The fallout from the referendum decision to leave the European Union is still falling heavily and the construction industry like most others is wondering what will happen next. Little conclusive can be said to have happened so far, and opinions divide sharply on whether the fallout will prove to be a smokescreen hiding some major upsets already on their way, or just a morning mist that will soon be blown away revealing a world of post Brexit opportunity.
Place your bets then. Little changes immediately, but there are some major tasks ahead in the procurement sector alone with legislation like the Public Contracts Regulations possibly having to be rethought and redrafted. There have been reports of clauses being inserted in contracts ahead of the referendum to protect developers and funders, giving them rights to halt involvement in projects in the event of a referendum yes vote. Sorting out what is the legal force of hastily drawn contract amendments could be a fruitful source of work for lawyers.
There will be changes to the law in a wide range of areas affecting construction, including intellectual property, employment, the use of agency workers and data protection. More immediately contracts involving companies from EU member states will have to be looked at, particularly where cross-border services are involved. Some consortia members may want to pull out of bids because of the uncertainties. Negotiations on contracts going forward will doubtless be slowed considerably as these and many other factors like exchange rate risk have to be taken into account.
It would be useful at such a time to be able to turn for guidance to a government department that has relevant experience in these issues, but government seems to be short of talent, let alone experience, in many areas related to procurement. It probably wasn’t the ideal time then to introduce a new minister, Ben Gummer, to a post that will be directly concerned with many of the problems that will no doubt arise.
Mr Gummer has been appointed to the Cabinet Office as the minister who will oversee implementation of the government’s construction strategy, including procurement. He will also be responsible for seeking cost-cutting measures under the government’s previously announced search for £1.7bn savings on construction costs and for the continued implementation of Building Information Modeling.
Mr Gummer will oversee the work of the Crown Commercial Service which, as the government’s purchasing agency, has been taking a lead in improving civil service procurement and project management skills.
A new set of eyes and a bit of youthful vigour may be just what procurement needs, but just in case experience is to count in the post Brexit world Lord O’Neill has been retained as the government’s ‘infrastructure tsar’ or Commercial Secretary at the Treasury. He was a leading force in the previous government’s infrastructure policy and in launching the National Infrastructure Delivery Plan. Both look likely to be needed, along with more than a little luck, as the industry shapes its future outside of the EU.
Nick Barrett
Editor