Would there be consequences for public procurement rules if the UK leaves the EU?

I have been thinking for some time about the potential implications in terms of public procurement regulationif the UK leaves the EU. The more I think about it, the more convinced I am that not much would change in the near future. Here are my reasons:

1. The public sector is used to procurement rules

Both the Public Contracts Regulations 2015 (PCR 2015) and the Public Contracts (Scotland) Regulations 2015 (PCR Scotland 2015) are mostly transpositions of the Directive 2014/24/EU, but the legal regimes do include some rules which are not required by EU law. In the PCR 2015, Chapter 8 applies specifically to contracts not covered by Part 2 - that is, those included in the Directive. I think the PCR Scotland 2015 on the other part is just a transposition of Directive 2014/24/EU, but the Scottish Government expanded substantially the legal regime applicable to procurement via the Procurement Reform (Scotland) Act 2014. These are not going anywhere any time soon.

Then there are other pieces of purely national legislation, such the Public Services (Social Value) Act 2012 or the Small Business, Enterprise and Employment Act 2015 which are applicable to or can influence procurement.

It is also known that public sector has used above-threshold rules/procedures/approaches to award contracts which would not necessarily have to follow said rules. This approach of "gold plating" procurement comes about as certain practices are seen as "good practices" and worth deploying even if not mandatory. And of course, even if they are completely inadequate to help award a small contract.

Why does this happen? Because procurement officers are used to certain practices and mental models. Those are not going away any time soon either, even if the underlying Directive would no longer be applicable.

This post on the Local Government Lawyer argues that the UK had a procurement regime before joining the EEC in the 1970s as a reason for things not to change. I think what happened 40+ years ago is irrelevant for a future legal framework, but today's practice and legal framework are not.

2. Directives have been transposed into national/regional law

The Local Government Lawyer post does make a very good point about the PCR 2015 and PCR (Scotland) 2015: they are already part of the national/regional legal systems. Where EU Regulations do not have to be transposed into Member States to be effective, Directives only* produce effects after being transposed into the appropriate "local" legal system. Were the UK to leave the EU then, the first would disappear from its legal regime, barring any national measures giving EU Regulations effect while the Government(s) go about producing new pieces of legislation to replace the EU ones. As for the second, the transpositions are purely national/regional law and would not disappear into the ether.

3. It all depends on the deal the UK cuts with the EU to get access to the internal market

It is not known how long it would take for the UK to re-negotiate its access to the EU's internal market - and that is assuming the country would be interested in such option. Assuming that is the case, then it depends on how the UK would position itself. Were it to follow Norway and join the European Economic Area (EEA) - any substantive changes to its own procurement rules would be moot as it would have to comply with EU Directives in the matter. Yes, it would mean transposing them once again if they had been repealed in the meanwhile.

An alternative would be to take the Switzerland approach and negotiate a "procurement trade deal" similar to the EU-CH AAGP which allows Swiss economic operators access to the EU procurement markets. The question is, how much different would said deal look from what the UK would have it from within the EEA.

Speaking of trade deals...

4. Then there's the Government Procurement Agreement (Revised GPA)

There is an area where I think, the UK could be significantly worse off by leaving the EU and that is the Revised GPA. This is a pure trade deal between various WTO Members focused on opening procurement markets. The EU acceded to the GPA, representing the Member States, using its exclusive competence under Article 3 of the Treaty on the European Union. As such, the UK has access to the GPA via its membership of the EU.

Not being an international trade lawyer, I suspect the straight answer here is that by the fact of leaving the EU, the UK would also lose access to all the trade deals acceded to by the EU, including the Revised GPA. They all would have to be re-negotiated one by one by the UK after it left the Union.

Maybe it could be argued that because the UK is already covered by the GPA via its EU membership that in reality it should remain a party to the agreement, but I find it hard to make this work with the legal consequences of a departure from the Union. In this spirit, however, another alternative would be for the Union to carry on representing the UK in international trade deals as a temporary/transitional measure as the country re-negotiates said deals on its own in the future. That, I suspect, would depend on how acrimonious the split ended up being.

5. What about economic operators?

When we talk about procurement rules and access to market with usually focus on the UK national/regional rules, as I just did. But it is important to take into account the potential impact on economic operators: they might be the ones worse off at the end of the day. Only 3% of UK's public procurement spend goes to foreign economic operators (p.41). On the other hand, 75% of Ireland's spend with foreign economic operators goes obviously to UK based ones (p. 11).

Naturally, the size of both markets is very different, but for the comparison to be far I would need to know how successful British businesses are at winning contracts in other parts of the UK. Unfortunately, I do not know how successful UK based companies are winning businesses in other parts of the EU (other than Malta where apparently they are also very successful), so it is impossible to say at this stage with a degree of certainty if leaving the EU (assuming access to the internal market was lost) would leave them better or worse off in the end.

* Yes, I am sacrificing nuance for the sake of making the argument clearer.

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