Regulaton & Policy
Pinsent Masons on the Consequences of Brexit for Public Procurement

As we move closer to the UK referendum on EU membership, we’re likely to see more speculation about that will happen if the country does vote to leave. The impact of Brexit on UK procurement regulations is probably not top of the list of possible consequences for most people, but for the public procurement community it is of considerable interest. We wrote an article about it here, and more commentary is starting to appear from other sources.

Pinsent Masons are one of the leading UK law firms in terms of public procurement advice, and their Out-Law.com website is always a good source of information and comment. Kerry Teahan of the firm has now written an interesting article on the site titled (a little clumsily) BREXIT: Changes to procurement regulations unlikely in aftermath of vote regardless of result, says expert.

Teahan agrees with our view, which is that a vote to leave the EU would have little immediate impact on the UK situation.

“In England, Wales and Northern Ireland the main rules are the Public Contracts Regulations 2015 and the soon to be Utilities Contracts Regulations 2016 and Concessions Contracts Regulations 2016. Although still rooted in EU law, different rules apply in Scotland. Until repealed or reformed, this legislation will continue to regulate purchasing. Moreover, in the aftermath of an ‘out’ decision, reform of procurement law seems unlikely to be top of the government’s ‘to do’ list”.

Indeed, there would be a very long list of complex “things to be done” in the case of an exit vote, and we can’t see the Prime Minister putting public procurement anywhere near the top of the list. Even if and when the rules are reviewed, it is likely that a “very similar regime would take its place … It is unlikely that the public sector, nor indeed those who supply to it, would embrace an unregulated approach to procurement”.

Teahan makes an interesting point about the UK’s stance on regulation. She explains that whilst politicians often give the impression that over-regulation is a bad thing, and suggest that without the EU constraints, the UK might take a more laissez-faire approach to public procurement, in fact the UK approach has often been to go beyond the minimum requirements set by the EU. So, for example, various reforms suggested by Lord Young have been included in the recent UK Public Contracts Regulations.

Whilst the government would argue that these are positive changes to make public procurement work better – such as the requirement to advertise contracts on the Contracts Finder website – they do also increase what might be perceived as “bureaucracy”, and were nothing to do with the EU.

Teahan’s final point covers the continued relationship that the UK would undoubtedly want and need to have with the EU even in the case of the country voting to exit. “If the UK adopted a similar relationship with the EU to Norway and Iceland and became a member of the European Free Trade Association (EFTA) – the main benefit being so that it could gain access to EU free trade agreements – the UK, as an EFTA member, would still need to adopt the EU procurement rules”.

Indeed, in some ways we might see that as the worst of all worlds – in that situation, the UK would still be bound by the current rules, and have to work within them. But as a non-EU member state, we would have no influence on their content, and would not be able to argue for the sort of positives changes that Francis Maude (the UK Cabinet Minister involved in the negotiations) felt the UK got included during the last review of the regulations.

So the overall conclusion from Pinsent Masons is that we should not expect any immediate dramatic change; but it is a subject that we will no doubt return to before June – and do read Teahan’s whole article here.