What the life sciences sector needs to know about supplying to the UK public health service post Brexit

Why is this an issue?

As we all know, the UK left the European Union on 31 January 2020, triggering an 11 month transition period. As we come ever closer to the end of that transition period (31 December 2020), not all of the terms of the future relationship between the EU and the UK have been ironed out and we still do not know for sure whether there will be “a deal” or not.

Life sciences companies wishing to supply their products and services into the UK National Health Service (NHS) have long had to navigate their way around the complexities of the EU public procurement regulations. Whether it be competing to get a place on highly regulated framework agreements or seeking to negotiate a direct award for products such as COVID-19 test kits that the NHS urgently need, it can be a minefield for the uninitiated.

The public procurement regulations that apply in the UK at the moment derive from EU law. So what does the life sciences sector need to know about supplying to the NHS post Brexit?

The main issue facing those in the industry relying on a public sector market is that we still can’t be sure exactly which public procurement regime will apply post Brexit. Although the end of the transition period is getting ever closer, it is still possible that the EU and UK will negotiate a free trade agreement. As well as dealing with all the knotty issues like state aid and “level playing field”, the agreement could make specific provisions for public procurement, in which case these terms would govern UK public procurement going forward. However, there have been no indications yet that specific provisions would be included in any free trade agreement. Perhaps the parties have bigger fish to fry…?  That being the current position, this note looks at what the position will be if negotiated terms on public procurement do not make it into the final deal.

What has been the position during the transition period?

The European Union Withdrawal Agreement Act 2020 was enacted on 23 January 2020 providing, among other things, for the rules governing public procurement to remain unchanged during the transition period. So, until 31 December, the EU law and process (enacted in the Public Contracts Regulations 2015) will continue to apply in the usual pre-Brexit way.

What about procurements started before 31 December that are continuing post Brexit?

The amending public procurement regulations (discussed below) provide that those public procurements started before 31 December will continue to be subject to EU law after this date. This means that the changes discussed below will not apply to these contracts.

The same goes for call-off contracts from framework agreements which were either established before 31 December, or established following a procurement which started before 31 December.

Amendments to the UK procurement regulations

The regulations which currently govern public procurement in the UK are the Public Contracts Regulations 2015 (PCR). These implement EU Directives, and are now part of UK law so would not automatically fall away after 31 December.

Nonetheless, the Public Procurement (Amendments etc.) (EU Exit) Regulations 2020 (PPR 2020) were enacted on 19 November 2020, providing for the PCR to be amended. Largely, these amendments ensure that the PCR will continue to make sense once the UK is no longer subject to EU law and process. The PPR 2020 will come into force on 1 January 2021.

Find a Tender

The most significant change brought about by the PPR 2020 will be the introduction of a UK e-notification portal, 'Find a Tender'.

From 1 January 2021, UK public bodies like the NHS will no longer have access to the EU Publications Office and the online supplement to the OJEU dedicated to European public procurement (Tenders Electronic Daily). Instead, all procurement notices will be published on Find a Tender.

The latest guidance by the Cabinet Office advises that public sector bodies should publish tenders on Find a Tender (as well as publishing an OJEU notice) before 31 December. However, this is not a legal requirement. The Cabinet Office guidance also states that public sector bodies should make suppliers aware of the relevant changes in how notices are published.

It should be noted that any obligation to post a notice on a different platform (such as Contract Finder) will not be affected.

The European Commission's role

The supervisory role currently carried out by the European Commission will be taken on by the Cabinet Office from 1 January.

Social, environmental or labour laws

Currently, a public sector body may refuse to award a contract to a bidder where the public sector body has established that the tender does not comply with certain international provisions in the field of environmental, social and labour law. The amending regulations insert new provisions to give the Minister for the Cabinet Office the power to disapply some of the international provisions in these fields or add provisions that are not listed.

Other changes

The other changes provided for by the PPR 2020 include:

• EURO financial thresholds will be replaced with the current sterling amount;
• references to the EU treaties will be removed; and
• references to the European Single Procurement Document will be removed.

The GPA

The Agreement on Government Procurement (GPA) is the World Trade Organisation agreement governing the public procurement processes between the countries that are a party to it. The EU is a party to the agreement, and as of 7 October 2020 the UK has secured its position as an independent party to the GPA. This means that from 1 January, the UK will still be able to compete for EU public procurement contracts.

However, the scope of the GPA is more limited than that of EU procurement directives. Therefore,  the UK will be able to compete on a more limited basis than before, particularly in relation to utility sectors, coverage of private utilities, the defence sector, some services and concessions and certain private contracts subsidised by the Government. The GPA also does not include below-threshold procurement.

It should be noted that other countries are also parties to the GPA, including the United States, Japan, Canada and South Korea. The UK will therefore also be able to compete for public contracts in these jurisdictions.

Future changes

In 2019, the Government said that it planned to reform public procurement following Brexit, stating that the current procurement rules are too complex and expensive. No details were given on how the rules might be changed, and since the announcement there have not been further communications to this effect.

It is possible that Government's position on this issue will become more clear in 2021, by which point the exact relationship between the UK and the EU will be more certain. Indeed, the Government have mentioned that they will put out a Procurement White Paper seeking input from stakeholders on what shape future UK procurement will take.

So it seems that even after Brexit, the regulatory landscape for life sciences companies supplying into the UK public health sector will be rather uncertain, at least in the short term. Watch this space!