National Audit Office publishes report on Brexit consultancy expenditure

Well, it looks like today is transparency day in the blog as the NAO has just published a report on the spend by Central Government with consultants for Brexit related matters. Predictably it makes for grim reading and here’s a bit of the press release (the final paragraph):

The NAO found that departments have not met the standards of transparency expected by government when publishing details of contracts for EU Exit consultancy. In December 2017, the Crown Commercial Service issued guidance to encourage greater transparency in government procurement. It recommended that departments publish basic information about the award of contracts within 90 calendar days. However, the NAO found that it has taken on average 119 days for basic details of EU Exit consultancy contracts to be published, compared to 82 days for all consultancy contracts. The NAO also found that in its review of contracts for EU Exit consultancy that some had not been published as recommended, and all that had been published were significantly redacted.


That’s one well buried lede.


Some thoughts on the frustrations of carrying out Brexit-related research (in the UK)

Myself and Albert co-authored a blogpost at the University of Bristol’s Law School blog reflecting on the frustrating state of trying to undertake EU law research in these times of Brexit and fitting it into the good old REF framework. Here’s a snippet:

Brexit, its research and its teaching are increasingly becoming a field of study on their own—see eg the illuminating contributions to the special issue edited by C Wallace & T Hervey on ‘Brexit and the Law School’ (2019) 53(2) Law Teacher 133-229, some of which build on the earlier series of SLS ‘Brexit and the Law School’ Seminars, one of which Albert had the pleasure to host at the University of Bristol Law School in July 2017. This seems rather natural, as it is hard to overstate the impact that Brexit is having on the work of academics active in all areas, but particularly for public and EU law scholars. In this post, we offer some personal reflections on the frustrations of carrying out Brexit-related research, some of which are related to Brexit and its unforeseeability, while others are derived from more general constraints on the ways legal research is published and assessed.

UK (re)joins the GPA

The GPA members and the UK have reached an agreement allowing for the country to acceed to the Agreement if and when it leaves the European Union. This agreement ensures a continuity of the international procurement legal regime for UK-based undertakings and those based on the GPA members.

Back in 2017 myself and Albert Sanchez-Graells concluded that the UK was not a party to the current GPA in its own right and would have instead to apply for accession. Our colleague Ping Wang from Nottingham reached a similar conclusion.

In the paper we posited that the accession could follow a streamlined process but we assumed that even then it would take a significant amount of time. In this instance we were proved wrong, with the accession ocurring quicker than we anticipated.

Regarding possible change to the UK's legal regime(s) post-Brexit, we remain convinced that the accession to the GPA limits the scope of the changes that can be introduced.

Department For Transport sued for *that* ferry contract

Eurotunnel is suing the Department for Transport due to the ferry contract(s) awarded back in December without proper tendering procedures. This turn of affairs is not really surprising and a logical consequence of the poor handling of those contracts.

The merits of the actual complaint, they appear obvious. In my opinion, the use of the negotiated procedure without prior publication based on the grounds for extreme urgency was not legal since said urgency arose from a lack of timely action by the Government. In other words, incompetence by the contracting authority is never a ground to use a non-transparent procedure. It has been public since March 2017 that the departure date from the Union is scheduled for 29 March 2019, therefore the lack of preparation for the consequences of the default scenario for such departure (no-deal Brexit) runs from that moment as well and is not unforeseen (or unforeseeable). This is pretty much well established at EU level and probably one of the reasons why the rules about contract notice transparency are as draconian as they are.

As Albert and myself said back in 2016 about Regulation 32(2), the negotiated procedure without prior notice is exceptional in nature and as such its grounds need to be interpreted strictly as not to create competitive distortions. And the latter seems to be exactly what happened in this instance.

PS: As for piling on Chris Grayling for spending £800k on consultants to prepare the contracts that is probably uncalled for based on the total amount being procured and that time was of the essence (which is different than saying the grounds for the negotiated procedure were met). And let’s not forget one of them actually flagged up Seaborne Freight lack of trading history as a risk factor. That no one heeded such advice, on the other hand, is more than fair game.

Some thoughts on the Brexit "no deal" guidance for public procurement

The UK Government published recently a guidance note on the potential impact for public contracts access in case there is no deal with the EU before March 29 2019. There is not really much actionable information and perhaps calling it “guidance” is a slight misnomer as the document is more of a “heads up, this may happen” type of document.

