Internal Market, Industry, Entrepreneurship and SMEs

New rules to help make public procurement more efficient, transparent and SME-friendly

New rules to help make public procurement more efficient, transparent and SME-friendly
Published on: 18/04/2016
The European Union has introduced new public procurement rules which will simplify procedures for public administrations and companies, promote a more socially and environmentally responsible economy, and help to prevent corruption and increase transparency.

18 April is the day by which all EU Member States are required to have legislation in place to implement these rules.

The new rules will make it easier and cheaper for small and medium-sized enterprises (SMEs) to bid for public contracts, will ensure the best value for money for public purchases and will respect the EU's principle of transparency and competition. They also allow for environmental and social considerations, as well as innovation aspects to be taken into account when awarding public contracts, so that public procurement encourages progress towards particular public policy objectives. The revised rules for over 250 000 public contracting authorities are designed to open up the EU's public procurement market to competition, prevent ’buy national’ policies and promote the free movement of goods and services.

Simplifying the participation of SMEs

Contracting authorities will be encouraged to divide large contracts into smaller parts, allowing smaller companies to participate in large tenders. Rules which excluded smaller companies from tenders on the basis of their annual turnover figures have been relaxed. The new rules limit possible turnover requirements to just twice the contract value, which should remove barriers to SME participation.

Supplying legal documents and accounts in different formats and languages, just to prove eligibility for a tender places a disproportionate burden on small businesses. The European Single Procurement Document (ESPD) considerably reduces the administrative burden for businesses by enabling them to electronically self-declare that they fulfill the required conditions to participate in a public procurement procedure. Only the successful tenderer will need to provide full documentary evidence, but in the future, even this obligation could be lifted once evidence can be linked electronically to national databases.

Promoting a more responsible economy

The new rules take a more holistic view of value for money. It is not just a question of minimising cost, but looking at what else can be achieved through procurement. The rules allow public bodies to promote social inclusion, innovation, and ensure the compliance of tender awards with all relevant rules and obligations (be they at national, EU or international level). Public authorities can now provide incentives to companies to develop socially responsible products and services. The awarding of a contract will no longer depend on price alone; a company committed to helping integrate disadvantaged persons, for example, might increase their chances of success.

Contracting authorities can now restrict some tendering procedures to social enterprises of all types where at least 30% of  the employees are disadvantaged. This means that 'sheltered workshops' or social enterprises whose main aim is to integrate disadvantaged people in the workplace can have a better chance to obtain contracts they might not be able to secure under normal conditions of competition.. However, contracting authorities will not be obliged to use the new possibilities to promote socially responsible goods, services and works, nor are they obliged to externalise the provision of services that they wish to organise themselves.

Public authorities can also encourage eco-innovation by using new criteria in contract notices which place more emphasis on environmental considerations. They can require bidders not only to comply with environmental obligations, but also to deliver goods fulfilling the requirements of environmental labels. In this way, companies can make an important contribution to sustainable consumption and production.

Preventing corruption

Public procurement spending accounts for around 14 % of EU GDP every year and involves over 250 000 public authorities. However, it can be a magnet for corruption, and no EU country is immune. The new rules will ensure that taxpayers’ money is not lost by introducing stronger guarantees for sound procedures preventing corruption. More efficiency will free up billions in public money – just a 1 % increase in efficiency will lead to savings of €20 bn! The measures include:

  • an EU-level definition of ‘conflicts of interest’ making it easier to identify and manage fraud and conflict of interest cases
  • a requirement for public purchasers to share any information given to a company involved in a previous tender with all other participating companies
  • excluding companies if they are found to have unduly influenced the decision-making process or made false statements
  • clarifying and simplifying the rules for modifying contracts in the post-award period to remove any doubts about possible corruption
  • increased reporting explaining decisions and violations to both national authorities and the European Commission
  • greater use of electronic tools and simpler procedures (e-procurement, dedicated legal framework for concession contracts, standard self-declaration form for bidders).

E-procurement: reducing administrative burdens and increasing transparency

Public procurement is currently transitioning to e-procurement. This is expected to continue until October 2018 when e-submission will become mandatory for all types of public procurement. The transition will simplify the entire procurement cycle for businesses and public buyers.

The long-term goal is an EU-wide integrated e-procurement system bringing together the ESPD service and the e-Certis mapping tool, which helps participants identify and compare different certificates requested in procurement procedures across the EU. This new system also makes use of modern and simple procurement techniques such as e-catalogues, e-auctions and dynamic purchasing systems.

Of course, the success of the new legislation also depends on its effective enforcement in the Member States and the readiness of the public buyers in the EU to capitalise on the benefits of the digital revolution, cut red tape and make procurement processes more efficient and more business-friendly to the benefit of all citizens.

Find out more

New rules on public procurement and concession contracts

Directive 2014/24/EU on public procurement

Directive 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sectors