Public procurement refers to how the public sector organisations purchase services, goods, and works. It is a big business in the UK and is currently governed by the rules of the European Union. With the British parliament rejecting the deal that Prime Minister, Teresa May, had negotiated, all eyes are on the next steps the government decides to take.
Importance of public procurement
The UK spends 20% of its GDP on public procurement. So, it is prudent to ensure that this spend is wisely done to benefit communities and businesses. At the moment, UK businesses have access to the markets in the EU and vice versa. But, once the country leaves the EU, things will change and this will have a profound effect on public procurement.
Procurement by the public sector is regulated by the EU rules. The rules are designed to prevent EU members from discriminating businesses from other nations. They help to level the playing field and ensure each business has an equal chance of winning a public sector contract, be it for utilities, security or defence.
The public sector contracts help to improve security and civic infrastructure so that communities can enjoy the perks.
Why a Brexit deal is important for public procurement
Some critics believe that the EU rules prevent the UK government buying from British companies. But, the rules ensure that businesses in the UK can bid for government contracts in other EU countries and they stand a chance of winning these lucrative contracts. Furthermore, not only can businesses access the public procurement markets in the member states, but they can also enter the markets in non-EU countries. The EU has free trade agreements with several non-EU countries, and this enables the UK to be active in those procurement markets.
If the UK is unable to develop a deal for public procurement after it exits the EU on 29 March 2019, it will have to revert to the default procurement rules that fall under the aegis of the World Trade Organisation (WTO). Should this happen, there will be no mutual access to public procurement markets. While the government could favour UK companies, these companies will face discrimination when accessing the markets in European countries.
The other alternative would be to re-join the WTO to access the EU procurement markets as well as the UK, Japan, and 18 other countries. But, it would not enjoy complete access to public procurement markets that it currently enjoys as a full EU member.