Post March 29 2019, the Government implies that UK contracting authorities will be using a new UK-based e-notification service instead of OJEU/TED. However, there is no information whatsoever about this new service, who will set it up, by what date and how it will operate. In short, it adds no legal certainty to the implications of the UK departure. It might have been preferable to simply refer to the need to use Contracts Finder and similar regional portals for the time being instead of re-inventing the wheel once more.

Looking into the part about procedures ongoing at that date also yields reasons for concern. Here’s what the guidance contains:

“There will be more engagement on about how to deal with ongoing procurement procedures in the handover period between the two systems nearer the time. This will be described via appropriate communication channels and in guidance, which will be made available on GOV.UK.”

Again, not exactly reassuring. What will happen to those situations whereby the contracting authorities (and suppliers) are reliant on the European Single Procurement Document or e-Certis and associated databases to get data about economic operators taking part in ongoing procedures? And would the EU economic operators (and GPA ones) lose their status halfway through the procedure?

Finally, a word about the GPA. The guidance confirms that the UK is seeking individual accession to the agreement (as forecast by myself and Albert Sanchez-Graells). As the accession request was submitted in June 2018, the process will take time and it is simply impossible that the accession would be wrapped up by the end of March 2019. In consequence, UK economic operators would not only lose access to the EU procurement market but also to those of GPA members. As for economic operators from GPA countries, it would be up to the UK to decide how to treat them, but even if they were admitted to tendering doubts will remain about their eligibility for remedies.



Brexit and public procurement: new working paper

Myself and Albert have just made available on SSRN a new working paper on Brexit and public procurement, focused mostly on the transition agreement. As usual, we welcome comments and criticism.

Here's the abstract:

On 29 March 2017, the UK notified its intention of leaving the EU. This activated the two-year disconnection period foreseen in Article 50 TEU, thus resulting in a default Brexit at the end of March 2019. The firming up of a draft agreement on a transition period to run until 31 December 2020 can now provide a longer timescale for the Brexit disconnection, as well as some clarity on the process of disentanglement of the UK’s and EU’s legal systems. The draft transition agreement of 19 March 2018 provides explicit rules on public procurement bound to regulate ‘internal’ procurement trade between the UK and the EU for a period of over 15 months. However, the uncertainty concerning the future EU-UK relationship remains, and the draft agreement does not provide any indication on the likely legal architecture for future EU-UK trade, including through public procurement. The draft agreement has thus not suppressed the risk of a ‘cliff-edge’ disconnection post-Brexit, but rather solely deferred it. The transition is currently not into an alternative system of procurement regulation, but rather into the void. There have also been very limited developments concerning the UK’s and EU’s repositioning within the World Trade Organisation Government Procurement Agreement (WTO GPA), which creates additional legal uncertainty from the perspective of ‘external’ trade in procurement markets due to the absence of a ‘WTO rules’ default applicable to public procurement.

Against the backdrop of this legal uncertainty, this paper critically assesses the implications for public procurement of the March 2018 draft transition agreement. In particular, the paper identifies three shortcomings that would have required explicit regulation: first, the (maybe inadvertent) exclusion from the scope of coverage of the of the draft transition agreement of procurement carried out by the EU Institutions themselves; second, the continued enforcement of the rules on contract modification and termination; and third, the interaction between procurement and other rules. The paper also and flags up some of the areas for future EU-UK collaboration that require further attention. The paper then goes on to revisit the continued uncertainty concerning the EU’s and UK’s position within the WTO GPA. It concludes that it is in both the UK’s and the EU’s interest to reach a future EU-UK FTA that ensures continued collaboration and crystallises current compliance with EU rules, and to build on it to reach a jointly negotiated solution vis-a-vis the rest of WTO GPA parties.

De La Rue drops challenge to passport contract

Can't really say I am surprised by De La Rue's decision, but the motives are a joy to read:

"We've done our homework, we've taken legal advice, we've looked at, frankly, the likelihood of overturning the decision and the sensible thing for us to do is to refocus our efforts elsewhere and to move forward."

and

"Following four weeks of intense consideration and clear legal advice, we have taken the decision not to challenge the award of the UK passport contract."

Seriously, was that no evident already two weeks ago? Or was it all an outburst to be seen doing something?

Bonus points for burying the news of the profit warning with the announcement of dropping the challenge. It will be interesting to see if the "profit warning should lead to lost contracts" brigade which sprung after Carillion's demise will be calling for their pound of flesh of De La Rue now.   

