September 2019 |

What does Brexit mean for Government Commercial? With the current level of uncertainty, no one quite knows – and perhaps we are even unsure if Brexit still means “Brexit”.

What is clear however is that there have been significant efforts to ensure that front-line suppliers are ‘Brexit-ready’ and critical contracts are adapted for various the scenarios that may ensue. This enormous effort by Government Commercial should give us all comfort – even if the outcome and impact are uncomfortable.

Whilst the big contracts make the headlines, some of the smaller, more day to day contracts could be similarly affected. In this article, we examine the potential impact of Brexit on such common goods and services and consider why they must not be left behind.

It’s tough to prepare for such an uncertain outcome

Brexit preparations within Government Commercial have been underway for months, even years. Given the uncertainty of outcomes there is a limit to what can be done to prepare (to date) but critical front-line services, such as supply chains of pharmaceutical products, have been subject to rigorous scenario planning and contingencies identified. It is likely that considerations have included, amongst other things, workforce implications, currency volatility, additional lead times, and any potential regulatory changes. For example, supply chain disruption was modelled in the Government’s leaked Operation Yellowhammer dossier, where it examined the potential impact on critical medicines such as insulin and adrenaline, and what stockpiles would be needed to account for various Brexit scenarios.

Commercial demands, inside and outside of Brexit, are unprecedented

Anecdotally, Brexit preparations have been challenging, putting a huge strain on already busy commercial departments. For most departments the challenge has been one of both capacity and capability, not just finding people, but moreover finding the right people to undertake important and specialist work, which does not fall into the usual demands of a Department’s commercial team.. Whilst some budget has been released to recruit new staff (over 700 roles as Civil Service World reported on 23rd August 2019), typically these roles are for front-line resources such as border guards, as opposed to Commercial Specialists. As a result, Departments are increasingly reliant on external consultancies – something which has been well reported and critiqued.

As a supplier to the Public Sector, Proxima has seen a variety of requirements come to market with Brexit as the catalyst. Requirements are typically published quickly and without much notice, reflecting the urgency and uncertainty of what is needed, and what needs to be done. In engaging third party support, Commercial Departments are most often either asking consultancies to deliver directly on “Brexit projects”, or to back fill their team and deliver business-as-usual activities (allowing internal Commercial staff to focus on Brexit).

Despite the urgency, demand for Brexit support has not hit the heights forecasted behind closed doors. As commercial departments juggle funding with frontline readiness, there is a real risk that gaps are being left in the day to day, for work perceived as less important and less at risk. But is this perception right?

The impact of Commercial Specialists moving to Brexit-related work

When thinking about Brexit, thoughts may drift to the more exciting projects, such as HMRC and the Home Office buying land and building warehouses for more thorough border checks. Arrangements for he ‘indirect’ goods and services which make up a large proportion of business-as-usual commercial activity would not be top of the list. After all, these are non-strategic goods and services on which the impact of Brexit must be minimal?

Perhaps, but, buyer beware, in some cases, the impact of Brexit on these ‘non-critical’ supply chains may not be minor at all. On the contrary, consider the following examples:

Desktop services, firewall and virus software – many programmers for software security, and the servers analysing the latest threats and providing patch updates, are based in Eastern Europe. It has been projected that in the light of a no-deal or hard-Brexit that the issuance and regulation of intellectual property is severely disrupted. This may result in out of date firewall and virus protection which risks crippling areas of Government. The impact of the WannaCry virus attack in 2018, costing the NHS £92bn, is an example of what could happen again.

Soft FM services – the potential impact on cheap European labour is well-reported, so many FM providers have considered the impact on staff who clean offices, or serve food in the cafeteria, for example. However, other areas such as cleaning chemicals may be overlooked. The majority of these are sourced from all over the world and imported to the UK, over 50% of which are from Europe. Mundane as this example may seem, it is important to ensure that one considers sustainable sources of supply which may well be affected by changing border regulations for dangerous chemicals.

Office stationery – overlooked by most Commercial Specialists, and a task often delegated to the office manager, PA community, or junior buyers, but every office needs stationery. The plastic ink insert in a BIC Biro is manufactured by a British company in mainland Europe. What happens if supply gets interrupted? On a slightly more important matter, the impact and supply of pulp (for office paper) could have far-reaching consequences on not only the office environment, but also heavy users relying on posting paper forms and letters – in departments such as DWP or MoJ.

There will be plenty more examples of seemingly innocuous contracts which have the potential to cause productivity glitches across government. Whilst the government will not be bought to its knees by a lack of stationery, its efficacy will in part depend upon how well the back office is able to function in the immediate aftermath of Brexit.

Brexit is full of unknowns. One of the most prominent now may be that in focusing on the front line, commercial departments have not fully considered the wider potential impact. Regardless, the impact of various scenarios need exploration and mitigation strategies put in place…before it’s too late.

Is Government Commercial geared up to tackle these issues?

It’s difficult to tackle an issue which keeps changing shape. For Government, commercial teams are using their best endeavours…implementing strategies which are varied and inconsistent. It would appear that to be prepared for whichever turn Brexit takes, effort needs to be made to understand the impact across all areas of the supply chain, and suppliers segmented so that appropriate and timely action can be taken where necessary. This will require not only flexible capacity, but also a dial up in capability across a broad range of goods and services.

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