In this blog post, Philip Moser Q.C. of Monckton Chambers examines the public procurement aspects of the negotiations between the UK and EU, and the opportunities for reform post-Brexit.
On the 19 May 2020 the UK Government published its papers outlining the UK’s approach to negotiations for the Future Relationship with the EU. The main draft UK-EU Comprehensive Free Trade Agreement (CFTA) document runs to 292 pages, yet public procurement is only mentioned six times in the draft articles. In each case (with a minor exception for rules on electronic signatures for digital documents), procurement by public bodies is referred to only to exclude it from the terms of the CFTA. As far as the UK Government is concerned, the future EU-UK relationship ought not to include an EU-UK agreement on Government purchasing. As the Prime Minister made clear in a formal written statement to the House of Commons on 3 February 2020, public procurement falls into a select group of policy areas where the UK requires full sovereignty, viz:
“Future cooperation in other areas does not need to be managed through an international Treaty, still less through shared institutions. The UK will in future develop separate and independent policies in areas such as (but not limited to) the points-based immigration system, competition and subsidy policy, the environment, social policy, procurement, and data protection, maintaining high standards as we do so. Cooperation on foreign affairs and related issues is of course likely to be substantial, but does not in itself require a joint institutional framework.”
At present, the UK of course has its existing procurement law, derived from EU Directives, which due to the historic development of EU procurement law is contained in four separate instruments: The Public Contracts Regulations 2015, The Utilities Contracts Regulations 2016, The Concession Contracts Regulations 2016 and The Defence and Security Public Contracts Regulations 2011. Unless and until they are repealed and replaced, these will continue to apply post-Brexit. It appears, however, that at some point after the Transition Period has expired something will change about that fourfold UK regime. The Government has made clear its intention to join the WTO’s Government Procurement Agreement (GPA) and that it will base its procurement regime around the GPA (see: “UK set to become a party to the Government Procurement Agreement in its own right” on the WTO website, 27 February 2019).
Apparently, at meetings of the parties to the GPA, the UK is to all intents and purposes already treated as a party to the GPA. The GPA, being the plurilateral public procurement agreement within the framework of the WTO, provides for a number of basic procurement rules that would not look unfamiliar to any UK contracting authority or bidder, such as the publication of a notice of procurement, “open, fair and transparent conditions of competition” and “a timely, effective, transparent and non-discriminatory administrative or judicial review procedure”. The fundamentals may not be a million miles from the basic EU law principles of transparency, equal treatment and non-discrimination. The differences will be in the detail. It is, however, one area of the law where the platitude about a “Brexit on WTO terms” looks set to become a reality.
The GPA was identified by the UK and the EU as a sort of minimum baseline for procurement standards post-Brexit in the Political Declaration issued alongside the Withdrawal Agreement, at paragraphs 46 and 47, albeit with references to opportunities beyond their commitments under the GPA and that they would be “building on those standards”, being EU code for a more than minimal procurement regime:
“46. Noting the United Kingdom’s intention to accede to the WTO Government Procurement Agreement (GPA), the Parties should provide for mutual opportunities in the Parties’ respective public procurement markets beyond their commitments under the GPA in areas of mutual interest, without prejudice to their domestic rules to protect their essential security interests.
47. The Parties should also commit to standards based on those of the GPA ensuring transparency of market opportunities, public procurement rules, procedures and practices. Building on these standards, the Parties should address the risk of arbitrary behaviour when awarding contracts, and make available remedies and review procedures, including before judicial authorities.”
However, in line with the Prime Minister’s statement, public procurement is not mentioned in the UK’s negotiating mandate. As the Institute for Government’s helpful table comparing the UK and EU mandates notes: “The UK will develop a separate and independent policy for public procurement. It is not included in the mandate.”
By contrast, as suggested by the wording of the Political Declaration, the EU wants to negotiate an agreement on public procurement that goes beyond the GPA, and that also includes sectors the GPA does not cover, such as utilities. Public Procurement is covered in some detail in Part 2, Title X of the EU’s draft text of the Agreement on the New Partnership with the United Kingdom.
According to someone close to the negotiations, the UK and the EU are “very, very, very far apart” on public procurement.
Whilst it remains unclear to what extent post-Brexit UK procurement law will be a copyout of the GPA, with a national remedies section, or merely a lightly-adapted version of the existing UK Regulations, this moment does present an opportunity to reimagine UK procurement law.
At present, being based on EU Directives, the principal objective of procurement law in the UK is “to ensure the free movement of services and the opening–up to undistorted competition in all the Member States” (see e.g. Case 26/03 Stadt Halle and RPL Lochau [2005] ECR-1, paragraph 44). In a jurisdiction outside the EU, that objective makes little sense. Indeed, viewed from a non-EU vantage point, the emphasis on free movement only between Member States sounds more protectionist than pro-free trade. It may be, for instance, that the principal objectives of post-EU UK procurement law should instead be value for money and the prevention of corrupt practices.
Perhaps of greatest interest will be the remedies post-Brexit UK procurement law will provide, and whether these will continue to be exclusively reserved to the High Court. There could, for instance, be a first-level administrative review body (with judicial review of its decisions on administrative law principles). There is something to be said, at least for lower-value procurements, for a ‘cheap and cheerful’ form of initial review. However, for complex, high-value cases the standard and intensity of High Court review will continue to be required. To cite one example, the outcome in the claimant’s favour – including the very high settlement sum – in EnergySolutions EU Ltd v Nuclear Decommissioning Authority [2016] EWHC 1988 (TCC) would not have been achieved without full disclosure and lengthy cross-examination.
Having said that, the damages remedy itself may be up for debate. Thus, GPA Art. XVIII.7(b) allows compensation to be limited to “either the costs for the preparation of the tender or the costs relating to the challenge, or both”. Whilst it is hard to imagine such a limitation in the UK jurisdiction, which has possibly the most generous damages regime in Europe, it is at least theoretically possible.
Similarly, the GPA has none of the “modern” remedies: introduced in the EU in the 2007 Remedies Directive, such as a standstill obligation, automatic suspension of the award, the remedy of ineffectiveness and related financial penalties such as contract shortening.
It remains to be seen how the UK decides to implement the GPA in UK law. It could be a welcome simplification of the four lengthy domestic Regulations, with their various different types of procurement procedures. The core obligations of transparency, equal treatment and non-discrimination look set to survive in any event, whether expressly or as “open, fair and transparent conditions of competition”, which any UK Court would likely interpret in much the same way. UK procurement law might be freed from the weight of some of the complexity wrought by a succession of Directives and decades of CJEU decisions, which could be scraped away by a new unified law, although that may yet depend upon how many barnacles the domestic Courts will decide to re-attach over the years to come.