Brexit - Likely impact on procurement

  • Published on: 12 July 2017
  • By: Frances Talman

Last June Britain voted to terminate its agreement with the European Union. This left the entire country in a state of confusion and uncertainty about what this decision would mean for the future. A year on, for many businesses, it still isn’t certain what Brexit means for them. A topic that continues to challenge many people is how the impact of Brexit will affect public procurement. At eXceeding we have continued to review the challenges and opportunities posed by Brexit and can give those procuring the key points that will help them prepare for potential changes in public procurement policies. The Brexit negotiations have been planned to take up to two years to settle. In this time, many things can change, ideas will be challenged and there is likely to be numerous disagreements. The public procurement policies that are currently being discussed are likely to be revised and developed throughout the two year period with a period of transition for organisations to make the necessary arrangements to implement the revised legislation.

Something that was an obvious change from the very beginning is the currency fluctuation caused by Brexit. The fall in the value of the pound has immediately resulted in the cost increase nationally, whilst making UK exports looking like great value. From procurement prospective, it means that there will be increased costs in supply chain. Procurers need to be aware if the provision of the goods or services that are scheduled under your contract are not firm they will change in a way that will affect your buying power. Can you still afford to meet the full requirements if the prices increase due to currency fluctuations? We would advise seeking risk adverse hedging advice to those organisations that are exposed to currency movements.

At this point in time, the UK government has a great deal of input into the current procurement directives. Whilst the governments influence on EU procurement directives will end with Brexit we believe that the policies will remain in effect until alternative arrangements are debated, agreed and implemented through primary legislation. Current regulations seek to promote transparency, fairness and equality of opportunity and we would put forward that any legislation replacing current guidelines would seek to deliver similar outcomes.

We envisage a period of uncertainty in the near future and are working in the market to ensure that any transition arrangements continue to consider the needs of suppliers and purchasers in practical terms.

Our consultants are currently assisting procurers navigate these uncertain waters and are available to advise organisations on how to reduce the impact of future changes in competitive tendering and procurement.

Please give us a call on 03333 555 111 to discuss your requirements and to arrange a free consultation.