Does a Conservative win mean a radical overhaul of public contracting?


Having won a sizeable majority in last week's election, Boris Johnson now has the opportunity to press ahead with plans to shake up government procurement policy and reform the procurement rules. It is expected that the UK will formally leave the EU on 31 January and new public procurement rules are proposed to be in place for the beginning of 2021.

What would the new rules look like?

In a keynote speech during the election campaign, Boris Johnson promised to use Brexit to introduce procurement policies to support the local economy and to make major reforms to the public procurement rules. These proposals came on top of previous pledges that a Conservative government will rip up red tape and overhaul the procurement rules to benefit small businesses, opening up a larger share of the (approximate) £290bn annual public procurement spend to them, and reducing reliance on the largest suppliers.

The new rules will need to comply with the UK's obligations under the WTO Government Procurement Agreement (GPA), which the UK will join as an independent member once it is outside the EU. The GPA operates on the same underlying principles as our current EU-based procurement rules, and its provisions are similar in substance, though considerably less prescriptive in their detail. Indeed many of the principles for the new rules, as set out in the press notice accompanying the campaign speech, such as integrity, equal opportunity and fair and equal treatment, align with GPA principles (and the principles underlying the EU rules). Within these parameters there would be scope to omit the more detailed "red tape" that some think deter small businesses under our current rules.

But the stated principles for the new regulatory framework also include the effective implementation of industrial objectives. Seemingly this is the underpinning for more detailed rules geared towards promoting local businesses and supporting local economies. We have yet to see how such rules would be framed and the campaign speech is vague on how far a more protectionist/"buy British" procurement policy would be taken. However, as a policy objective it is difficult to reconcile with the equal treatment/non-discrimination principle that is set out in the GPA, and that is likely to underpin the procurement commitments which the EU will be seeking in a future trade deal with the UK. It also appears to be at odds with the principles of equal opportunity and equal treatment already mentioned as principles for the UK's new rules.

A balancing act

The UK's freedom, once fully outside of the EU, to put in place a procurement policy and regulatory framework to promote domestic business will need to be balanced against its objectives in negotiating new trading relationships with the EU and other countries (and it is still open to the UK to renegotiate its GPA coverage should it wish to do so in the future), where access to the UK's procurement market will be on the negotiating table. It will inevitably involve trade-offs when weighing up the relative benefits of giving UK suppliers greater access to public contracts, through rules that favour "buying British", against the potential costs for UK suppliers in terms of limiting their bidding opportunities outside the UK, and for procuring entities if this were to result in a smaller pool of bidders to call on, with less choice and reduced competition in the tender process.

Wider debate

The reform of UK procurement law and policy will thus take place within, and will have to take account of, the wider policy debate over the UK's future industrial policy, its future relationship with the EU and trading arrangements with other nations. That debate has barely begun. It could lead to a final position that is less protectionist than the Conservative party campaign promises might suggest. It is far from clear what the eventual new procurement framework might look like and the aspiration to have it in place by 1 January 2021 seems ambitious to say the least.

We shall be following the debate, to update you on developments and how they are likely to affect you.

Key Contacts

Jonathan Davey

Jonathan Davey

Partner, Commercial Services
United Kingdom

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Michael Rainey

Michael Rainey

Partner, Commercial
Manchester, UK

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Bill Gilliam

Bill Gilliam

Partner, Dispute Resolution
Leeds

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