Future Fleet Forum 2018: The effect of Brexit on fleet management procurement, by Professor Christopher Bovis, University of Hull

Published:  10 March, 2018

The UK currently has one of the best procurement systems in the world, according to Christopher Bovis, professor of international and European business law at the University of Hull. His presentation focused on the potential disruption to this system from Brexit, and why negotiations for access to the customs union and single market will be so important.

Why is the UK system so good? Because the UK has applied EU directives and then gone over and above what is required. This allows municipalities to add extra elements such as environmental protection, innovation, and health and safety into the procurement process. The UK system provides for public-private partnerships, concessions, and a number of other flexibilities. This might not sound that radical until you realise that almost nowhere else in the world does evaluating the whole-life costs of a contract – value for money – have such importance. Elsewhere, lowest cost is usually the driving factor for contract awards.

Brexit won’t see any immediate changes, Professor Bovis explained, because the negotiation and transition periods must expire before any replication of any aspect of the single market can be agreed between the UK and the EU. He then outlined what he sees as the three possible scenarios for UK procurement law after Brexit, each of which has its downsides.

The first is membership of the European Economic Area, like Norway and Switzerland. This would allow access to the customs union and single market but without a seat at the table – and will depend on contributions to the EU budget.

The second is the WTO, specifically the Government Procurement Agreement, which is the part of the WTO that regulates procurement. ‘However, the GPA is a skeleton of the current system and does not include fundamental areas such as services, intellectual property and market access,’ said Professor Bovis. ‘It also regulates the system on a reciprocal basis, and therefore members must reciprocate access to their markets for anyone within the WTO.

‘Up to a point, this is fantastic. But, when it comes to procurement, the WTO put on the emergency brakes because every government knows procurement is strategic as it regulates strategic industries, principles and preferences. Certain industries, such as aviation, transport, energy and infrastructure, need protection and preferences. These are not included under WTO. And memberships of the GPA is only a third of the total WTO membership because many countries do not want to open their markets.’

The third option is something like TTIP, the Transatlantic Trade and Investment Partnership. Professor Bovis described this as ‘WTO+’. The system allows the inclusion of some services and opens markets to some sectors between its members across the EU, US and Canada. 'But it will be a steep learning curve for the UK to learn the tricks of the trade to replicate these trade agreements and it is imperative that the new system is negotiated quickly.’

In particular, Professor Bovis highlighted the need for innovation as a part of the procurement process, and that this can only happen in a system that includes the concept of value for money. This is an element that is difficult to replicate because the life-cycle costing methodology doesn’t exist in any procurement system outside the EU. ‘How will you get all these things into the real market when the real market precludes consideration of them? This is the biggest concern.’

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LAPV (Local Authority Plant and Vehicles) is the only UK information source purely dedicated to local authority vehicles and affiliated plant equipment. Appearing four times a year, it offers well-researched technical articles on the latest equipment/technology as well as in-depth interviews with key industry professionals. More...

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