How The ‘Brexit’ Could Change Public Procurement

Although the UK referendum isn’t until June, an increasing number of reports are now discussing the potential impact of the ‘Brexit’ on public procurement.

Brexit

On June the 23rd, UK voters will go to the polls in order to decide on the UK’s future as part of the EU. The referendum promises to polarise opinion, much like the Scottish Independence Referendum in 2014, but there is an increasing focus on what it will mean for public procurement in the UK, as well as supply chains crossing UK/European borders.

EU Procurement Directives, required to be taken into account for all public procurement activity within the community, are widely recognised, and even more widely discussed. While there are critics of the Directives, many believe that they are key to maintaining a fair and equitable process in sourcing activities.

Brexit Impact

Although the EU procurement directives receive a lot of bad press, they were set up with a specific purpose in mind – elimination of trade barriers resulting from discriminatory and preferential procurement practices. It was hoped that this would assist countries across the EU realise savings in public procurement, and create a level of transparency in activities.

Further changes have been made to the procurement directives in the past 12 months, aimed at simplifying and modernising the public procurement process. The directives also have their supporters, who argue that they help to maximise competition, achieve value for money, and enable social benefit and innovation in purchases.

There are also arguments made that, had the UK not joined the EU Common Market, now the European Union, it would have still ended up with public procurement regulations that would not have been vastly different to what exists now.

The impact of a UK exit, or ‘Brexit’, is still largely unknown, and can only be estimated in terms of costs to both the UK economy and UK businesses. However, from the point of view of procurement regulations, some parties are stating that it wouldn’t have an immediate impact on current UK procurement rules.

In fact, any changes to procurement law in the UK public sector would be low on the Government’s priority list. And if there were changes, the rules would end up being very similar (where they have been successful), or some industries, like agriculture, would have to maintain EU standards in order to continue doing business on the Continent.

Supply Chain and Procurement Costs

But what about costs to import goods and the wider supply chain impact in the event of the ‘Brexit’? Well, there still isn’t a consensus when it comes to this either. Some reports show a potential drop of 8 per cent in import costs, but that this could potentially be offset by rising labour costs, partly due to a loss of access to low cost, or cheaper, labour.

Open Europe, a think tank, predicted a worst case scenario of a 2.2 per cent fall in UK GDP, but a potential 1.6 per cent growth in GDP, by 2030. There are also concerns that any possible saving the UK might see in tariffs and not paying money into the EU, would be swallowed up by having to cover subsidies paid to certain industries by the EU.

For both UK and European businesses with supply chains operating across borders, there would be a loss in freedom of movement, both goods and services, and labour. Some goods could be subject to as much as 35 per cent export tariffs, while pan-European partnerships could be lost or cancelled.

While a ‘Brexit’ is by no means a certainty, both British and European companies should start preparing for it happening. Actions like monitoring alternatives suppliers, assessing logistics decisions, and work with existing suppliers to put deals in place, all help to reduce the risks that businesses are exposed to.

What are your (non-political!) thoughts on the ‘Brexit’? Is your business likely to be exposed to the impacts? Let us know in the comments below.

As ever, we’ve been scouring the ‘net this week for top headlines to enjoy with your morning tea or coffee…

Using Waste to Plug Power Gap

  • Using the energy from processing waste at anaerobic digestion plants in the UK could help to solve the country’s energy issues
  • However, there are warning that if the AD technologies aren’t promoted better, they could be lost before they even manage to prove benefits
  • Despite favourable tax breaks, environmental benefits and cost savings, the UK lags a long way behind European countries such as Germany in the number of AD plants it has
  • There are currently 434 plants in the UK, some of which support large retailers (Sainsbury) and manufacturers (Diageo) in their operations

Read more at Supply Management

Brazilian Retailer to Clean Up Supply Chain

  • Brazil’s largest grocery chain has pledged to stop selling beef reared on deforested land in the Amazon rainforest
  • Retailer, Pão de Açúcar, also promised to stop buying beef produced by workers living in slave-like conditions, or cattle produced on land grabbed from local communities
  • The new purchasing plan is set to be in place by the 30th of June, at which point the business will stop dealing with suppliers linked to deforestation and modern slavery
  • The firm operates 832 stores across Brazil and has pledged to help its suppliers improve their practices ahead of the June deadline.

Read more at Thomson Reuters

Love Your Waste to Save Money

  • New reports have shown that Scottish households waste the equivalent of 26 million beef burgers (2,900 tonnes of beef) each year in food wastage
  • Zero Waste Scotland has launched a campaign aimed at reducing this waste by using leftovers as part of other dishes, something that could save each household up to £460 per year
  • Confusion over dates on labels, caution about meat safety and worries over freezing and reheating can lead to good meat being thrown away even thought it is still fine to eat
  • In February, Scottish environment secretary Richard Lochhead pledged to cut food waste in Scotland by a third by 2025, to save businesses and households at least £500m

Read more at Supply Management

2016 Enviro Challenge Launched

  • Enviro Challenge’s challenge day for 2016 is set to take place next week in the Waikato, Auckland, Bay of Plenty, and Central Plateau regions of New Zealand
  • The day is aimed at inspiring schools to develop sustainability and leadership skills in high school students
  • Students are also asked to develop, or continue developing, a project for their school with measurable outcomes, and encouraged to think long term
  • Students will be working on initiatives that will have ongoing positive impacts on their schools and their communities, which this year include renewable energy and biodiversity

Read more at Sun Live