Wendy Ni­col­son: Post-Brexit divergence in legislation for procurement creates danger

Wendy Ni­col­son: Post-Brexit divergence in legislation for procurement creates danger

Wendy Ni­col­son

New rules which won’t ap­ply north of the bor­der will mark the most sig­nif­i­cant change to pro­cure­ment law and prac­tice for a gen­er­a­tion, writes Wendy Ni­col­son.

The Cabinet Office has issued its latest update on the UK government’s Transforming Public Procurement Programme, including helpful information on the timeline for the passage of its new Procurement Bill, expected to come into effect as early as Spring 2024. Initially announced just after the 2016 Brexit vote, ministers aim to overhaul current procurement legislation, derived from EU law, to drive UK economic growth and job creation.

When introducing the Procurement Bill to Parliament last May, Lord True said it was part of the drive to free the UK from “many bureaucratic and process-driven regulations that stifled our country and businesses for many years”.

The UK government believes reform of current rules will “better tailor the procurement framework to the country’s needs”, stating that reform will make procurement“simpler, quicker, more transparent and less bureaucratic”.

Ministers claim that their new bill will “create more opportunities for innovation and support new businesses, including small and local companies ,” that wish to deliver public contracts.

Time will tell if these bold objectives will be achieved, but there’s no doubt the new legislation will mark the most significant change to procurement law and practice for a generation. It will also only apply to procurement in England, Wales, and Northern Ireland, with Scotland likely to adopt its own legislation – creating a potential divergence north and south of the border.

While procurement is a devolved area of competence where Scotland has its own regulations, existing rules throughout the UK derive from the same EU directives and are broadly similar on both sides of the border. Unlike Wales, which has decided to join England under the UK government’ s procurement bill, the Scottish government announced it would maintain its own legal framework on this matter.

In reality, this means we will soon see two quite distinct procurement regimes operating – one in Scotland, the other throughout the rest of the UK. There are concerns this divergence could, in theory, create challenges for Scottish businesses bidding for public sector contracts in the rest of the UK.

While Scotland-based businesses wishing to bid for public contracts would still have access to the market across the rest of the UK, having to operate within two distinct regimes could raise administrative challenges and create cost implications.

It should also be noted that the Scottish public sector itself spends more than £13bn a year buying goods, services and works. Going forward, and if Lord True gets his wish, there is a risk that bidding for public sector contracts in Scotland becomes less attractive. There is a potential danger that after the new rules south of the border bed in, suppliers see the procurement rules in Scotland as being more complex than those in the rest of the UK. This could deter some companies from bidding for public sector contracts here lowering competitive tendering activity and increasing costs for Scottish public sector bodies.

In some ways the Scottish government is ahead of the rest of the UK, having adopted legislation in 2014 providing for a comprehensive set of public procurement rules (going beyond what was required under EU law). With the implementation of a new regime south of the border, it will need to consider what changes it might now make to improve the current Scottish legislation.

Scottish ministers are likely to consider many of the same themes that are being covered in the Procurement Bill, but have the opportunity to avoid some of its more complex features. At the same time, they can also ensure alignment with some of the Bill’ s more positive aspects and minimise issues with divergence.

With the procurement landscape changing across the UK, it is important that businesses operating across the UK engage with these reforms and get to grips with the new legislation and how it will work in practice.

Wendy Nicolson is a partner at CMS

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