Brexit: the Possible Implications for Public Sector Procurement

We discuss the possible implications for public sector procurement and how firms may be affected by Brexit in general and more specifically when bidding for contracts.

EU Procurement Directives

The procurement directives and regulations in the UK are determined by EU laws, which are then implemented in national legislation. The current EU procurement directives (2014) are unlikely to change overnight and the UK may wish to keep current regulations in place longer term. However, procurement will no longer be officially governed by the EU laws.

It is thought changes may be implemented across a range of legal topics which impact procurement contracts, such as data protection, competition, tax, and employment law, e.g. agency workers and TUPE. This would certainly impact the supply of goods and services in general, but also the process of tendering for contracts, as firms would need to react accordingly and reflect any changes in their bid proposals.

Council Spending

New figures from DCLG and the Chartered Institute of Public Finance and Accountancy (CIPFA), show local government spending is set to fall by 1%, or £0.9bn, in this financial year.

Regardless of the monetary implications of leaving the EU, local authorities were already under pressure to make cost savings and become more efficient. The social care industry has felt the highest pressures recently with the National Living Wage costing councils in excess of £300m to cover home care contracts. In line with this, the only two areas of spending which are set to increase are adult services (2.2% rise) and children’s services (1.8% rise).

Alongside council spending, many firms may also cut back their own spending in areas such as buying, staff recruitment and outsourcing, as the current economic climate is uncertain.

Tendering for Contracts

Local authority cost saving pressures will make it even more pertinent for suppliers to offer the best value for money, yet still at a high quality. Your PQQ and tender responses must reflect this and as always, the bidding process will be highly competitive. Certain contracts will become even more lucrative to firms as it is an unclear time for the market, therefore securing an important contract can be vital for company growth.

British firms bidding for contracts in other EU member states are still guaranteed access to the market for the time being, and again it could take a while to implement any changes.

As mentioned previously, it is unlikely current procurement practices will undergo any immediate changes. However, organisations should monitor the situation closely for a time when this could change. A selection process for public sector goods and services will always need to be in place, regardless of EU regulations; much like the private sector, which is unregulated yet a bidding process still exists.

To discuss how we can assist with an upcoming bid submission, or for a more general chat, contact us on 020 3507 0314.