UK's Industrial Strategy announced-new Government contracting approach will favour UK-based firms after Brexit.
- UK Government spending currently runs circa £278 billion per annum.
- Government contractors will be given priority when bidding for UK Government work after Brexit.
- International players should take note and design their organization and operating models accordingly.
Currently, EU public procurement rules, under which "buy national" policies are outlawed, mean that companies from all 28 countries are given an equal opportunity to bid for work from the UK Government. In the UK, procurement rules such as the Public Contracts Regulations 2015 are based, largely, on the transposition of these EU rules into our domestic law.
A new Industrial Strategy
On Monday 23 January 2017, the UK Government published a 132-page strategy green paper-or consultation document-entitled Building our Industrial Strategy. The document sets out the Government's "buy British" plan aimed at helping UK-based suppliers, supply chains and infrastructure companies when bidding for public sector contracts. Focusing Government buyers on "social and economic factors" when designing their procurements will, the paper says, "encourage innovative solutions and maximise the positive impact of public procurement on strengthening the [UK's] economy."
An important pillar of the Government's strategy is its plan to use strategic Government procurement to drive innovation and better develop supply chains in the UK. In support of this, all major Government procurement projects are to be structured to support productivity improvements, thereby putting UK-based suppliers in the best position to compete for contracts throughout the supply chain. Accordingly, the "balanced scorecard" recently developed recently by the UK Cabinet Office will be rolled out across all major construction, infrastructure and capital investment projects with a value of £10 million or more. Procurement decisions will be evaluated against a broader set of criteria such as reduction of regional inequality as opposed to simply awarding them on a "value for money" basis.
"Those who hoped for a fully-baked strategy document will be disappointed; however the green paper gives a strong signal as to how UK procurement laws will likely be adjusted once the UK leaves the EU. We will also see how the EU responds-perhaps by tightening rules which already permit exclusion of companies based in third countries (which is what the UK will become) in the telecoms, post, water, energy and defence sectors."-Tim Wright, Pillsbury
The paper recognizes that, in certain key industries, healthcare and defence in particular, the Government is both the main customer and the regulator. Another highlighted sector is Government spending on IT-which has seen a number of high profile failures and budget overruns in recent years-but which the UK Government says it has transformed through initiatives such as its GCloud framework for procuring cloud-based services, and its SME-focused Digital Marketplace.
The specific procurement-related questions asked are:
- Are there further steps that the Government can take to support innovation through public procurement?
- What further steps can be taken to use public procurement to drive the industrial strategy in areas where government is the main client, such as healthcare and defence? Do we have the right institutions and policies in place in these sectors to exploit government's purchasing power to drive economic growth?
The consultation will be of interest to current and prospective bidders for Government work. The Government invites responders to participate as part of a "broad discussion on the approach and ideas [it has] set out, in order to make the industrial strategy effective in delivering an economy that works for everyone." Responses must be submitted to the Department for Business, Energy and Industrial Strategy's Industrial Strategy Team no later than 11:45pm on 17 April 2017.