Timely reminder that EU public procurement remedies are still in force in the UK

Building upon two week's ago decision to award the first post-Brexit UK passports to an Franco-Dutch (Dutch-French?) company, it seems De La Rue is initiating proceedings to get the award decision reviewed.

This is yet another timely reminder EU law is still applicable in the UK since the Public Contracts (Amendment) Regulations 2009 tranpose Directive 2007/66/EC.

As for the grounds from De La Rue, based on the public reports, it seems they are either keeping their powder dry or do not have much to argue. Making generic comments such as the award price was below their cost price does not indicate any wrongdoing - only that they were not competitive enough. Even if there is an abnormally low bid, all the Home Office needs to do is investigate it and is under no obligation to exclude Gemalto.

This all reminds me of a tender I was once involved on the public side with a former colleague as legal adviser for one of the tenderers. After the result was announced he retorted to a common friend "How do I set aside the other 4 bids? Thanks for screwing my weekend!"

PS: I love De La Rue's assertion their new price is lower than that of the old contract, begging the question if they suddenly became very efficient or if they have been extracting rent since 2009. And let's not forget what 3M who lost the contract back then had to say.

PS2: As for the logic of tendering 10/11 year bog standard supply contracts, it defies me still especially with the assertion by De La Rue they were cheaper this time around than in 2009.

Timely reminder public procurement rules still apply in the UK

It seems Gemalto, a French company has won the contract to produce the UK passports post-Brexit. FT has the scoop:


"Gemalto, a security company based in Paris, is expected to win a tender process ahead of the UK’s De La Rue, one person briefed on the decision said. De La Rue currently holds the contract for producing UK passports, worth £490m over 10 years.

Both the Sun and Daily Telegraph newspapers reported the news on Wednesday evening. Bill Cash, a pro-Brexit MP, said the decision was “incongruous to say the least” and “symbolically completely wrong”.

“The irony is unreal,” said Eloise Todd, chief executive of Best for Britain, the anti-Brexit campaign group.

The Home Office said the procurement process was ongoing, adding: “We do not require passports to be manufactured in the UK. A proportion of blank passport books are currently manufactured overseas, and there are no security or operational reasons why this would not continue.” "

While the UK is inside the EU (transition included) EU public procurement rules and general principles remain applicable. And there's no irony in that.

Updated Draft Agreement on the UK's withdrawal from the EU [Public Procurement]

The Commission published on March 19th a revised Draft Agreement on the UK's withdrawal from the EU, conveniently colour coded green, yellow and white to denote different levels of agreement between the parties. Green means the text has been agreed but is still subject to technical legal revision, yellow that the policy objective has been agreed upon but drafting changes are still required and white that no agreement has been reached yet.

As regards public procurement (Arts 71 to 74 of the Draft Agreement), the situation is as follows:

Article 71 - Green

Article 72 - All green except paragraph 2.

Article 73 - Yellow

Article 74 - Green

It seems that in what regards to public procurement, progress is being made in reaching an agreement. No major changes are visible to any of the articles in comparison with the original draft from a few weeks ago. As I said in the meanwhile, I find it odd that EU procurement rules will apply only until the procurement procedure is finalised, but not to the contract performance, thus meaning Articles 70 to 73 of Directive 2014/24/EU won't be applicable. Unfortunately, the draft remains unchanged in this point and the parties have accepted it (Draft Agreement Article 72(1) and (4)).

As for Article 72(2) where no agreement has been reached, I am puzzled as for the reasons why. Since Article 72(1) establishes the application of secondary rules to ongoing public procurement procedures, paragraph 2 only re-iterates the applicability of the principle of non-discrimination to the same set of procedures. That is the logical contextual reading of Articles 72(1) and 71 (which includes the definition of relevant rules). Another reading, however, would allow the extension of the principle of non-discrimination to contracts not covered by Article 71, that is contracts not-covered by the Directives: ie, those today subject only to the (horrible) certain cross-border interest. As I said, my guess is that those have been excluded from the scope of application of the Withdrawal Agreement via Article 71, but perhaps the definition of this scope is where the parties are yet to reach an agreement.

The only area where only policy agreement has been achieved is Article 73 pertaining to the Remedies Directives (Directives 89/665/EEC and 92/13/EEC). This can be understood in the negotiation context of the UK not wanting to be subject to the jurisdiction of the Court of Justice. This is, however, speculation on my part. 

