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Infrastructure blog

Procurement and Brexit: Is it business as usual?

24 April 2017

Paul Nash of CIOB discusses the potential impact of regulatory changes following Brexit on infrastructure sector procurement between the UK and EU.

Procurement and Brexit: Is it business as usual?

To be honest, I doubt that procurement was at the forefront of voter’s minds as they went to the polls on 23 June last year. But there is no question of procurement’s importance both to business and government. Having clear and sensible regulations helps ensure competition, guard against fraud, underpin corporate governance requirements, provide value for money and level the playing field.

Some argue that procurement regulations from then EU have helped deliver major savings to the public purse and improved transparency. Others would respond that it is too complex a process, inflates bidding costs and excludes SMEs.

Future direction

One thing is for sure: the current Government is not seeking to continue the UK’s membership of the single market. The Great Repeal Bill white paper states that the Government will seek to simply convert directly-applicable EU law into UK law. This would mean that the procurement regulations under the European Communities Act 1972 will essentially remain in force, likely under a different name, unless and until a decision is taken to amend or repeal them further down the line.

So taken at face value, it appears that Brexit changes procurement very little. Given the two-year (and counting) time window for Brexit negotiations to conclude, this is probably the most sensible approach as it means the same rules and laws will apply the day after Brexit as on the day before.

What happens following this, when the UK will have the power to change its procurement regulations, is less certain. But with a number of Ministers stating they want the UK to be a fair, free and open trading nation, continuing to access foreign procurement markets and allowing foreign businesses to compete in the domestic market, it is likely that procurement rules will be very similar to those presently in place.

Complete reform of procurement regulation is something that I believe neither industry nor government has any great desire to do. It risks damaging investor confidence and compromising well-established practices. And besides, currently in place is the Government Procurement Agreement (GPA), a product of the World Trade Organisation, which the UK will very likely have to comply with to compete in overseas markets. In the construction and infrastructure sectors, which have long called for certainty and stability, a complete paradigm shift in procurement would be counterproductive. But this is not to say that there isn’t room for improvement.

Improving procurement

As the largest construction client by far in the UK, government, both central and local, has a vital role to play in supporting innovation, developing skills and improving productivity through public procurement. The Government recognises this, highlighting “improving procurement” as one of the ten pillars that should support the UK’s modern industrial strategy. I believe this presents an opening to develop procurement as part of construction and infrastructure’s ‘sector deal’ within the industrial strategy, learning from the best practice seen on the likes of Crossrail and the 2012 Olympics. In this sense, implementing subsidiary detail into legislation might be a more productive approach than a wholesale reinvention.

It is safe to conclude that, given the pressure to use public funds effectively and efficiently, the same core principles which underpin the current EU procurement regime of securing value for money are likely to remain. But it is clear that Brexit does provide the UK with an opportunity to look at how we can use procurement to improve our industry, producing better buildings and infrastructure that add wider value to society.

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