Economic uncertainty is already impacting the construction industry © Claire Doherty/In Pictures/Getty Images
Economic uncertainty is already impacting the construction industry © Claire Doherty/In Pictures/Getty Images

Brexit provides opportunity and risk for procurement

4 December 2019

Brexit provides an opportunity to change public procurement rules to stimulate the UK economy but the current political impasse means businesses are reluctant to make long-term financial commitments, an event was told. 

Duncan Brock, group director at CIPS, told the Homes 2019 conference in London the problem with trying to replace EU suppliers with local ones was the lack of willingness to invest in the long term. 

“Across the world, every government has got a localisation agenda. Every government wants to have local capability, and every government is struggling on the same basis. How do you build out that local capacity, without a long-term commitment to the availability of funding and all the things that come with it? That's where the current political impasse doesn't help because people won't take that long-term view,” he said. 

“You could find the right supplier who may have the inclination to provide you, but then they've got to invest, they've got to get the capital, and they've got to build up their skills. That's a long-term investment. You probably need five to 10 years.

“How do you get to a point where that long-term plan can be properly implemented to allow that local capacity to build up the quality, innovation, technology that we're looking for? That's why it's not happening.”

Speaking at Fusion21's panel discussion on managing procurement in a changing political landscape, Rebecca Rees, partner specialising in procurement at law firm Trowers & Hamlins, said prime minister Boris Johnson had promised a “bonfire to red tape” to allow smaller firms to win government contracts. But people tended to want to change procurement rules only when they saw them as a barrier. 

She said the challenge for the government lay in identifying legislation and procedures considered “blockers” across the board.  

“The Cabinet Office brought together a group of procurement lawyers, and asked, 'What would you change?'. I told them in the housing sector, we don't really use the Innovation Partnership Procedure [which allows for collaboration to develop new goods and services not available on the market] so we could get rid of that quite easily. However, another lawyer said they need the procedure because it really helps the health sector, who want to procure really complex IT stuff,” she said. 

“It's a challenge for UK central government to simplify and slim down and actually identify those bits of legislation that wholesale are seen as an irritation or blocker to value being procured.”

According to Mark Astbury, partner at construction consultancy Ridge and Partners, economic uncertainty is impacting businesses now.

“The big issue on the ground is economic uncertainty. There are labour issues with getting good, skilled tradespeople, and the cost of materials.

“As an industry, construction relies on over £10bn worth of materials coming in from Europe. That is a significant volume and we've also been very used to a just-in-time delivery model. Some sectors are trying to stockpile to get the materials in,” he said. 

Astbury added that its important for procurement to understand supply chains risks, whether the UK reaches a deal with the EU or not.

“How effected are they going to be? Because we can't just expect to send the risk down the line to contractors. They may have part of their supply chain which will be hit by tariffs, they may not be able to travel as quickly or will have to pay VAT up front. We don't really know what is going to come out, so we have to be very mindful.”

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