EU Procurement Act Spares UK Firms, For Now
- The EU Public Procurement Act currently exempts the UK from its restrictions, but only for now.
- UK firms are now third country suppliers, risking exclusion and higher costs in EU public contracts.
- Defence and utilities procurement remain unresolved and subject to further negotiation.
Third country status could still price British suppliers out of EU public contracts years from now.
The EU has adopted its Public Procurement Act, and William Bain, Head of Trade Policy at the British Chambers of Commerce, says UK firms will "breathe a sigh of relief, for now" that they are not targeted by it.
The Act extends preference for EU companies into government procurement, a sector that makes up 15% of the EU's economy. For the moment, the UK is exempt from the restrictions it imposes. That exemption is the whole reason for the relief, and it is worth being clear that it applies to the rules as they stand today, not to whatever comes out of further negotiation.
The complication is that the UK is now a third country supplier to the EU, and Bain is blunt that this leaves British firms at risk of being squeezed out of supply chains, and facing higher costs and more bureaucracy, as the "Made In Europe" agenda continues. The rules are still being considered in other EU institutions following the Leaders' Summit, so this is not a settled position, it is a live one.
For UK manufacturers with contracts feeding EU public sector supply chains, including the automotive, aircraft and medical equipment work Bain names specifically, the exemption does not remove the exposure, it just delays it. Subcontracting terms, bidding eligibility and any clause that assumes EU preference in a customer's own procurement rules are all worth checking now, before the rules that replace them are finalised rather than after.
There is a possible upside buried in the same reform. Bain notes that replacing a patchwork of national procurement laws across Europe with one set of rules could actually help UK firms bidding in, by cutting the cost of navigating multiple national systems. Defence and utilities procurement remain areas of uncertainty, and Bain expects these to be addressed as the legislation proceeds.
Businesses that are tracking how this legislation moves through EU institutions, rather than waiting for a final version to land, will have more room to adjust supplier terms and bidding arrangements before the rules bite.