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What Happens to Public Procurement if the UK Votes to Leave “Europe”?

The debate about the UK’s membership of the European Union continues, with Prime Minister David Cameron coming back from his negotiations claiming that he has achieved a better deal for the country. The referendum on Britain’s membership will probably take place in June – the view is that Cameron wants it to happen before we get into another summer of the refugee crisis, which is likely to make British citizens feel less positive about “Europe”.

The general assumption has been that Cameron would gain some concessions, come back with the good news, and given the fear of the unknown, the British electorate would agree grudgingly to stay in the EU. However, the latest polls show the “get us out” campaign moving ahead (despite the chaotic nature of the groups who are campaigning for that). That is largely because what Cameron has been offered is almost hilariously insignificant, certainly compared to some of the rhetoric originally about what might be achieved. Even the limited reduction in in-work benefits for non-British workers would still be at the discretion of the European Parliament, for instance.

Anyway, without getting into the detail, or the positives and negatives of the decision we have to make in Britain, it is clear that this vote might well be a close call. So it is time to start thinking seriously about what it might mean for public procurement if the UK does vote to get out of the EU and become an independent nation.

Over the years, politicians have enjoyed complaining about the terrible bureaucracy of EU procurement regulations, and how it stifles innovation, stops contracting authorities awarding contracts to wonderful local suppliers and generally is a nuisance. But if we do vote to come out, suddenly those same politicians will have to think about what they actually want to do.

So will we see dramatic changes? One factor that might work against major change is the recent 2014 directives and the subsequent national legislation. That offered concessions in terms of flexibility – more scope to negotiate, the opporuttiy to take advantage of tighter timescales, the new Innovation procedure for instance. So maybe there is less for the UK to change if the country does pull out?

Some will no doubt argue for getting rid of all the rules. Let each contracting authority decide how to carry out procurement, just like the public sector does. But how would this go down with the public and with the business community? How will firms react if they realise that they won’t necessarily get the chance to bid for public sector contract opportunities? Not well, we suspect.

We would also hope that politicians would realise the dangers of corruption. There is an argument that says “flexibility” leads to “subjectivity” which leads to bias, favouritism and ultimately corruption. The UK has not had major issues with public procurement corruption unlike so many countries in the world; that does not mean it could not happen here. There have been enough issues in local government particularly to make this a real worry. Take away the safety blanket of a robust regulatory framework, and some organisations at least might quickly sink into procurement anarchy or worse!

But are there some changes that might be both positive and avoid those risks. So it is a good time for those of us interested in public procurement to start thinking seriously about the possibilities. We suspect that the policy folk in Crown Commercial Services must be onto this already; but we would love to hear from any readers with your ideas for making public procurement better if the UK does decide to exit itself from the EU.

Voices (7)

  1. Les Mosco says:

    After life as Procurement Director in several private and public sector organisations, my conclusion is that the EU rules aren’t actually that far wrong. When I was asked by a Government Minister what I would change in the EU Regs, if I had a free hand, my conclusion was that most of the rules are there for good reason, and my main priority was to shorten the time lines to enable quicker procurements.

    I’d now also add that the Remedies and Alcatel standstill periods should be changed, so that contract awards can be proceeded with rather than suspended, but still leaving open a claim for damages after the event from a supplier who could subsequently prove they had been treated unfairly. Suspension is too heavy a hammer, given that a contract vacuum in public procurement means a hiatus in services, sometimes vital services. And I’d seek more flexibility on framework contract durations, and much greater ability to extend existing contracts for more volume/duration and additional related services, where the current constraints are too severe.
    But complete abolition of all the EU Regs would be bad news, opening the door to corruption, both blatant but also more subtle bias and preference for ‘favourites’, for example without regulations, a sensible ‘buy socially’ policy can become a back door for ‘buy from the bosses preferred supplier’. So if we leave the EU, there is scope for some modest common sense amendments, but don’t imagine that complete abolition would be a positive outcome. Of course if we stay in the EU, then I doubt even modest beneficial changes would ever become a priority. Perhaps that’s the crux of the Brexit debate: do we want to be in a club where we benefit on some matters, but have to accept tortuous collective decision and rule making?

    1. Bitter and twisted says:

      Im curious: why, in your ideal world, would you pay damages to unfairly treated suppliers?

      Isnt that just making the poor taxpayer pay twice?

      If public purchasers are grossly incompetent, sack them. If they are corrupt, send them to prison.

      1. Les Mosco says:

        ‘Bitter and twisted’ asks why I would pay damages to unfairly treated suppliers. The point is, if a supplier has genuinely been disadvantaged and lost out via an unfair procurement process, they need some remedy. And the most obvious is that they are compensated for their loss. We might argue about whether they had lost due to unfairness, or simply because their bid wasn’t as good as the winner, when clearly no compensation would be due. And what is the loss incurred: arguably the potential profit over the contract life, though I would argue that would be too high a compensation. Perhaps it’s just abortive bid costs. But surely some compensation is due, just like if someone crashed into your car you’d expect to be compensated.
        As for public purchaser’s incompetence or corruption, I agree the former is disciplinary and the latter criminal. But in my experience most are simply trying to do a difficult job without enough resources or time, in a rule-bound process that can trip up the best intentioned and hardest working professionals, and generally paid less well than in the private sector. Beware of making the job so penal that there’s no one left willing to do it!

        1. bitter and twisted says:

          If suppliers can win damages for purchasing decisions made by competent public purchasers acting in good faith….
          ….then the rules are broken.

          1. Peter Smith says:

            One problem is that you can’t distinguish between a decision made by “competent people”, acting in “good faith” and one made because of inappropriate political pressure or indeed outright corruption. That’s why we have the rules.

  2. October says:

    I think there will likely be no change. If the UK left the EU but still wanted to be part of the EEA then it would still have to implement the procurement regulations just like Norway. The only difference being it would no longer be involved in their development.

  3. Mike Robertson says:

    Change can be seen as Risk or an Opportunity. If the UK left the EU it could provide an opportunity to fix what is not working within Public Procurement. However as Les Mosco (a former Public Sector Procurement Director) indicates, very little is wrong with the process which leaves the bigger question, if the process is ok then what is the Real issue?!

    Maybe it’s a culmination of many issues such as :
    1) Took much to do and too little time to adequately plan for it, also know as the “Tidal wave effect”
    2) Lack of flexibility on contracting models. UK Public Sector appears wedded to Framework Agreements yet they rarely offer Value for Money savings and after “Mini competitions” are completed might not even offer operational savings either.
    3) Lack of adequate training, not just in processes but in delivering Value from contracts. Leading to better communication between Procurement and business leaders.
    4) Years of mistrust between buyers/suppliers resulting in an inability to discuss “innovation” because of the concern of a biased outcome for one party.

    The easiest way to express all this “The process doesn’t work!”