REUTERS | Eric Gaillard

Brexit: What next for public procurement?

So, what happens now?  It appears from the Prime Minister’s speech at the Conservative party conference, and the responses emerging from the EU, that Brexit now means not only Brexit but Hard Brexit: no freedom of movement = no membership of the internal market (although it seems possible that negotiations, when they start, will lead to a more nuanced outcome, for example a hybrid solution where the UK remains effectively in the internal market for some goods and services and not for others).

The author speaks as one who advocated remaining, and who has been dismayed by almost every aspect of the outcome; but when life hands you lemons, make a gin and tonic. So far as concerns public procurement, Brexit is a golden opportunity to reform the law and put in place something simpler, more effective and less costly. This blog takes a brief look at one quite likely alternative, the WTO Government Procurement Agreement, and particularly at the resolution of disputes under the GPA.

UK public and utilities procurement is currently governed by the Defence and Security Public Contracts Regulations 2011, the Public Contracts Regulations 2015 (the “PCR 2015”), the Utilities Contracts Regulations 2016 (if you can work out whether the entity in question is a utility) and the Concession Contracts Regulations 2016. In addition to the EU law implemented by these Regulations, the PCR 2015 include in Part 4 purely domestic legislation, implementing reforms proposed by Lord Young of Graffham, intended to improve SME and VCSE access to public contracts.  The National Health Service (Procurement, Patient Choice and Competition) (No 2) Regulations 2013 impose obligations on NHS bodies, additional to those imposed by the EU legislation. The PCR 2015 Part 2 alone mandates five alternative procedures (Open, Restricted, Competitive with Negotiation, Competitive Dialogue, Innovation Partnership) and allows two others (negotiated without advertisement and the authority-devised procedure for “social and other specific services”).  There are special provisions for framework agreements and dynamic purchasing systems, for the award of contracts to and by “controlled legal persons” and governing the use of electronic auctions.

This is bonkers. It’s exactly the kind of obscure, byzantine, micro-managing over-regulation which makes even those who believe deeply in the original mission of the EU (“to make war not only unthinkable but materially impossible” – Schuman Declaration, 1950) gasp and stretch our eyes and think, maybe we really are better off out – a thought which is reinforced by the gnomic jurisprudence of the European Court.

In the UK we have chosen to deal with the disputes generated by this legislation by High Court litigation – the process of which Lord Devlin said, “We have made of litigation, which ought to be a gentle solvent of disputes, a thing of horror” (Lord Devlin, ‘Who is at fault when injustice occurs?’ in Michael Zander (ed), What’s wrong with the law? (BBC 1970) 74).  Putting it at its mildest, High Court litigation does not, in the words of the 2007 amendment of the Remedies Directive, “ensure that…decisions taken by the contracting authorities may be reviewed…as rapidly as possible.” The court fees and lawyers’ fees, the time required, and perhaps above all the procedural rules and case law which postpone disclosure of the relevant – and often determinative – documents until tens of thousands of pounds have been spent, are an embarrassment (particularly when one is instructed by clients from continental Europe, accustomed in their own jurisdiction to sensible procedures and reasonable costs).

Of course we could reform the dispute resolution system without changing the law but it’s unlikely that we will – but if the law changes, there’s the opportunity to reform both. We should seize it.

In this author’s view we could do a lot worse than to enact the Government Procurement Agreement, even if we don’t become a party to the Agreement itself. The GPA gives effect to the same principles as underlie the EU directives, but is expressed in far simpler terms, omitting most of the micro-management which characterises the EU legislation: the whole of the GPA (disregarding the schedules, specific to each signatory state, which set out the types of contracts to which the signatory state’s procurement obligations are to apply) runs to just 22 articles, which print on 29 A4 pages (available here).  Moreover, the absence of a supra-national tribunal in the role of the General Court and the CJEU means that domestic law can more easily be developed consistently with the domestic legal order, subject to compliance with fundamental principle.

Article XVIII GPA requires signatory states to provide an independent administrative or judicial tribunal for complaints and sets out the essential procedural elements and remedial powers of the tribunal. Art. XVIII (6) sets out requirements applying to “a review body that is not a court”. Such a body must either be subject to judicial review of its decisions or adhere to the procedural requirements set out in XVIII (6). Perhaps the most notable of these, from the UK practitioner’s point of view, is the first:

…the procuring entity shall respond in writing to the challenge and disclose all relevant documents to the review body;

The introduction of such a rule in the UK would, without more, transform procurement disputes. If, for example, under the existing legal regime, a defendant authority were obliged to disclose the documents falling within regulation 84 PCR 2015 as a core “procurement file”, together with any other documents relevant to the dispute, most procurement cases would at least be shortened by a matter of months. If that disclosure were made to an expert tribunal whose job it was to form a view as to whether there was a case to answer and what questions the authority should answer (along with the opportunity, of course, for the parties to be heard), the whole character of procurement disputes would be transformed.

GPA states have a range of different ways of meeting the Art. XVIII requirement. Canada offers a specialist tribunal (the Canadian International Trade Tribunal, “CITT”) empowered to award compensatory damages and costs and/or to “recommend” (in effect, require) that the defendant authority award the contract to the complainant or otherwise change its decision; but complainants can also bring an action in the civil court (founded on an extended application of the “Blackpool contract” doctrine, see R (oao Ontario) v Ron Engineering [1981] 1 SCR 111.). By contrast, in Japan the rules of the Government Procurement Review Board make no provision for damages or costs – but, again, the complainant can make a claim under the State Redress Act for losses caused by the negligence or intentional misconduct of a state official. In Singapore on the other hand, the Tribunal has exclusive jurisdiction over procurement complaints and its power to make financial awards is limited to an order that the authority pay either the complainant’s tender costs or, where no tender costs have been incurred, the costs of the complaint.

All three of these tribunals (In all three jurisdictions, the tribunal is also responsible for determining disputes arising under other international trade agreements) specify how long a determination should take, in each case providing for both standard and expedited procedures. The shortest of the latter is in Japan: 25 days for certain kinds of contracts.  The longest is the statutory maximum of 135 days allowed in Canada’s CITT.

The author has long advocated a Procurement Appeals Tribunal to replace High Court litigation, at least for all but the most complex and high-value cases. The PAT would have a legal chairperson who might sit alone or with expert assessors (who could, on the model of the Employment Tribunal, be drawn from contracting authorities on one side and economic operators on the other) and would be free of the current jurisprudential resistance to hearing expert evidence and considering the merits of tenders. It would hear both factual and, where it would be helpful, expert opinion evidence. Such a Tribunal would fit very neatly into the GPA scheme; the UK could benefit from the many existing models, copying those elements which work best in GPA jurisdictions.  We might see lawyers’ roles diminish, at least in the settlement of disputes, but it must be likely that there would be clear and immediate benefits to contracting authorities and economic operators. Procurement practitioners should lobby for these reforms as part of the process of law reform which will follow the enactment of the Great Repeal Bill.

For the latest updates on Brexit, visit Brexit key developments: tracker. For Brexit-related content generally, see the Brexit landing page.


Keating Chambers David Gollancz

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