Bidding Implications of Brexit
Dear <<First Name>>,
Sixfold’s newest associate, John Fernau makes an initial assessment of the implications for bidders, and he should know what he is talking about. He ran procurement for the ODA and then took responsibility for the entire (£2.8b) Home Office procurement budget!
'Whatever your views on the referendum result, we are in a period of unprecedented uncertainty and, possibly, change. So, what does this mean for those businesses considering bidding for public sector contracts? Perhaps nothing and everything:
Nothing
If we consider the details of Government procurement processes, we expect that the impact of Brexit may be less than you might imagine.
Firstly, nothing at all will change until we legally leave the EU, which could be two years or more after Article 50 is instigated. We expect that this may not be until early 2017, leaving the status quo in place until 2019. Clearly if we remain members of the single market we will have to maintain the current EU driven public procurement laws.
Additionally, under the EU, we are signatories to the World Trade Organisation’s Government Procurement Agreement which opens government procurement markets amongst its members. We would certainly want to remain a signatory to the GPA because its other members include countries we are keen to develop more business with such as China and the USA. A key condition of being a signatory is maintaining standards of openness, transparency and non-discrimination in public procurement, rather like we do under EU rules.
Of course, there are some areas in which a future administration may wish to tinker with procurement policy. For example, the application of spend quotas for local employment and content, as is practiced in the USA. However, we do not believe that bidding or the government procurement processes will be subject to substantial change. After all, they have protected individual government officials for many years against charges of poor procurement decision making and, generally, given adequate value for money from what has been procured. It is difficult to conceive a system of government procurement which can do better and provide resistance against substantial challenge and scrutiny.
Everything
Most commentators agree that our business environment is facing a prolonged period of uncertainty, for at least two years and maybe longer. There is a good chance that this will leave the economy stagnant or slow growing, at best.
In such times businesses will look to diversify their client base. As commercial activity slows, some businesses may consider this a good time to develop their public sector business to provide a relatively reliable income stream. The implications of this are that this would create greater competition in public markets and effective bidding practices will be even more critical to give contract success.
Then, of course, if the economy performs worse than forecast, tax receipts may reduce and this would lead to further budget cuts and austerity. However, our best guess is that government will have to continue to buy much of what it does now. After all, we will still have to provide housing and medical services irrespective of the tax revenues. However, it is clear that those who offer savings will be at an advantage, and those offering innovative new methods to improve service delivery and create ongoing efficiency, even more so. We believe that the government will continue to invest to save. So there will always be a place for innovation.
Conclusion
Whatever happens, Government will keep wanting to buy and will be seeking the best value from suppliers. Despite the risk adverse nature of the public sector procurement engine, the time is ripe for truly innovative solutions. Moreover, the procurement competition rules are not likely to be altered in the foreseeable future. So “sharpen your pencil” on your prices and tout your good ideas to whomever in Government will listen. The general level of business to be done is unlikely to diminish, so go and win the bits that are rightfully yours!'
And as ever, if you would like to discuss this some more, we would love to hear from you. Please do send feedback or comments to us at peter.lobl@sixfoldinternational.co.uk.
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