The current EU-based system for public procurement will be replaced by a new domestic system in the event of a ‘no-deal’ Brexit. In this ‘what you need to know guide’ we explore the implications of this for UK businesses.
The Government has released the second tranche of technical notices offering guidance to business in the event of a ‘no-deal’ Brexit which brings into focus a worrying scenario for UK firms currently reliant on access to procurement markets across the 27 EU member states.
What could happen post-Brexit?
In the event of ‘no deal’ the default for public procurement would be a return to WTO rules. The UK would lose mutual rights of access to public procurement markets which could see UK companies overlooked or discriminated against when it comes to supplying the EU, potentially putting our firms at a disadvantage when it comes to lucrative contracts.
In addition to the access to the EU procurement market, the UK (as an EU member) is a signatory of Government Procurement Agreement (GPA) – a separate, voluntary trade agreement under the WTO. To retain access the EU market, as well as the market of 20 other countries including United States and Japan, the UK would most-likely need to re-join this though it is unclear how complex and lengthy this process may be.
"With the UK’s procurement market valued at just £260 billion (or 13.6% of UK GDP), businesses will be concerned by the potential loss of access to the much larger EU market and will be hoping that a deal can be reached before the leave date of March 29th 2019."
How is the government preparing for a ‘no deal’ scenario?
Under current EU rules, contracts that fall under European procurement directives are advertised through the Official Journal of the European Union (OJEU) via Tenders Electronic Daily (TED). The government’s contingency plans outline that, in the event of a ‘no-deal’, the UK will create a new UK-based portal or e-notification that will be active as soon as the UK secedes from the EU. The guidelines state that the new UK-based portal will be “in line with the current requirements to send notices to the EU Publications Office for publication on OJEU/TED”.
Free to all users, the new portal will not replace current domestic portals such as Contracts Finder, Sell2Wales and Public Contacts Scotland; businesses will still be required to advertise on these portals in addition to the new e-notification service just as they would currently be in addition to OJEU or TED.
What do we stand to lose?
As part of the terms of the UK’s membership of the EU, UK firms currently enjoy access to a Europe-wide procurement market worth £1.6 trillion, according to 2015 estimates by the Institute for Government. In the event of a no-deal Brexit, the UK would lose its current access to this market. With the UK’s procurement market valued at just £260 billion (or 13.6% of UK GDP), businesses will be concerned by the potential loss of access to the much larger EU market and will be hoping that a deal can be reached before the leave date of March 29th 2019.
As chambers of commerce representing London, Greater Manchester and Bristol we are continuing to gather evidence for a campaign – Terms of Trade: the reality of Brexit for business – exploring the everyday impacts of the most widely discussed Brexit scenarios on business through our members’ own insights. Email email@example.com to share your views.