Business life goes on post Brexit

Just as the UK is on the verge of finally leaving the EU, at 11pm on 29 March, with or without a deal, a loophole that has allowed local authorities to enter into development agreements without going through the OJEU processes has been closed.

Councils could agree the specifications of what should be built on land without following EU procurement rules by entering agreements with developers without immediately enforceable obligations. Until now this sort of agreement has not been regarded as a public works contract, but for the first time a claimant has been granted a remedy of ineffectiveness of contract in such a case. The remedy has been available in England and Wales for some nine years. This is the first time a contract has been cancelled following a challenge by a supplier.

The tract of land in question is on an industrial estate in Newbury where West Berkshire Council had entered into a development agreement with developer St Modwens on the understanding that the developer acquired land on the site. Another developer, Faraday, challenged the contract on the basis that the council had effectively bound itself into a public works contract when St Modwens acquired the land. This was against the spirit of the procurement regulations, if nothing else.

The High Court initially ruled that this was not a public works contract but the appeal court now finds that it was unlawful for the council to enter into the development agreement as by doing so it committed itself to entering a public works contract, bypassing the requirement to advertise Europe wide.

The court could have imposed an unlimited fine, but the council escaped with a £1 fine, possibly because it had not acted in bad faith. Some might question whether having this loophole closed was worth it when the whole EU procurement process is likely to be abandoned shortly. But commercial life goes on post Brexit and the procurement regulations looks like changing more in detail than anything else.

Guidance from the Cabinet Office has confirmed that although public bodies may no longer have access to the OJEU they will still have ‘a legal obligation to publish public procurement information’.

‘The current regulations will be amended to ensure they remain operable and functional on exit,’ says the guidance.

The majority of the procurement regulations and in particular the different procedures available to contracting authorities and entities, will remain exactly the same. The key difference for contracting authorities would be the need to send notices to a new UK e-notification service instead of the EU Publications Office.

‘The new UK e-notification service will be ready for use by exit day,’ the Cabinet Office says.
The requirement to advertise in Contracts Finder, MoD Defence Contracts Online, Public Contracts Scotland, Sell2Wales and eTendersNI will remain unchanged.

Aside from that, it says public procurement regulations will remain unchanged after an EU exit, currently scheduled for 11pm on 29 March.

UK contract opportunities from the UK public-sector can be accessed via the new UK e-notification service instead of TED.

Suppliers who wish to access contract opportunities from the EU can continue to do so via OJEU/TED.
If the UK leaves the EU with a deal, the public procurement regulations will remain broadly unchanged during the implementation period, which runs until December 2020. CL

Nick Barrett
Editor