Modernising the European public procurement market – guide

Public procurement accounts for roughly 17 per cent of the EU’s GDP. In times of tight budgets and economic difficulties in many Member States, public procurement policy must ensure the most efficient use of public funds, with a view to supporting growth and job creation. This would require flexible and user-friendly tools that make transparent and competitive contract awards as easy as possible for European public authorities and their suppliers. With these objectives in mind, the European Commission has today launched a consultation. This open debate with interested parties will focus on the modernisation of the rules, tools and methods for public procurement to deliver better on these goals. The deadline for responses to the Green Paper is 18 April 2011.

1. What do public procurement rules do?

Public procurement rules organise the way public authorities and certain public utility operators purchase goods, works and services. They set up specific contract award procedures to ensure that public purchases are made in the most rational, transparent and fair manner. Public purchasing has to be underpinned by particular safeguards. These prevent any preferential treatment that could favour specific economic operators and guarantee sound competition between economic operators, so as to ensure that contracting authorities get best value for European taxpayers’ money.

2. What are the current rules?

The current European legislative framework for Public Procurement is the latest step in a long evolution that started in 1971 with the adoption of Directive 71/305/EEC:

• Directive 2004/18/EC sets out common rules and procedures for the award of public works, supply and services contracts by public authorities of the Member States.

• Directive 2004/17/EC contains rules and procedures for contract awards by public utility operators in the water, energy, transport and postal services sectors.

The EU Public Procurement Directives apply to all contracts above certain thresholds. Their main objective is to ensure that companies in all EU Member States have full and equal access to contract awards throughout Europe, ensuring a level playing field within the European procurement market. For this purpose, they oblige public procurers to publish a Europe-wide call for tenders and provide detailed procedural rules covering all stages of a contract award procedure.

Under certain conditions the Directives allow public procurers to take into account other policy-related objectives when awarding public contracts, such as environmental protection and social standards.

3. How is public procurement relevant for the European economy?

Public procurement is one of the major expenditure items for contracting authorities in Europe and an important element of the European Single Market. In 2009, the value of calls for tender published in the Official Journal of the European Union (i.e. advertised in the whole Internal Market) represented approximately €420 billion for the 27 Member States. This figure includes only those purchases which are subject to compulsory advertisement EU-wide, as they are above the thresholds for the application of the Directives. The overall value of the calls for tenders published in the Official Journal of the European Union represents 18.3% of the total expenditure on public works, goods and services.

A dynamic pan-European procurement market with easy access to these contracts provides huge business opportunities for European companies. It can greatly contribute to stimulating a competitive European industry and sustainable economic growth.

4. Why is the European Commission considering modernising the rules?

Public procurement is faced today with an evolving political and economic context and important new challenges: the public purse is shrinking, and there is a growing need to be parsimonious with public money. At the same time, there is a growing demand for procurement to be more environmentally friendly and/or more oriented towards social standards. Fostering innovation through public procurement could be a way to facilitate the transition to a knowledge-based modern economy for European undertakings.

A modernised set of public procurement rules could considerably help contracting authorities in meeting these new challenges. It would let them turn policy statements into actions, while guaranteeing a high level of transparency and fair competition between suppliers. This view is shared by a number of stakeholders, who have voiced demands for a review of the EU public procurement system to increase its efficiency and effectiveness.

5. What is the point of publishing this Green Paper?

Reviewing the EU public procurement regime will be a major challenge. It is a complex and technical issue of great importance for the functioning of the Single Market. The Commission considers it important to consult widely in order to make sure that its policy choices are based on the experience of those who deal with public procurement on a day-to-day-basis, and that future rules provide the best possible solutions to the actual needs of contracting authorities, economic operators and society as a whole.

It is for these reasons that the Commission announced in the Single Market Act that broad-based consultations would be organised to collect feedback on public procurement rules from all stakeholders. This feedback will then serve as a basis for any appropriate legislative proposals.

6. What areas are currently under consideration?

The Green Paper reflects issues that the Commission has identified as possible aspects of a future reform. It also invites stakeholders to raise other elements that they think should be addressed in a future reform. The Green Paper discusses, amongst others, the following subjects:

• Simplification of procedures: The Green Paper looks at possible ways to make procedures easier and more flexible, such as allowing for a wider use of negotiated procedures. A particular focus is given to the needs of smaller (local or regional) contracting authorities. The issue of how far cooperation between public authorities should be covered by or exempted from the application of public procurement rules is also widely discussed.

• Better access to contract opportunities for all economic operators: reducing the administrative burden for undertakings could boost participation of all economic operators, in particular for the benefit of SMEs. The Commission also proposes to explore ways to stimulate cross-border bidding.

• The potential of public procurement to support other policy objectives: Many stakeholders call for EU-level rules which would encourage or even oblige public buyers to take into account societal concerns in their procurement (making more “green” or more “social” purchases). At the same time, the Europe 2020 Strategy has invited the EU to have a deeper look at this issue. The Green Paper invites stakeholders to discuss whether the possibilities offered by the current legal framework are sufficient or if more far-reaching measures or requirements are needed.

• Tackling favouritism and corruption: Stakeholders are also consulted on the question of whether fighting against corruption and favouritism requires more specific legal instruments than what is currently set out in the EU public procurement rules. Examples of such additional safeguards could be for instance enhanced transparency concerning the composition and work of evaluation committees.

7. Does the Commission already have an idea of what any future legislative proposals will look like?

As stated above, the Commission has chosen to publish a Green Paper in order to gather and build on the views of all stakeholders, without any preconceived approach. As such the content of any future legislative proposals will only be determined after, and on the basis of the analysis of the replies to the consultation.

8. How is this Green Paper related to the Green Paper on expanding the use of e-Procurement in the EU?

The e-Procurement Green Paper published in October 2010 deals with a specific aspect of EU public procurement policy: to facilitate and expand the use of information and communication technology in public procurement. The two Green Papers are separate documents targeted at different groups of stakeholders. However, should it appear from the public consultation on e-Procurement that legislative changes are needed in this regard; such changes will be considered in the context of the overall reform.

9. Are concessions dealt with by the present Green Paper on modernisation of EU public procurement policy?

No. Concessions will be the subject of a separate Commission initiative aimed at ensuring greater legal certainty for regional and local authorities and economic operators throughout Europe and at facilitating the development of Public-Private partnerships. The issue of concessions is excluded from the scope of the consultation on the Green paper on the modernisation of the EU public procurement policy.

10. What are the next steps?

Stakeholders are invited to send their contributions by 18 April 2011. These contributions will be published on the Internet unless otherwise indicated by the respondent.

In addition to the Green Paper consultation, the Commission is currently undertaking a comprehensive evaluation to take stock of the efficiency and cost-effectiveness of the current European public procurement rules (to be published in summer 2011).

The analysis of the replies to the Green Paper and the results of the evaluation will be discussed at a high-level conference in Brussels on 30 June. Further information on this conference will be posted on DG Internal Market and Services website in due course. This work will then inform the legislative proposals that are to be tabled by 2012.

Consultation on the modernisation of EU public procurement policy (until 18.04.2011)

Source: European Commission