October 23, 2017

October 20, 2017

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The UK's Defense Department turns to the private sector

As a general rule, high-value government contracts in the EU must not be awarded by public authorities without first complying with the detailed EU procurement rules designed to ensure non-discriminatory access to such contracting opportunities and“value-for-money” for public authorities and, ultimately, EU taxpayers. However, due to national sensitivities in the EU Member States, the defence procurement market was traditionally largely exempt from the EU public procurement regime. That position changed in August 2011 when the EU's newly liberalised defence procurement regime officially opened for business.

It is still too early to judge whether the reforms are having the desired effect - namely to increase the level and intensity of international competition for the EU's estimated annual defence spend of over €170 billion. Ultimately the success of the initiative will depend on the confluence of two phenomena: (i) total commitment on the part of national contract authorities to look beyond their "national champions" to the better deals being offered by foreign suppliers; and (ii) enthusiastic engagement by foreign suppliers in the new market(s). Should either fail to materialise then the market opening will almost certainly be deemed a damp squib.

On the latter score, opportunities would appear to be opening up in the UK. The UK government, keen to find defence budget savings in the current macro-economic climate, recently announced plans to reduce regular forces numbers from 102,000 to 82,000. To fill the resulting capability deficit the UK government is planning to plug gaps by contracting out more to the private sector. Among the outsourcing projects being considered is a $22 billion tender for the provision of procurement and support service functions. The overwhelming majority of such contracts will have to be let via the EU's general procurement system described above.

This system is, for the most part, open to contractors based outside of the EU.

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About this Author

Stephen C. Tupper, EU Competition Attorney, Greenberg Traurig, Law firm, Consultant

Stephen C. Tupper focuses his practice on EU and competition law. He has been practising law for more than 30 years, including working in New York, Washington, D.C. and in Brussels (the latter for 10...

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Jacob Pankowski, Greenberg Traurig, government contracts attorney, federal supply schedule legal counsel, subcontract performance issues lawyer, Homeland security law

Jacob B. Pankowski focuses his practice on representing government contractors and subcontractors of all sizes in their dealings and disputes with federal, state and local governments. His government contracts practice covers a broad range of areas and concentrates in contract and subcontract performance issues, claims analysis and preparation, federal supply schedule issues, information technology issues, rights in technical data and intellectual property and systems integration contracts. Jacob has appeared before the U.S. Court of Federal Claims, the U.S. Court of Appeals for the Federal Circuit, various federal district courts, agency boards of contract appeals and the Government Accountability Office.

A few of Jacob's most notable representations include serving on the team representing one of the co-contractors in the $4 billion, A-12 litigation representing the Space Shuttle contractor on a variety of issues relating to risk of loss, technical data rights and patent issues, and litigating a board of contract appeals matter that carved out new law relating to jurisdictional aspects of federal supply schedule contract disputes.