Modernisation of Public Procurement

EU insitutionsrecently recognized the need for a modernization of public procurement procedures, that should be simplified in order to help SMEs applying more easily to calls for proposals.

As a matter of fact, despite having a huge influence on EU economy, small entreprise only manage to obtain small percentages of public procurements: access to tenders is complicated and quite expensive.  

A resolution project presented by EU delegate Heide Ruehle and already approved by the Internal Market Commission calls for the creation of an electronic passport stating the adequacy and respect of EU standards by enterprises, in order to cut up costs and red tape. Other means to lighten administrative burden could include self-declarations of compliance, and request of the original documents for the successful tenderers only. The need for new and wider criteria, other than the “lowest price wins”, for the procurements’ assignment (such as social and environmental impact) has also been questioned .

UPDATE 20/12/2011: EU Commission unveiled its proposal, that will now pass on to the EU Parliament and Council for negotiation. If adopted by the end of 2012, the proposal will be implemented by June 2014. Electronic procurement’s introduction has been postponed to 2015 and won’t probably be generalized before 2017.

As part of the Europe 2020 strategy for smart, sustainable and inclusive growth, the proposal aims to reform and simplify public purchasing procedures, in order to attract more bidders, especially SMEs and non-national companies.

As for simplification, the proposal introduces self-declaration of compliance for bidders, thus significantly cutting red tape’s costs for appliances, along with an “apply or explain” division of contracts into lots, new requirement limitations (turnover requirement for bidders has been lowered to 3 times the contract volume) and allows direct payment to subcontractors, in order to prevent bidders to suffer from delayed payments and insolvency. All of these measures are intended to foster SMEs’ access to the public procurement market: given that small and medium companies provide the highest employment and job creation rate, legislators believe that supporting them will help reduce unemployment and will finally trigger a positive reaction that could get EU out of the current crisis.

The proposal introduces as well the possibility of negotiation, even if still circumscribed to particular cases: public administrations will be able to talk terms with bidders, while the last will be allowed to modify their proposals in order to better satisfy the purchaser’s needs. This should provide more flexible procurement procedures, which could include green and social criteria, and hopefully grant cost-effective outcomes, too. Yet, it must be noticed that the introduction of any additional criteria has been limited to the specific contract, and cannot be applied to the company per se.

UNIEP is corrently following the modernisation process, and welcomes the improvement made by the new proposal but stay dubious about the introduction of negotiation: even in the presence of safeguard measures (minimum requirements, documentation of negotiation and the oversight of a national independent authority), transparency and equal treatment may not be guaranteed, thus creating, once again, an uneven field for competitors.