opportunities from the EU may continue to do so via OJEU/TED.

In either scenario (deal or no deal), it is likely that public procurement rules will continue to apply in substantially the same form as the Public Contract Regulations 2015. The UK government has announced that it is aiming to accede to the WTO Agreement on Government Procurement (GPA) in the event of a no deal. Many of the rules under the GPA align with existing EU rules on public procurement. In the event of a deal, the EU is likely to require substantial compliance with EU procurement rules.

What next for UK state aid?

In relation to state aid, the UK government announced in March 2018 that state aid regulation will continue to apply in the UK post Brexit and has announced that the Competition and Markets Authority will become the new regulator for state aid. Unlike the EU, the WTO has no procedure under which subsidies and other forms of state support (countervailing measures) are notified and approved.  It can however impose sanctions and the assumption must be that nothing of underlying substance will necessarily change.

Deal/No Deal – there is still some uncertainty as to which rules precisely will apply and the detail, for instance, in how disputes between the EU and the UK/CMA will be settled and how disputes between the CMA and the UK government will be settled (perhaps by judicial review).

We expect the CMA to continue to gear up its state aid function by recruiting staff and that the UK government will enact secondary legislation for new UK state aid rules to apply. Again, any new UK rules are likely to mirror EU state aid rules broadly in either scenario.

If you require any advice or assistance on any of the points raised above, then please contact David Kilduff, Richard Auton or Richard Butterworth.

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