On 17 February 2016, the Cabinet Office published a Procurement Policy Note (“PPN”) which seeks to prevent public authorities from participating in boycotts and other political decisions which affect decision making and public spending.
Some public authorities, namely local government councils, including the City Councils of Leicester, Birmingham, Swansea and Gwynedd, have been imposing such boycotts, commonly on grounds of the alleged Israeli occupation of claimed Palestinian territory. These boycotts are likely to be unlawful interventions under the EU public procurement rules and capable of challenge.
The boycotts effectively discriminate against Israeli suppliers and thereby contravene the World Trade Organisation Government Procurement Agreement (“WTO GPA”), which requires all signatories to treat suppliers equally. The PPN clarifies 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 PPN highlights the dangers of such boycotts including the potential to “damage integration and community cohesion within the United Kingdom, hinder Britain’s export trade, and harm foreign relations to the detriment of Britain’s economic and international security”. It also gives guidance, setting out how contracting authorities “can ensure compliance with wider international obligations when letting public contracts”.
All contracting authorities, “including Central Government, Executive Agencies, Non Departmental Public Bodies, wider public sector, local authorities and NHS bodies” should now be aware that, by imposing such boycotts, they make themselves vulnerable to severe penalties “such as damages, fines and ineffectiveness (contract cancellation).”
As reported widely in the media, local councils considering boycotts on political grounds are also discouraged by pressure groups such as Jewish Human Rights Watch, who actively pursues judicial review proceedings against such authorities, alleging such boycotts amount to anti-Semitic behaviour.
It remains to be seen as to whether boycotted companies which have been denied tender opportunities will join judicial review proceedings or sue under EU public procurement rules, on the basis of bids they have been excluded from.