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Small and medium-sized enterprises (SMEs)

Opening public procurement to SMEs

The public procurement market in the EU is estimated to be worth around one-sixth of total GDP in the EU. This represents a huge market, and one from which Europe's SMEs ought to be deriving a significant share considering their overall contribution to the economy. The 2004 EU Directives reforming the public procurement rules provide a good basis to ensure a level playing field for SMEs' bidding for public contracts. The European Commission encourages Member States to share their good practices in facilitating SMEs’ access to public procurement and stimulate the innovation and growth potential of SMEs.

Judge's hammer

New report on SMEs' access to public procurement in the EU: SMEs disadvantaged

Public procurement covers a wide range of supplies, services and works required by governments, local authorities and public organisations, utilities and agencies. The size of such contracts varies hugely, and so whilst some are clearly beyond the capabilities of SMEs to fulfil, a significant proportion of the public procurement opportunities in Europe are well within the scope of SMEs.

The SMEs' access to public procurement varies from one Member States to another. However, overall SMEs secure 33% of the value and 60% of the number of contracts above the thresholds fixed by the EU directives on public procurement (2006-2008 data). The directives cover roughly 16% of the EU public procurement market. It is interesting to note that medium sized companies are performing much better that small and micro companies.

There are still many barriers which discourage SMEs from responding to tenders or even lead them to avoid such opportunities altogether. These include:

  • difficulties in obtaining information;
  • lack of knowledge about tender procedures;
  • the large size of the contracts;
  • too short time span to prepare the proposal;
  • cost of preparing the proposal (since many costs are fixed, SMEs face disproportionately high costs in comparison with larger enterprises);
  • too high administrative burdens;
  • unclear jargon used;
  • high qualification levels and required certification;
  • financial guarantees required;
  • discrimination against foreign tenderers, in other words, favouring local and national enter-prises;
  • finding collaboration partners abroad.

Full report 2010 pdf - 2 MB [2 MB]

Annex - Case studies pdf - 2 MB [2 MB]

Executive summary pdf - 438 KB [438 KB] Deutsch (de) français (fr)

Changing practice

Whilst these difficulties that SMEs face are now widely understood, significant efforts are still required to change public procurement practice across the Union. After all, those responsible for awarding contracts on behalf of governments and public authorities are required to safeguard public funds, and many need to be convinced that reforming their procedures will not jeopardise this.

The current package of directives on public procurement is designed to reduce the administrative burden and costs related to tendering, make procurement systems more transparent and easier for SMEs (in particular) to access, and to encourage the use of information technology systems (e-procurement) to simplify the process. To optimise the use of the possibilities given by the directives by the Member States and respectively their public buyers, within the framework of the "Small Business Act" for Europe, the European Commission proposed a Code of best practices in opening public procurements to SMEs, taken both from Member States and elsewhere. The Code assist public authorities in developing 'strategies', 'programmes' or 'action plans' with the specific aim of facilitating SMEs' access to public contracts. It also encourages Member States to learn from each other as they implement the new rules under the public procurement directives.

The Work of the Enterprise Europe Network

The Commission is also mobilising its Enterprise Europe Network in its effort to promote the “European Code of Best Practices Facilitating SMEs’ access to public procurement contract” to public authorities and to develop its services to SMEs in the field of public procurement. A number of specific actions started in September 2010 will provide trainings to SMEs, will bring closer together SMEs and authorities in public events and publicise the “Code”. Furthermore, the Network is currently updating its tools in support of its public procurement services.

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