British firm De La Rue was undercut by Gemalto for the contract to print the new post-Brexit British passports. Since losing the contract, shares in De La Rue have dropped by 6%.
De La Rue is the largest commercial passport manufacturer in the world and supplies passports to more than 40 countries around the world. It has been producing British passports from its Gateshead factory for the last 10 years and last year produced its 40 millionth document.
The tender process
In March 2017, the £490m contract to design and produce the new British passport was put out to tender by the Home Office; the contract was advertised via the OJEU and put out across the EU under single market rules. Three firms were shortlisted, and the final evaluation of the successful bidder was based on both price and quality elements.
Ultimately the successful bidder Gemalto provided a price that was £50 million cheaper than De La Rue and the other competitor in the bidding race.
Controversy over the successful bidder
Many have spoken out, saying that it is ‘an outrage’ that the contract for the new passport will not remain in Great Britain, and as such the decision should be re-evaluated as a matter of ‘national pride’. Teresa May was even invited to De La Rue to speak to the workers directly and has been pressured to overturn the decision. However, Great Britain has adhered to the EU procurement laws, with the tender for the contract being issued across the EU under single market rules. EU procurement states that the ‘most economically advantageous tender’ should always be selected, which on this occasion was the bid from Franco-Dutch firm, Gemalto.
A spokeswoman from the Home Office said, ‘We are running a fair and open competition to ensure that the new contract delivers a high quality and secure product and offers the best value for money for customers. We do not require passports to be manufactured in the UK. A proportion of blank passport books are currently manufactured overseas, and there are no security or operational reasons why this would not continue.’
The procurement process post-Brexit
It is still undecided what the procurement process will look like post-Brexit, but the UK would not be bound by EU procurement laws and could award contracts like the passport printing to a UK firm as a priority. It is unlikely that the bid and tender process will change too much, as it is still thought necessary to award contracts to the most economically advantageous tender – using a process that is transparent and deemed fair.
However, guidelines will need to be established for any EU firms bidding into the UK, and likewise UK firms bidding into countries in the EU, for all contracts post-Brexit.