The UK Technical Note on Other Separation Issues [Public Procurement]

The UK Government has just published a technical note detailing its approach in phase 2 to a number of different areas, including ongoing public procurement procedures.

The Government disputes the EU's assumption that Union law should be applicable to ongoing procedures and states instead that "in practical terms" the procedures should be carried out under the applicable *national* law. This is slightly disingineuous since it implies that only national rules are relevant for public procurement contracts. That is certainly not the case since contracts not covered by the EU public procurement Directives can nonetheless be subject to EU principles in certain situations (more here and here) as well as jurisprudence from the CJEU. Eventually there may be situations as well whereby direct effect of provisions from the EU Directives would be relevant as well. Neither are "national law" in the context presented by the Government in this technical note.

There are not many differences in the position expressed today by the UK Government and that of the Union a few days ago. But there are two points worth noting. 

In para 32 the Goverment (rightfully) asks for reassurances UK businesses will be able to bid for EU contracts (but strangely not those tendered in other Member States?) for procedures launched before the withdrawal. This is a reasonable request but one that requires reciprocity...

In the same paragraph, the Government also calls for these 'transitional arrangements' to be extended to existing contracts (at EU and Member State levels) instead of only ongoing procedures. When the Commission published its paper last week I noted that the 'transitional arrangements' would end with contract award notice being published and, by definition, did not cover the contract itself. While it is true most procurement rules are connected with the award stage, I made a point about Arts. 70 to 73 of Directive 2014/24/EU therefore not being applicable any longer. 

Personally, I agree with the UK Government view that contract performance for ongoing contracts at the date of exit should be subject to the current procurement rules. But that is a mix of EU and national rules...

Some thoughts on the procurement elements of the EU's Draft Withdrawal Agreement

The Commission has just published today a Draft Withdrawal Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community.

The Draft Withdrawal Agreement sets out the arrangements for the UK's withdrawal from the Union and Title VIII (Articles 71-74) refers to public procurement, namely ongoing procedures at the date of withdrawal.

Most of the content seems non-contentious with the rule of thumb being that public procurement procedures initiated before the date of withdrawal will still be subject to EU substantive and remedies rules as appropriate until they are finalised. This logic applies to traditional procedures (Article 72(1)(a)) and also to framework agreements (Article 72(1)(b)) concluded before the withdrawal. It does not seem to cover however dynamic purchasing systems though - at least not explicitly.

It is worth mentioning however what is meant by a procedure "being finalised". One would assume that for the purposes of Article 72(1)(a) it would be with the contract signature, but not necessarily:

"4. A procedure referred to in paragraph 1 shall be considered finalised:
(a) **upon publication of a contract award notice in accordance with the relevant rules** or, where those rules do not require the publication of a contract award notice, upon conclusion of the relevant contract; or

(b) upon informing tenderers or, according to the relevant rules, persons entitled to otherwise submit applications, of the reasons why the contract was not awarded if the contracting authority or contracting entity decided not to award a contract."

As contracts covered by the Directives do require the publication of contract award notices (even if compliance in practice is shoddy...) it is important to bear in mind the provision of Article 72(4)(a). 

There are no provisions in the Draft Withdrawal Agreement about contracts already awarded and under performance. As such, the conclusion is that performance of contracts post-withdrawal will be subject to the national laws only thus meaning Articles 70 to 73 of Directive 2014/24/EU on contract performance will no longer apply.

New working paper on European Union Citizenship available

I have uploaded to SSRN a new working paper entitled "Protection from Exclusion: A Reassessment of Union Citizenship in the Time of Brexit" co-authored with Volker Roeben, Keith Bush, Petra Minnerop and Jukka Snell.

Here's the abstract:

"The received wisdom on Union Citizenship is statist: it is thought to be intrinsically connected with the State of nationality being a Member State of the European Union, and so no one can be a Union citizen otherwise. The purpose of this article is to challenge this conception. It argues that Union Citizenship institutionalises the idea of individual membership in the EU and its legal order, into which individuals are included and from which they cannot be excluded en masse either by the European Union or the Member States. Citizens are protected against physical exclusion by way of extradition and expulsion and, even more so, against being stripped of Union Citizenship against their will. Union Citizenship, once conferred, cannot be removed without cause in the person of the citizen, even though the rights contained therein may change over time.

