Red dice

Brexit: What it means for UK procurement

We’re less than two weeks past the EU referendum result and so, at this early stage, it’s difficult to predict precisely how the UK’s exit from the EU will affect procurement rules and practices in the long term. What I have read so far is cautiously positive in the main, with an underlying assumption that nothing much will change until after the two year leaving process is complete.

I have my own opinions, hopes and worries on the whole thing, some concerned purely with how the result will affect my clients – who are predominately UK-based small businesses – and consequently, how my own business and those of my peers in the bid writing and tender services industry will be affected. I also have more personal and wide ranging thoughts and feelings concerning the effects the result may or will have on business, services and life in the UK in general.

Forgive me for not going into those here. That said, I would very much like your input and thoughts on how Brexit will affect your business when tendering for contracts as either a prime contractor or as a sub-contractor, or if you work in tender services or procurement yourself, so do leave a comment below (keep it civil, please!).

Without further ado, here’s what we know so far:

CCS

The Crown Commercial Service has put out a statement within their monthly update:

“Following the outcome of the EU referendum we have received a number of questions from our customers and suppliers about what the implications will be for our public procurement regulations. At this point it is too early for us to say what the longer-term implications will be but it is important to state that the current rules will continue to apply until the UK has left the EU, following the successful conclusion of exit negotiations. We are considering the longer term opportunities and will be advising Ministers. In the meantime, CCS remains focussed on delivering value for money for our customers and the taxpayer.”

Their annual business plan reiterates their commitment to increase the volume of government spend with SMEs to £1 in every £3 by 2020 as well as simplifying procedures with the aim of benefitting small businesses.

Department for Business, Innovation & Skills (BIS)

BIS seems to be very busy putting together roundtables, issuing statements and asking for input none of which appear to give any clear indication of how small businesses can be involved in ‘shaping future trade and investment policy’.

I think this is disappointing but probably inevitable – the focus right now is likely to be on those larger business that will have a significant and immediate impact. I hope that the collective 5.4 million SMEs in the UK – which total more than 99% of all UK business, employ around 15 million people and are responsible for 47% of the total UK turnover – will get the chance to have their say as soon as possible.

Crescent Purchasing Consortium (CPC)

CPC is a not-for-profit organisation, owned and run by the FE sector. Its main purpose is to produce EU-tendered purchasing frameworks for the FE, schools and academies sectors, that offer best value for money and follow best spending practices.

A statement by Peter Brewer, CPC MD, reminds us that the procurement principles of OJEU are also enshrined in UK legislation and are UK law and that the UK played a major role in the development of the Procurement Directives and Public Contract Regulations. The CPC feels that it is unlikely that the UK will jettison public procurement rules wholesale and that any changes that are made are unlikely to be material.

Again, they feel that nothing much will change over the short term, and that any new rules introduced over the longer term will take several years and will be of a lower priority than other key areas of legislation.

They have set up a dedicated page on their site to address EU exit news and progress.

Industry media

I will add to this post or write new posts as time goes on. However, seeking out and writing up views and predictions from every sector will take time, so today I’m just looking at two biggies, Construction and Health & Social Care:

Construction

Unsurprisingly, construction seems to have one of the most negative views of the Brexit impact and really, who can blame them? Already we’ve seen property funds locked, architects shedding staff and forecasters downgrading prospects. A poll by Building.co.uk asks whether Brexit will have a negative long term effect on the UK construction industry, with (at the time of writing) ‘yes’ at 60%, ‘no’ at 29% and an undecided 11%.

Procurement within the construction industry is inevitably going to be affected by this new, extremely cautious mindset – perhaps not too much in terms of procurement practices but certainly in terms of the volume of tendering opportunities available. This will no doubt affect small businesses quite severely, especially those who primarily sub-contract on larger tenders.

Health & Social Care

The health and social care sector, particularly contracts within or related to the NHS, appears to have a slightly more positive view, at least on procurement practices. The King’s Fund’s ‘Five big issues for health and social care after the Brexit vote’ notes, again, that our leaving the EU will probably not have a significant impact on NHS procurement and competition regulation, as that would mean the repeal or amendment of some quite sticky laws.

However, they do note that staffing is highly likely to be a significant issue. “55,000 of the NHS’s 1.3 million workforce and 80,000 of the 1.3 million workers in the adult social care sector (Health and Social Care Information Centre 2015; Skills for Care 2016)” currently working in the UK have come from other EU countries and there still remains a shortfall in staff recruitment and retention across both health and social care.

While freedom of movement policies are as yet unchanged, it’s likely that the overall uncertainty surrounding potential new rules will see a lot of current workers leaving to work elsewhere. For procurement, this means – at the very least – that bidders are going to have a hard time proving they have access to the qualified and experienced staff they need to win contracts, both now and in the future.

Business as usual?

I am somewhat reassured that the overall view is that it’s going to be ‘business as usual’ for procurement, for the next year or two at least, and that changes to procurement laws and regulations will need to be addressed properly with any significant changes being thoroughly put through their paces before implementation. In terms of keeping that level playing field and, in light of the government’s re-statement of their aim to continue making tendering more accessible for SMEs, it seems that the day-to-day of bid writing won’t change all that much. Yet.

I’m less confident about the impact Brexit may have on how SMEs fulfil those contracts, especially when it comes to staffing and, beyond that, the impact it will have on the volume of tenders being issued. We’ve already seen a significant downturn in the number of tenders issued by councils and local authorities over the last few years due to ‘austerity’ measures: smaller budgets = fewer contracts.

I’m also left wondering if shorter contracts will start to become the norm, giving contracting organisations more flexibility in their options as the landscape changes through year one, two and beyond.

In summary

Right now, it’s too early to say. Which is profoundly frustrating as it means that I can’t advise my clients in any meaningful way about the long term future, I can only focus on the here and now with any kind of certainty.

I strongly encourage you to keep potential Brexit ripples in mind when considering your bid/no bid and long term, contract-led growth strategies and to look at ways of ensuring you have the staff (and resources, if your own supply chain might be affected) to fulfil any contracts you do tender for.

It looks like the general rules for procurement will remain in place for now but I’d also like you to keep an eye on any unexpected limitations – in specifications, pass/fail qualifiers or tender instructions – that definitely do, or could be seen to, exclude SMEs, particularly small and micro businesses.

Mystery Shopper Scheme

The CCS, Cabinet Office and the Efficiency and Reform Group continue to promote their Mystery Shopper scheme, where bidders can report any unsound practices in procurement for investigation. I will be keeping a close eye on these reports over the next few years – I’d also encourage you to consider making a report if you find or suspect that the specifications or instructions in the tenders you apply for are making procurement more, rather than less, difficult for SMEs.

If you’re unsure, do please get in touch for a chat – even if it’s about a bid I’ve not been involved in – and together we’ll figure out what to do.

Have your say

As I mentioned at the top, I would very much like to hear your views, so do please leave a comment, or just drop me an email if you’d prefer your thoughts and opinions not to be publicly visible.

If your sector or industry seems to be particularly well-insulated or particularly badly affected, let me know. I’d be interested to investigate why that may be in more detail.

Please be civil! It is a contentious and important subject (as it should be) but let’s keep it respectful.

Lyndsey

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