What are the rules on Government and public sector contracts?

  • At present, there are common EU based rules on tenders for government and public sector contracts. They also apply to utilities such as energy water and communications entities. The rules apply to contracts for works goods and services above particular thresholds.
  • Under the EU rules, proposed contracts for works goods and services above a particular level must be notified in the EU journal. Tenderers from all EU states must be permitted to participate without discrimination. There are detailed rules and criteria for the award of the tender. There are mandatory legal remedies by successful tenderers can challenge the legality of the process.
  • Some service businesses or their important clients established in one jurisdiction provide services to public sector bodies  in the other jurisdiction. Where they are party to existing public sector contracts, their terms should be reviewed to see if they are  affected by the UK’s departure from the European Union. Early planning should take place in relation to the renewal of such contracts.
  • The common EU-wide public sector contract (procurement) rules will no longer apply to the UK after 2020. The UK is re-enacting similar procurement rules with some amendments. The UK is joining the WTO General Procurement Agreement to which the EU is already a party. The rules are similar to the EU procurement rules but are less detailed and thoroughgoing and have less effective remedies.

What is the WTO agreement on government procurement?

  • In 2021 the UK will no longer be subject to the EU rules on public procurement. Therefore, businesses established in one jurisdiction but no longer able to rely on those in relation to sector contracts in the other jurisdiction.
  • The United Kingdom is joining the  WTO Government Procurement Agreement (GPA) to which the EU is already a party. The exact terms and commitments on which the UK joins will be determined by schedules lodged with the WTO. They will specify the threshold amounts for contracts for works, services and supplies.
  • The WTO procurement agreement has some of the features of the EU wide procurement rules but has less extensive coverage and less effective remedies. Unlike most WTO agreements some element of direct dress Is available to businesses which are adversely affected is required.
  • The WTO procurement agreement provides that each State (UK and EU) is to provide immediate and unconditional access to the product services and suppliers of other states. They are to afford treatment no less favourable than that accorded to domestic products services and suppliers. Under the most-favoured-nation principle, each state must afford the same rules to all other states as is afforded to the most-favoured-nation.
  • The WTO GPA rules apply to contracts valued above the coverage schedules lodged by the state.  Thresholds of contract amount are usually between e €130,000 and €400,000 for goods and service depending in on the whether a central government, local government or other public sector is involved and  €5,000,000 for works contracts.
  • The GPA provides that a member state shall not treat a locally established supplier less favourably than another locally established supplier on the basis of the degree of foreign affiliation or ownership. States shall not discriminate against locally established suppliers on the basis of the country of production of the goods and services.
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