Stéphane Séjourné, executive vice-president for prosperity and industrial strategy. Credit: © European Union The European Commission has proposed replacing the EU’s public procurement directives with a single regulation that would apply directly across the bloc. The proposal would introduce a European preference framework for public contracts and create the basis for a digital marketplace connecting tender systems across all 27 member states. The proposal was adopted in Brussels on Wednesday.
It would bring three existing directives, along with procurement rules currently spread across sector-specific legislation, into a single Public Procurement Act. It would also reduce the number of award procedures from five to three. Public procurement accounts for around 15% of EU GDP. The Commission estimates that the new rules could save €650mn a year in administrative costs, including €80mn for public buyers and €570mn for companies taking part in tenders.
The proposal would make the best price-quality ratio the standard for awarding contracts. Quality criteria would have to account for at least 30% of the score, rising to 50% for labour-intensive contracts, unless a buyer can explain why it is using a different approach. Quality would cover environmental and social factors, innovation, security, resilience and European preference. In practice, the change means public buyers would still be able to accept bids from companies outside Europe.
But at least 30% of the evaluation would have to be based on factors other than price, and whether a supplier is European could be one of those factors. The European preference framework is described as horizontal, which could make it more significant than some of the Commission’s earlier attempts to favour European suppliers. When the Commission proposed its Made in EU rules in March, the focus was on products such as concrete, aluminium and electric vehicles. Engineering software, cloud hosting and design tools were not covered.
A horizontal procurement framework would also apply to services, and public authorities buy large amounts of software and other services. The current proposal does not specifically name cloud or software. Their inclusion would depend on later market access assessments, but the framework could extend beyond physical products. The Commission would be able to restrict access to public contracts if it finds that a third country does not give European suppliers fair access to its own procurement market.
Restrictions could also be introduced where they are needed to reduce security of supply risks. Some national governments have already started moving in that direction. Poland announced a sovereignty test for major government technology contracts in June. The Commission itself has also split a sovereign cloud contract between four European providers.
The proposed digital marketplace is less developed. The idea is to connect the procurement systems used by the 27 member states so that a company could register once, bid for contracts across the EU and have its eligibility and exclusion criteria checked automatically. The proposal establishes the principle of a shared marketplace and a common data management framework, but it does not specify a technical standard, delivery date or budget for building it. The reform would also introduce a new procedure for buying innovative solutions that are not yet available on the market.
This is intended to address a wider problem with European public procurement: falling competition, limited participation from companies in other EU countries and SMEs, and more tenders receiving only a single bid. Ekaterina Zaharieva, the startups commissioner, presented the package alongside the European Innovation Act. “Europe spends hundreds of billions of euros through public procurement every year. This money must work harder for Europe,” said Stéphane Séjourné, the executive vice-president for prosperity and industrial strategy. He described the proposal as a political choice to use European public spending to create jobs in Europe rather than primarily benefiting foreign competitors.
The administrative savings are relatively small compared with the size of the market. Even using Séjourné’s figure of hundreds of billions of euros in annual procurement, €650mn represents only a small share of total spending. The bigger question is therefore not how much paperwork the reform removes, but which companies ultimately win the contracts. The proposal will now go to the European Parliament and the Council for consideration.
