EESC recipe for public procurement: spend better!

At the beginning of December, the European Economic and Social Committee (EESC) voted on its contribution to the evaluation of the European public procurement directives. Its recipe: Europe must spend better. Every year, European governments and public authorities spend more than two trillion euro on goods, works and services – around 14% of the EU’s gross domestic product. This expenditure, the EESC argues, could be used more effectively.

Awarding contracts on the basis of best value

In an exploratory opinion, the EESC sets out a series of recommendations. First, contracting authorities should divide contracts into smaller lots, simplify qualification requirements and fully digitalise procurement procedures. This would enable smaller companies to compete in line with their actual capacities. According to the European Commission, small and medium-sized enterprises (SMEs) currently account for only 71% of contracts by number and 55% by value, which is below their overall economic weight in Europe. Moreover, the EESC notes that even an efficiency gain of just one percent could free up billions of euro for better use elsewhere.

Removing barriers to cross-border procurement

Second, direct cross-border awards remain limited. Where they do occur, they are mainly linked to companies’ existing cross-border presence through subsidiaries or joint ventures. This falls short of the ambition of a genuine European single market. In order to allow companies to compete for contracts across borders on equal terms, legal and administrative barriers must be reduced. This requires better alignment of national interpretations of the directives and easier access to information. Ultimately, the contract should be awarded to the best offer.

In-house procurement must remain the exception

Third, the EESC warns against an extensive use of in-house procurement. While it may in some cases be justified for public authorities to award contracts directly to entities under their control, widespread use entails the risk of closing the market to private operators – in particular SMEs – thereby undermining efficiency and innovation. In-house procurement should remain what it was intended to be: an exception. Market failures should not be addressed by creating new distortions.

A civil society perspective

The EESC opinion focuses on the Commission’s evaluation of the public procurement directives. It seeks to contribute to this assessment by reflecting the perspective of organised civil society.