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The vote to leave - Brexit and public procurement

24 June 2016

In the wake of the vote to leave the European Union contracting authorities will be dealing with a vast amount of uncertainty and potential change. Here we take a look at the UK procurement regulations, which were implemented to comply with an EU directive, and consider what the impact of the referendum result might mean.

Overall, we are expecting there to be little change. In the short-term, the current rules will continue to apply as the UK seeks to negotiate a deal for trading with the EU. If we wish to remain part of the European Economic Area (EEA) then we will be required to continue to be subject to the EU directive on public procurement and the UK regulations will stay in place as they are. Even if we do not remain part of the EEA, the Government’s worst case scenario for Brexit involves using the mechanisms of the World Trade Organisation (WTO). The WTO has its own procurement regulations based on the principles of transparency and procedural fairness. Currently, a number of WTO members are subject to the rules including, among others, the EU, the US and China. It is likely that the UK would join these important trade partners in agreeing to follow the WTO procurement regulations, resulting in little change in domestic law.

Even if the UK were not required to follow international procurement agreements, there is still a strong possibility that the UK procurement regulations would not change. The reason for this is that the procurement rules primarily aim to ensure openness and fairness in public procurement, goals which are not necessarily tied to European or other international integration.

We currently follow the EU treaty principles of transparency and equal treatment in all procurement processes. The aim of these is to allow for the accountability of contracting authorities. The current culture in the UK is strongly in favour of mechanisms ensuring public transparency and accountability, highlighted in recent years by the public outcry over the MP’s expenses scandal. Contracting authorities should be clear that leaving the EU does not mean leaving behind public procurement processes and any changes to the current regime will not likely see any significant change to the way public procurement is run in the UK.

A further important consideration is the General Data Protection Regulation (GDPR). The GDPR will provide an updated and harmonised data protection law for Europe. EU organisations need to comply with its provisions by 25 May 2018. Following the referendum result, the UK's Data Protection Minister at the Department for Culture Media and Sport has stated that if the UK remains as part of the single market, EU personal data law will remain applicable in the UK. However, in any other situation, national law could replace current EU data protection law. It is likely that the two year process to leave the EU will finish after the GDPR comes into force on 25 May 2018. This means that the UK must ensure it has replacement domestic legislation in place which can be applied instantly on Brexit. In the unlikely event that the UK leaves the EU prior to 25 May 2018, the GDPR will not apply to the UK.

An additional issue to be aware of is the recent High Court ruling in R (Gina Miller and Deir Tozetti Dos Santos) v The Secretary of State for Exiting the European Union [2016] EWHC 2768 (Admin). The High Court held that the Government could not use a Royal prerogative power to give notice of the UK’s withdrawal from the EU under Article 50 of the Treaty on European Union. This meant that the Government could only give notice under Article 50 after the passing of an Act of Parliament. This case has had substantial constitutional significance as it deals with fundamental legal issues. Ultimately, only time will tell how Brexit will impact procurement, as until decisions start to be made we can only guess what the future of public procurement will look like.

Brexit and beyond: navigating the challenges ahead

Our Brexit hub provides useful information on the key areas that are likely to be affected by Brexit, the priority issues for any business or organisation and practical guidance to help you navigate the challenges ahead.

Visit the Brexit hub >

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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