This is, however, precisely the spectre of Brexit. The effect of this first withdrawal of a Member State on the citizenships of UK and EU-27 nationals remains unclear, and the statist and individualist conceptions of Union Citizenship produce diametrically opposed consequences. The statist conception implies that Brexit extinguishes the Union Citizenship of UK nationals. But the individualist conception of Union Citizenship implies that the citizenships, and the rights contained therein, will survive the end of UK membership in the EU. This ‘Continuity’ Union Citizenship becomes the salient touchstone of this conceptual shift advocated here; EU (and UK) action to preserve it, either through the Withdrawal Agreement or legislation, is declaratory rather than constitutive. If this is correct, little changes as a consequence of Brexit.

The principal argument in support of the received statist conception is that the Treaties connect Union Citizenship with EU membership of the State of nationality. But the article argues that the individualistic idea of Union Citizenship has indeed been institutionalised by the Lisbon Treaty, with the analysis proceeding in four steps. First, Union Citizenship is not just a status but a fundamental right. Any interference with it is thus subject to the principle of proportionality and cannot affect its core. Second, deciding on the acquisition and loss of Union Citizenship is not a right but a competence of the Member States. This competence is not unlimited. Third, Union Citizenship is autonomous from the nationality of a Member State. Third-Country nationals may continue to hold the rights of Union Citizenship provided a sufficiently close link exists with the EU. Fourth and finally, the EU is obligated to ensure legal certainty for citizenships beyond the end of a State’s membership in the EU, and the Lisbon Treaty confers the requisite competence in line with the international law of treaties."

This paper is based on the report we co-authored last year for Jill Evans MEP entitled "The Feasibility of Associate EU Citizenship for UK Citizens post-Brexit."

Crown Commercial Service is looking for senior public procurement policy advisors

So it seems, although the full description is "Senior Policy Adviser - Brexit - International Agreements."

Although I have the feeling this is one of those positions where you will either end up having a ton of interesting work or none at all depending on how the Brexit negotiations end up. Deadline is December 18th.

 

New paper on Brexit and public procurement published

Albert and I have just published a new paper on the impact of Brexit in the regulation of public procurement in the UK. The paper is called 'Examining Brexit Through the GPA’s Lens: What Next for UK Public Procurement Reform?' (2017) 47(1) Public Contract Law Journal 1-33 and the ungated copy is available here

Here's the abstract:

"The United Kingdom has formally started the process of leaving the European Union (so called Brexit). This has immersed the UK Government and EU Institutions in a two-year period of negotiations to disentangle the UK from EU law by the end of March 2019, and to devise a new legal framework for UK-EU trade afterwards. The UK will thereafter be adjusting its trading arrangements with the rest of the world. In this context, public procurement regulation is broadly seen as an area where a UK ‘unshackled by EU law’ would be able to turn to a lighter-touch and more commercially-oriented regulatory regime. There are indications that the UK would simultaneously attempt to create a particularly close relationship with the US, although recent changes in US international trade policy may pose some questions on that trade strategy. Overall, then, Brexit has created a scenario where UK public procurement law and policy may be significantly altered.

The extent to which this is a real possibility crucially depends on the framework for the future trading relationship between the UK and the EU. Whereas ”EU-derived law” will not restrict the UK’s freedom to regulate public procurement, the conclusion of a closely-knit EU-UK trade agreement covering procurement could thus well result in the country’s continued full compliance with EU rules. Nonetheless, this is not necessarily a guaranteed scenario and, barring specific requirements in future free trade agreements between the UK and the EU or third countries, including the US, the World Trade Organisation Government Procurement Agreement (GPA) seems to be the only regulatory constraint with which future UK public procurement reform needs to conform. However, the position of the UK under the GPA is far from clear. We posit that the UK will face a GPA accession process and GPA members may see Brexit as an opportunity to obtain new concessions from the UK and the EU, which could be both in terms of scope of coverage or regulatory conformity. Further, given the current trend of creating GPA plus procurement chapters in free trade agreements, such as the US-Korea FTA, the GPA regulatory baseline will gain even more importance as a benchmark for any future reform of public procurement regulation in the UK, even beyond the strict scope of coverage of the GPA. Given the diversity of GPA-compliant procurement systems (such as the EU’s and the US’), though, the extent to which the GPA imposes significant restrictions on UK public procurement reform is unclear. However, we argue that bearing in mind the current detailed regulation in the UK might itself limit deregulation due to the need to comply with the international law principle of good faith as included in the 1969 Vienna Convention on the Law of Treaties and, to a certain extent, the United Nations Convention Anti-Corruption. 

