Public procurement accounts for roughly 17% of the EU's GDP and is therefore hugely important for businesses in terms of a source of contracts.
EU public procurement law is a set of rules designed to ensure fairness, transparency and non-discrimination in the awarding of public and some utility contracts by entities in the EU. Over time, the regime has been amended a number of times and it is likely to change again because reform of public procurement legislation
is one of 12 priority actions articulated in the Single Market Act which was adopted in April 2011.
In January 2011, the Commission initiated a public consultation on the modernisation of the EU public procurement rules. The consultation attracted some 623 responses. On 24 June 2011, the Commission published a summary of the views expressed in the consultation process. There were very divergent views on the priority to be given to each of the different objectives of the proposed review. Also on 24 June 2011, the Commission published a report evaluating the impact and effectiveness of the EU public procurement regime. It is interesting to note the highlights of the two reports.
In its analysis of the sector, the Commission identified many of the cost savings to public bodies because of using the public procurement process - the Commission believes that competitive public procurement markets have reduced costs by around 4% which generated savings of approximately €20 billion. The budgetary constraints currently facing Member States means that States are keener than ever on efficient and cost effective public procurement.
The Commission's report also demonstrated that there is strong support for greater access to public procurement - particularly, support for entry by small and medium sized enterprises (the so-called "SME" sector); the report also found that SMEs had effective access to, and participation in, above threshold contracts.
The report demonstrated that cross-border suppliers account for only 3.5% of the value of contracts advertised at EU level which is somewhat disappointing but it is worth recalling that, by reason of logistics alone, there will always be some need for domestic suppliers.
The report confirmed that a general consensus existed for streamlining the procedures and making them more flexible (e.g., by expanding the scope for using the negotiated procedure and reducing the volume of documentation required from bidders).
The Commission's report highlighted the variations in the level of efficiency of public procurement between EU countries. The average public procurement procedure takes 108 days and costs €28,000 - three quarters of which is accounted for by the costs of preparing tenders (5.4 tenders received on average) and 1/4 for the contracting public authority. The worst performing Member States take 3 times longer to complete a purchase than the best-performing.
The Commission found that there was a trend towards the concentration of public procurement in the hands of fewer authorities, including specialised purchasing bodies.
The Commission will publish draft new EU procurement legislation towards the end of 2011. It is likely that the reforms will make the regime more flexible and user-friendly to reduce costs and the duration of contracting procedures.