Procurement ‘important area’ for Brexit talks

A document drawn up for the European Parliament covering the nature of public procurement between the UK and EU post-Brexit has highlighted four scenarios.

The report said the value of EU public spending on goods, works and services in 2015 amounted to 13.1% of EU GDP and 13.6% of UK GDP. The value of tenders published on the EU’s electronic database for public procurement represented 3.1% of GDP for the EU and 4.9% for the UK.

“The EU has sought to include provisions on opening up of these procurement markets in all its trade agreements and is likely to be concerned to ensure a future opening of these markets between the EU and UK after the UK’s withdrawal from the EU,” said the report, which was prepared at the request of the Parliament’s Committee on Internal Market and Consumer Protection.

The report said EU trade agreements covering public procurement generally featured four key elements:

  • A set of provisions defining what procurement is covered (which entities and size of contracts)
  • Rules prohibiting discrimination in awarding contracts
  • Rules governing the drafting of specifications and award of contracts
  • Provisions for enforcement

The report said four models were relevant to any discussion of EU/UK public procurement post Brexit, and these were:

1. The European Economic Area (EEA) Agreement model, which represents current EU procurement law.

2. The WTO Agreement on Government Procurement (GPA), whose rules are much looser than EU law.

3. EEA-minus, which uses the EEA Agreement but without all its elements.

4. GPA-plus, which adds to GPA provisions. GPA-plus is the approach currently being pursued in negotiations with the US in the Transatlantic Trade and Investment Partnership.

The report said in the event of the UK leaving the EU with no trade deal in place and falling back on WTO rules, “the position of the UK in relation to the GPA post-Brexit is not clear”.

“One view is that the UK needs to rejoin the GPA after Brexit if it is to undertake commitments and receive benefits under the Agreement. Another view is that succession to the Agreement by the UK is possible, with no new application required.”

The report said any withdrawal agreement would need to consider measures to address the consequences of changing from one procurement regime (the EU one) to another and transitional measures to address the fact the ultimate shape of the EU-UK relationship is undetermined at the point of Brexit.

“If the final relationship is indeed undetermined when Brexit occurs, it seems likely that the UK’s current procurement regulations transposing the EU directives will remain in place pending any final determination of that relationship in public procurement,” said the report.

“However, given the absence of significant WTO rules at multilateral level, an interim EU-UK access arrangement might still be needed in a withdrawal agreement to secure rights for EU regulations pending any final agreement or… pending the UK’s accession/succession to the GPA.”

The report said any agreement would need to consider issues including treatment of ongoing award procedures, remedies for violations when proceedings are begun after Brexit, retention of records, treatment of ongoing framework agreements, qualification systems, dynamic purchasing systems and e-procurement rules.

“Public procurement is an important area to consider in the Brexit negotiations,” said the report.

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