The wind beneath our PINs? Procuring in post-‘Brexit’ UK

United Kingdom
How would the UK’s procurement regime operate in a post-Brexit UK? Does our procurement regime need the guiding hand of Europe to survive or would it thrive without it?

Once upon a time …

It is easy to forget that the UK had a procurement regime before joining the EU. There was, however, very little national legislation with public bodies simply regulating themselves through their own formal tendering process. These processes were there for many of the same reason the EU procurement framework exists today: to provide best value for money to limit practices such as bribery and corruption.

However, world trade has progressed significantly and it is unlikely that public bodies or contractors conditioned by a heavily regulated EU procurement regime could or, indeed, would want to revert back to that unregulated approach.

It is more likely that the UK government would adopt similar channels of procurement which would mirror, to an extent, the rules and regulations already in place. Whilst EU directives would no longer have application in the UK, the UK legislation put in place to transpose those directives would continue to have effect. In reality it is likely that the UK government would leave this legislation largely unchanged and could choose, on a voluntary basis, to adopt any further changes coming from Europe.

Happily ever EFTA?

Of course, depending on the settlement achieved, the UK would need to have some continued relationship with the EU. There is the possibility that, like Norway, Liechtenstein and Iceland, a newly independent UK could become a European Free Trade Association (EFTA) member and join the European Economic Area. The main benefit of this would be that the UK could gain access to EU negotiated free trade agreements worldwide, thereby controlling the cost of exporting and importing goods to and from the UK.

As an EFTA member, the UK would be required to apply the public procurement rules contained in Appendix R to the Convention establishing the EFTA. That, in itself, should not be overly problematic but the entry requirements to the EEA prescribe that members must apply the EU procurement directives. Not only would this mean that the features of the current EU framework that have been criticised in the UK would persist, but as a non-EU Member State the UK would have no influence in the creation, amendment or applicability of these rules.

If one of the desired effects of leaving the EU is increased control over such policies then this is not the answer.

Does Switzerland have the answer?

Switzerland is a member of EFTA but not a member of the EU or the EEA and therefore is not bound by the ties of the EU procurement regime. It instead conducts its relationship with the EU on the basis of bilateral sectoral agreements. The effect of this on the Swiss procurement regime is that Switzerland must extend the procurement rules imposed on it by virtue of its membership of the World Trade Organisation to all public sector procurement and some private sector bodies.

This approach appears to work very well and Swiss suppliers can compete under the same conditions as their European competitors in public tenders and foreign suppliers gain free access to the Swiss market which encourages competition.

The Swiss people have ratified this approach on various occasions and it certainly appears to be a clear reference point for the UK in its negotiations with the EU should a Brexit become reality.