The aim of this paper is to try to disentangle the multi-layered complexities of Brexit and to explore the issues that Brexit has created in the area of international public procurement regulation, both from the perspective of ‘internal’ EU law-related issues and with regard to broader ‘external’ issues of international trade regulation, as well as to assess the GPA baseline regulatory requirements, and to reflect on the impact these may have on post-Brexit public procurement reform in the UK."

UK trade delegation to Washington lacked international trade experience

So claims Greepeace on its Unearthed blog. The punchline for me is this tidbit:

"One senior advisor at Dexeu was working as a procurement officer for Enfield Council as recently as March 2016."

(Local) Procurement officer =/= (International) trade negotiator.

Maybe this is why the Government Legal Department is hiring trade lawyers while offering a London salary below the starting rate of any major law firm? Brexit on the cheap. We'll see the 'value for money' of this approach soon enough.

Now, if only the Department for Exiting the European Union granted more FoI requests...

Commission publishes Art. 50 position paper on public procurement

The European Commission has just published its position paper regarding public procurement within the context of the Brexit negotiations. Here are the main take aways:

1. Current rules are to be followed until Brexit happens and procedures/framework agreements being conducted at that moment subject to the same rules as before.

2. Review of procedures and legal remedies should continue to apply after Brexit but only for those procedures initiated before it.

The Commission has defined what it considers to be a 'ongoing public procurement procedure' and clarified that one is "launched" if the call for competition has been transmitted to the Publications Office of the European Union.

One final note about e-Certis: contracting authorities in the UK will maintain access to e-Certis after withdrawal but only for the procurement procedures "live" at the moment of withdrawal. No word about future integration/access to ESPD though.

Maybe a transitional agreement would be of help?!

Simplification for whom?

One of the topics for discussion in last week's Procurement Week was simplification of public procurement and how Brexit could finally enable the simplification of the legal framework in the UK. Simplification, like flexibility, is on the eye of the beholder.

The problem with simplification is that it has different meanings for the various public procurement stakeholders. Simplification for the public sector means fewer constraints when awarding a contract, and in that sense is closer to flexibility than really simplification. As for the private sector, simplification means lower transaction costs and standardisation, ie the certainty the procedure will be identical (or very similar) irrespective of the contracting authority managing it. It is fundamentally at odds with the public sector view of simplification. Although both sides want simplification, what is meant by it is very different.

The simplification oxymoron

There's an intrinsic contradiction between simplification and flexibility when it comes down to the regulation of public procurement. The system can be optimised either for one or the other, but not both at the same time. Let's look at the current Public Contracts Regulations 2015 for example.

The introduction of the ESPD and associated rules on information retrieval about economic operators simplified their life and reduced their transaction costs. They no longer have to provide all the documentary evidence about their capacity or technical capability at the beginning, only later in the procedure. But this does only constitutes a partial simplification: the workload associated was shifted to the contracting authority which is now under the obligation of fishing for this information in national and foreign databases (in first instance). In a sense, this is only right since contracting authorities have long indulged in asking for significant amounts of qualifying information "just in case" without considering the implications of such requirement. Nonetheless, the simplification achieved for one side implied an increase in complication for the other.

As for flexibility, the profusion of different procedures in the last 13 years - particularly those with negotiation involved - provides contracting authorities with ever more specific "tools" to do its job. First, came competitive dialogue. But that was not flexible enough (that is, it did not include the magic n-word), so we can now find on Directive 2014/24/EU competitive procedure with negotiation, innovation partnership and competitive dialogue - all three overlapping like a nice Venn diagram.

No surprise then that we can now find contracting authorities using the competitive procedure with negotiation to award innovation partnerships (here and here) when the latter is supposed to be used by itself. But at least we got flexibility, meaning it is up for the economic operators to adapt and get used to multiple different ways to do the same thing. Guess who will support the cost of all that flexibility?

It is ironic as well that at least in the practice with innovation partnerships contracting authorities are basing themselves on a procedure with more prescriptive rules (the competitive procedure with negotiation) instead of embracing the full flexibility offered by the innovation partnership rules.

