BT BT could lose millions of pounds of EU contracts after Brexit
Leaving EU with no deal would heighten risk of contracts being terminated early
BT is facing a post-Brexit battle to maintain access to a number of multimillion-pound EU contracts and avoid the premature termination of a £24m deal with the European parliament.
The BT Group has won a slew of contracts with the EU’s institutions in the last decade worth more than £150m.
But the potential for the EU to scrap “sensitive” contracts such as that struck with BT was raised during a recent meeting of EU officials and senior MEPs discussing Brexit preparations, according to leaked minutes obtained by the Guardian. The risk to the EU in honouring contracts and allowing the BT Group to provide telecommunications services, when the UK is no longer an EU member state, was said to require examination.
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According to minutes of the meeting, senior MEPs voiced the view that “sensitive services, such as telecommunications, currently provided inter alia by British Telecom, should be given thorough consideration in the framework of procurement by parliament.” The meeting also discussed creating “a full list of contracts with UK-based companies currently in force”.
The MEPs concluded that “whereas ongoing contracts with British companies would be fulfilled as a general rule … certain particularly sensitive contracts could be terminated prematurely for security reasons”.
The meeting between Klaus Welle, the secretary general of the European parliament, and a “Brexit preparedness” working-group of MEPs, also heard that the EU bodies such as the European parliament would not be able to sign off on future contracts with British firms under its procurement rules.
“As of the date on which the United Kingdom ceases to be a member state, ie 29 March 2019, parliament will no longer be able to conclude contracts with British companies, noting that this also applied to ongoing calls for tender,” the minutes note.
In response to the MEPs, Welle had agreed that “the question of certain sensitive external service providers to parliament from UK-based companies, inter alia in the field of telecommunications, would be evaluated closely in the light of a new legal situation”, according to the minutes.
It was also noted that a no-deal Brexit, under which the UK would leave the EU without the 21-month transition period envisaged in the withdrawal agreement, was a factor that would heighten the risk of contracts being brought to a premature end.
Under the terms of the withdrawal agreement, the UK would in effect remain a member state for at least 21 months, and possibly until 2022, allowing it to retain many of the current benefits, although it would lose representation in the EU’s decision-making institutions.
Welle told the MEPs that the parliament need to examine “existing contracts with UK-based companies, for which the future status will depend on whether or not specific provisions are adopted as part of the withdrawal agreement”.
A spokesman for the BT Group said it was in talks with the EU over the contracts. “We firmly believe that BT should continue to retain its existing EU contracts”, he said. “We will continue to monitor the situation as it develops as part of our scenario planning for Brexit to ensure we’re prepared for any potential impacts on our business, people and customers.
“We are fully engaged with the EU institutions and remain committed to delivering the services we have been contracted for. We believe BT should be able to bid for new EU contracts post-Brexit.”
In 2016, BT secured a £49m contract with the European parliament and separately announced two new contracts with the European commission worth £24m to deliver public and private cloud services across 52 major European institutions, agencies and bodies – including the European parliament, the European council and the European Defence Agency.
Those deals followed the signing in 2011 of a £100m contract between BT and the European parliament for the provision of telecommunications services over a period of five years.
That contract proved to be a huge boost for BT’s Global Services division, which at one stage reported losses of £124m. In 2008 the division was at risk of losing 10,000 jobs because of its poor performance but it has subsequently become a major generator of the company’s profits.
Liberal Democrat MEP Catherine Bearder said: “This is the reality of Brexit. Once you’re out the door, you’re out. There is no special treatment. If Brexit happens, the EU will assess public procurement contracts with UK companies in the same way they do with other third countries.”
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