Procurement law practitioners will no doubt have diverse views as to what the United Kingdom should decide on 23 June 2016. Some may even be concerned that their views are confused by self-interest in maintaining a lively procurement law jurisdiction. I suggest that we need have no such concern. Procurement law will not disappear upon Brexit, but might just get more interesting.
Much of the body of EU law that it is suggested could be removed is likely only to be succeeded by regulation and red tape covering much the same subject matter. The majority of the regulatory regimes derived from the EU deal with subject matter that would either have to be regulated, or which those living in the UK would expect to be regulated in some way. In the case of many of these regimes it is likely that any post-Brexit solution will involve reimplementation of something very similar to the EU solution. In practice, the introduction of a separate and distinct system would hinder the ability of UK consumers and purchasers to buy from elsewhere in the EU, and would probably make it necessary for UK exporters to produce goods or services compliant with both EU and UK systems.
It may be said that such practical arguments do not apply in the case of procurement law. It can be fairly pointed out that there was little if any procurement law before accession to the EU and that the UK might quite happily survive without such a system now.
However there are many things we did not enjoy in 1973 which might now be difficult to dispense with. In 1973 public law in the United Kingdom was in its infancy – the decision in Anisminic had been handed down only 4 years earlier. Further, whatever may have been sensible then in practice will now be difficult to sustain given the way in which the regulation of the global economy has evolved.
Demand for procurement law
But first and foremost, the driver for public procurement law has been clients’ increasing appetite to challenge decisions in public and utility procurements. In 1973 it was not the done thing to challenge a procurement under the existing procurement legislation, or that which was adopted over the succeeding years.
The establishment of public procurement law based on regulations from 1991 has provided the catalyst for the demand for procurement challenge procedures to grow. The demand has not been consistent across all sectors, or nationality of challenger. The environment is now one in which most tenderers for public or utility contracts of any size would expect to at least consider their legal rights and remedies if they felt unfairly treated in the process.
Unless demand for the ability to make the challenges falls away dramatically there will be demand for lawyers to find ways of bringing those challenges.
Procurement challenges without the Regulations
The availability of the procurement regulations in the public and utility sector has dampened down the development of procurement challenge jurisdictions in either public or private law, such as has developed in Canada over the last few decades. The judgment of Elias L.J. in JBW Group Ltd v Ministry of Justice [2012] EWCA Civ 8, paras 57 to 60 demonstrates reasonably clearly that in the absence of the regulations a number of procurement challenges might readily have been brought as contract claims. (See Legal update, Court of Appeal ruling on definition of services concession.)
The effect of the regulations upon a public law jurisdiction in this area is more complex and is examined in the recent article by Aspey, “The search for the true public law element: judicial review of procurement decisions” (2016) PL 35. Detailed consideration of the interesting points raised there will have to be for another blog. Whatever the state of the law is now, it must be likely that there would by now have been a very much more demanding public law jurisdiction for analysis of procurement decisions if the regulations had not had such a sterilising effect on the development of the law.
A useful indicator of where the law might otherwise have been or where it would develop in the absence of any procurement regulations is offered by the judgment of the Privy Council in The Central Tenders Board v White [2015] UKPC 39 (see Legal update, Tenderers for public contracts should be afforded fair and equal treatment by contracting authorities (Privy Council)). This concerned a procurement in Montserrat and it appears that there was no relevant statutory framework for the review of the decision making in that procurement. It was stated in the judgment that “…there is no dispute as a general principle of public law that tenderers for public contracts should be afforded fair and equal treatment.” As it happens in that case the decision was based on the application of an implied contractual duty owed by the purchasing authority to the under-bidder and to every other invitee that they would each be treated fairly and equally.
In a regulations-free world there would be plenty of work to be done to develop sensible jurisdictions in either private or public law, but given a client appetite for challenges, it seems likely that there would plenty of opportunities to develop a “new” procurement law on traditional common law principles.
Procurement Regulations after Brexit
It seems rather unlikely though that this would be the situation after Brexit. There is a left wing rationale for Brexit in which the EU economic law of which public procurement is part has the effect of providing a constitutional entrenchment of the capitalist economic system (see Nicol, “The Constitutional Protection of Capitalism”, page115). The logic of this philosophy would indeed be that there would be no procurement regulations and no place for conferring rights upon private commercial interests. It does not seem likely though that this would be political backdrop against which any Brexit would be effected.
On the contrary, most Brexiteers endorse the idea that the United Kingdom would continue to engage with the existing world trade system through the World Trade Organisation (WTO), or bilateral trade agreements, or some other closer engagement with the EU such as the European Economic Area (EEA). Under EEA arrangements there would be no cause for any change to the current regulations.
Even if the UK looked for a future outside the EEA, the government would no doubt continue to be an enthusiast for arrangements such as the CETA agreement recently entered into by Canada and the EU and the TTIP agreement under discussion between the United States and the EU. It would presumably look for the United Kingdom to enter just such agreements. Such agreements do or will incorporate a procurement chapter and of such agreements with the United Kingdom as a party would involve introduction of a domestic procurement regulatory regime. The standards applicable in such agreements are much as apply under existing EU law. There may be a number of interesting wrinkles along the way but the overall effect would be that procurement law looking much like the current regime would be maintained.
The same situation would be expected to prevail if the United Kingdom sought to engage with the WTO. If the United Kingdom sought to join the WTO it would be expected to apply to join and in due course accede to the Government Procurement Agreement (GPA), a plurilateral agreement within the WTO framework. The terms of the GPA, published in the Official Journal of the EU at OJ L 68/1, 7 March 2014 (see Legal update, Council decision on conclusion of the revised WTO GPA published in Official Journal), are a rather simplified version of the EU regime. Accession to the GPA would necessitate the implementation of a regime all but indistinguishable from that in the EU.
Even if it were decided to eliminate all the existing procurement regimes and not to replace them with any of these suggested regimes, this would not be a sustainable long term position for the United Kingdom. The EU Commission has a long-held ambition to put in place a measure that enables the EU to close its public procurement markets to entities from states that do not offer reciprocal and enforceable access to their own public procurement markets. The Commission’s 2012 proposal was blocked by a coalition of states in which the United Kingdom was a key player. The Commission has recently put forward a new reinvigorated proposal (see Legal update, Commission makes revised proposals to open up international procurement). Whatever the current prospects of that measure becoming law, it is much less likely to be blocked after Brexit. This will mean that there will be an existing measure permitting and in some circumstances requiring retaliatory action to be taken against UK entities bidding in the EU if there is no reciprocal access in the UK. It seems likely that the UK would seek to avoid that situation occurring and would put in place an appropriate procurement regime matching, and therefore probably similar to the EU system.
Conclusion
While Brexit may enable us to avoid a few of the rigours of the EU public procurement system, the likelihood is that public procurement challenges will remain part of the landscape of public purchasing in the United Kingdom. As most of the relevant models for that law will be EU-inspired, UK legislators will probably have a lot less influence over the content of the supposedly “British” legislation.
We may return to this subject on the blog as further commentary emerges.
For more commentary on Brexit, see our EU referendum collections page.