Contracting Authorities Must Not Implement Public Procurement Boycotts

Local authorities in the UK have been told by central government that they cannot boycott goods from particular countries. This is aimed very much at left-wing councils who support the Palestinian cause and boycott Israeli goods or suppliers. Leicester City Council introduced a boycott of Israeli products linked to settlements on Palestinian territory in 2014, while both Swansea City Council and Gwynedd County Council in Wales have introduced and then ended boycotts. The Scottish Government published a procurement notice to Scottish councils that “strongly discourages trade and investment from illegal settlements”.

The Israel / Palestine question is far too complex for us to address here, but it does seem reasonable that these issues should be determined at national level, not by some collection of local councillors. The fact that so many of the UK’s local authorities are mini “one party states”, having been dominated forever by either Labour or Conservative cabals, does not help. That lack of competition leads in too many cases to bad governance or even corruption at local level. We’re not keen centralisers here, but the argument for a strong approach to this issue seems reasonable.

So the Cabinet Office has issued this Procurement Policy Note titled “Procurement Policy Note: Ensuring compliance with wider international obligations when letting public contracts”, which explains what can and can’t be done. It applies to all public bodies, including councils, hospital, agencies and so on.

It makes clear that boycotts in public procurement are inappropriate, outside where formal legal sanctions, embargoes and restrictions have been put in place by the UK Government”.

The Note re-iterates that value for money (whole life cost) is the key driver for public procurement. Wider policy objectives can also be pursued within reason;

Further, wider policy objectives (such as economic or   employment-related considerations) can be pursued through the procurement process where they are linked to the subject-matter of the contract. The new Public Contract Regulations (PCR) 2015 also provide flexibility for authorities to take account of wider matters in the procurement process, such as social and environmental factors. Contracting authorities may apply these flexibilities where relevant, ensuring always that all suppliers are treated equally and without discrimination”.

But the law does not allow random boycotts; UK regulations come from the European Directives and also the WTO Government Procurement Agreement. Signatories to that agreement include Israel, the victim of most of these actions by councils. The Note explains that there can be wider consequences for boycotts – they can damage integration and community cohesion within the UK, hinder exports, and harm foreign relations That is all on top of the fact that it can “also be unlawful and lead to severe penalties against the contracting authority and the Government”.

Matt Hancock, the Cabinet Office Minister, did not announce how contracting authorities would be penalised if they ignored this, but he did say any breaches would face “severe penalties”.

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