One final word about introducing more flexibility in procurement regulation in the UK. The Directives provide ample of space for additional national rules - or national solutions for issues not solved by the Directives themselves. Case in point, how to run the innovation partnership. However, the UK has always preferred the copy paste (sorry, copy out) approach to transposition of EU Directives and refusing to introduce further rules. No surprise then that even the regulation of contracts below EU thresholds is so sparse and restrained. Why would it change with Brexit? Other than the EU Directives no longer being a scapegoat for "we cannot do that" or bad practice, that is.

 

PS: This is not to say simplification for both sides cannot happen - it can - but is very hard to achieve in practice. When done well, electronic procurement might be an example. When done well.

The unravelling of EU law compliance on the run up to Brexit [Public Procurement Edition]

A few months ago I tweeted that we were on the cups of watching the rule of EU law disappearing before our eyes here in the UK as Brexit approaches. If we consider the CJEU's enforcement of EU law to be the ultimate deterrent for non-compliance, such effect is progressively reduced as time goes on and the exit certainty increases. And as with dam bursts, what starts as a trickle ends up as a flood.

For agents in the field making decisions about how to behave, this reduced influence of EU law will certainly permeate into their decision making thinking. If the risk of being caught and punished is low (and getting lower all the time) why comply with the law in the first place?

This takes me to two stories about public procurement compliance, one from the 90s/00s the other from today. As for the first, I remember when doing my Ph.D on the use of competitive dialogue seeing someone of reputation who shall remain nameless arguing that technically the UK use of the negotiated procedures for PPPs/PFIs in the 90s was non-compliant with EU law, but the fact that the competitive dialogue had been introduced in 2004 showed the country was right. In consequence, it should not be punished for any illegality committed in the meanwhile. And it was not: the proceedings were opened by the Commission but nothing came out of them.

Then this morning Albert tweeted about the Department for International Trade assessing the "cultural fit" of bids. Yes, "cultural fit". This includes "[b]e committed to the best possible outcome for the United Kingdom following its departure from the European Union." We can unpack this criterion in a few different ways and perspectives:

1. It's nothing else other than asking for professional ethic

The least ominous option is that this is simply a new version of the more traditional "ensuring that the contract will be performed professionally and to a high standard." If that is the case, the language could have been different and certainly be included as a contract performance clause and not as an award criterion. But I do not think this option sticks.

2. It's a sign of what it is about to come

The more logical explanation is that the key decision makers are already discounting the compliance of EU law in their decision-making process (even if it violates the Public Contracts Regulations 2015 which are national law) and doing whatever they please. If this interpretation is correct, every decision like this that goes unchecked and is complied with by public servants and the market will increase the likelihood other disregards of EU law will spawn between now and the exit date.

It can be argued that the contract value is below the EU thresholds and as such not subject to the full might of EU regulation in procurement. Even if true, it may be subject to Treaty principles, including equal treatment and non-discrimination. But even if it is a simply purely national contract...

3. It is illegal under Regulation 111 of the Public Contracts Regulation 2015 (PCR2015)

Albert has already highlighted that Regulation 111 of the PCR2015 would be applicable and that the proposed contract breaches it. I agree, and our commentary to that particular Regulation is available here. Regulation 111 is a purely national provision covering contracts that would not be subject to EU law due to their low value. There are grounds to challenge this award criteria and they should be used by any aggrieved bidder (or potential bidder).

4. It is illegal under EU law

If the contract is valued above the EU financial thresholds, then the award criteria would also be illegal as it mixes what could be a selection criterion with the award of the contract and both need to be kept separate. Article 58 of Directive 2014/24/EU was transposed into England and Wales by Regulation 58 of the PCR2015 and our commentary on it is here. Long story short: information about bidders is by definition irrelevant (i.e., illegal) when assessing the bid.*

Furthermore, award criteria need to be relevant to the proposed contract (Regulation 67 PCR2015) and proportionate (Regulation 18 PCR2015) to the aims being pursued. This award criteria is neither. So yes, the Government should be left with its ears burning for this proposed award criteria. 

Let's conclude with an analogy: how would we react if instead of a "cultural fit" criterion the contract included a "political fit"? The latter would probably generate uproar but for the purposes of EU law both are questionable (i.e., illegal) for the exact same reasons.

The bottom line for me is that we may finally seeing in this instance the start of a progressive disregard for EU law rules and the deterrent compliance role of the CJEU as an enforcer of EU legality. As an EU citizen, I hope to be proved wrong.  

*I could drill down on the legal minutiae of the provisions but this is probably enough to pass the message