Tenders Direct Blog

Comment from the experts at Tenders Direct.

Millstream reaction to Brexit vote

Posted by David Law on June 24, 2016

After months of campaigning, debates and opinion polls the people have spoken and decided that Britain should leave the European Union. Once the dust has settled on the result the long and arduous task of the Government negotiating an exit will begin.

One of the key questions coming out of this result is: will the UK retain access to the Single Market, through membership of the European Free Trade Association (EFTA)? This is what Norway, Iceland, Liechtenstein and Switzerland have done but it remains to be seen whether the UK will decide to pursue this option as it will require us to contribute to the EU budget, accept the free movement of EU citizens and to implement European legislation relating to the Single Market. The obligations are very similar to those required of full EU members, but without representation on any of the decision making bodies. It is also doubtful whether the EU will agree to UK membership of EFTA.

If we retain membership of EFTA, or equivalent access to the Single Market then UK companies should be able to bid for and win work on pretty much the same basis as we have enjoyed in the past. As a member of the EU, the UK was a party to the World Trade Organisation’s, Government Procurement Agreement which allows suppliers in the US, Canada, Japan, etc., to bid on an equal basis for European public contracts and vice-versa. Unfortunately as the UK’s membership was on the basis of being a member of the EU that will lapse and we’ll have to negotiate our own agreement.

It is very disappointing that Britain has opted to leave the European Union today. The EU procurement regulations that have been developed with significant input from the UK over the last 40 years, have done much to improve the quality and value for money of public procurement. In particular, the regulations have dramatically improved access for small and medium sized companies to business opportunities in the UK and the rest of Europe.

For example, the Government took its lead from the EU last year by introducing new rules to stop public sector buyers from excluding small suppliers. Thankfully it’s now required that larger contracts are broken down into smaller lots, making it easier for small businesses to compete. This undoubtedly leads to more competitive budgets and improved savings for the buyer.

As experts in public procurement services, Millstream will be keeping a close eye on any development in legislation that will affect the sector, either positively or negatively. We’re committed to being a part of any discussions around proposed changes to ensure that we’re able to provide the best procurement solutions for our customers.

4 Responses to “Millstream reaction to Brexit vote”

  1. Richard Garland said

    If we do as you suggest with regard to the single market we will accept all the things leave wanted to get away from.
    Result was crazy enough as it was.

    • Richard,

      You are absolutely right. it makes no sense to leave the EU, but then adopt the Norwegian model. That maintains access to the Single Market, but we would still have to contribute to the EU budget, accept the free movement of EU citizens and implement all Single Market legislation in UK law, but we wouldn’t be participating in any of the decision making. Consequently, it doesn’t deliver any of the promises made by the Brexit campaigners, but also takes away the influence that we did have.

      There are other models being proposed (BBC News) such as negotiating a withdrawal from the free movement of people requirement, but agreeing a lesser “free movement of labour” which allows for workers from the EU to come to the UK with a firm job offer.

      The situation is so confused at the moment as nobody seemed to think that we’d actually vote for Brexit that there isn’t a plan. As far as public procurement is concerned we don’t anticipate any major changes in the short or medium term. The regulations are all implemented in UK legislation so unless the Government actively changes them the legal framework will remain the same. The UK Government gold plated the last set of procurement regulations that originated in Brussels and so it seems unlikely that they’d want to reverse that approach.

  2. dnhb said

    Regarding the breaking of contracts into lots: my understanding is that the UK decided, in implementing the 2014 EU Procurement Directive, not to take advantage of the option member states were given to make it mandatory for Contracts meeting specific criteria to be broken into Lots. Under the PCR 2015, Contracting Authorities must however explain, where relevant, why a contract has not been broken into Lots.

    • Digby,

      Thanks for your comment. Regulation 46 of the Public Contracts Regulations does implement the European Directive, more or less word for word as far as it goes. You are quite right that the Directive included an option to make it ‘obligatory to award contracts in the form of separate lots under conditions to be specified in accordance with their national law and having regard for Union law.’

      The UK decided not to make it obligatory, but as recital 78 of the European Directive explains removing that discretion available to the buyer ‘could risk restricting competition, or risk rendering the execution of the contract excessively technically difficult or expensive, or that the need to coordinate the different contractors for the lots could seriously risk undermining the proper execution of the contract.’

      The view taken both by the European Commission and the UK Government was that having to provide an explanation of the decision was an adequate enough measure to encourage contracting authorities to consider the issue seriously.

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