UK Government cracks down on illegal discrimination in procurement
One of the fundamental principles of the EU public procurement legislation is that it is illegal to discriminate against products or services on the grounds of nationality or national origin. This is also the case outside the EU; the EU Public Procurement Directive (2014/24) and the Public Contracts Regulations 2015 also require that countries which are signatories to the World Trade Organisation Government Procurement Agreement (GPA) must be treated equally.
However, in spite of this, a number of contracting authorities have purported to introduce boycotts of goods and services from Israel on purely political grounds. Israel has been a member of the GPA since 1996. There is no doubt that such boycotts are completely illegal. Not only do they breach the fundamental principle of non-discrimination but also fail the requirement that any criteria applied in procurement must be linked to the subject matter. A purely political agenda cannot be considered to be linked to the subject matter. Last but not least, excluding potential suppliers from the market (other than on permitted grounds) means that such authorities are limiting competition and not getting best value for money; and are thus failing their taxpayers and constituents.
It is therefore welcome that the UK Government yesterday introduced tough guidance prohibiting such boycotts by contracting authorities in the UK. The language is uncompromising and lays down a very clear message –
"Public procurement should never be used as a tool to boycott tenders from suppliers based in other countries, except where formal legal sanctions, embargoes and restrictions have been put in place by the UK Government."
The guidance makes the point that serious legal consequences can flow from such illegal boycotts, including damages, fines and ineffectiveness (i.e. rendering a contract void after it has been entered into).
Even more importantly, the guidance underlines the fact that discrimination on grounds of nationality has no place in procurement.