Seven months on from last summer’s stunning Brexit vote, it appears we’re looking at ‘hard Brexit’ – a complete break with the EU, which will put the UK outside of the European single market customs union and beyond the jurisdiction of the European Court of Justice.
In the short term, bidding remains business as usual. The UK’s procurement laws and practices are rooted in European Union (EU) legislation and we will remain a full member of the EU until negotiations are complete and an exit date has been agreed. The earliest exit date is March 2019, two years on from the date on which Prime Minister Theresa May has indicated that she will trigger Article 50, which will launch exit negotiations.
Beyond that, the impact depends on the exit agreement that is negotiated. But the potential implications are enormous, affecting exchange rates, the legal and regulatory frameworks and affecting direct delivery disciplines like logistics.
The impact of Brexit on procurement legislation is hotly debated. Many bodies, including the Construction Industry Council, have gone on record to welcome a less regulated approach to procurement than that set out by OJEU. They argue that it inflates bidding costs and excludes smaller companies. The option for public bodies to award contracts on a discretionary basis would speed up a complex process, but potentially at the cost of the gains of competition for public value for money.
Other voices, such as Eversheds in their post-Brexit briefing, point out that EU procurement regulations are aligned to those of the World Trade Organisation (WTO). The WTO has its own very detailed Agreement on Government Procurement (GPA). Once outside of the EU, it’s likely that the UK will seek WTO recognition in order to secure access to EU and other overseas markets, so while the shackles of OJEU may be lifted, other regulations will take their place. Restricting access to domestic markets by overseas players would also breach WTO rules.
Access to skills
Highlighted time and again as the greatest threat of Brexit, the availability of a workforce with the right skills at the right time will affect companies’ ability to bid. Clients will need assurance about the availability of a pool of talent, so bidders will have to demonstrate strong skills pipelines, whether through their own academies and networks or how they manage revised arrangements to access skilled migrants when these are unveiled.
During the negotiations, and currently exacerbated by the ‘Trump effect’ in the USA, the value of the pound against the Euro and the dollar is fluctuating dramatically, which will need to be reflected in pricing policies or bidders risk entering into contracts that are not financially viable across international borders.
Exiting the single market and the customs union will open up UK firms to increased paperwork and inspections of people and goods crossing borders. The extent of that depends on the agreement that is negotiated, but be prepared for delays sending people and goods outside of the UK.
Bidders will have to demonstrate a flexible approach to navigate the shifting sands of Brexit.