EU: Behind on public procurement, a push is required

The EU Commission and President Jean-Claude Juncker, acknowledge that the potential contained in the new procurement regulation, has yet to be exploited
EU: Behind on public procurement, a push is required

 

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The opportunities offered by the new EU-directives to utilize public procurement strategically, is by far not being fully used. More than half of the tender competitions in the EU is still using lowest price as the only award criteria. According to the EU Commission, the amount of competitions with only one bidder is increasing, and the number of tender offers per tender competition has decreased from 5 to 3 from 2006 to 2016. The EU Commission now calls for strong boost in public procurement.

Recently, The EU Commission presented the document “Making Public procurement work in and for Europe”. The document defines priorities and presents a strategy to improve its own and member countries practice of public procurement. The EU Commission advocates a broad collaboration at EU level as well as at national, regional and local level to take advantage of the opportunities found in a more strategic use of public procurement.  

Public procurement is a powerful tool, every year the public in EU uses close to 1900 - 2000 billion Euros for the purpose. A better practice of procurement can achieve significant savings. A gain of 10 % means 1900 - 2000 billion Euros per year - without cutting the service level for its citizens, confirms the EU Commission.

 

Transboundary

The new directives from 2014 give a framework that opens for a more flexible way to procure. According to the EU Commission, the time has come to shift focus to a smart use of the new regulations, and that notes that cross-border procurement is peaking. Figures show that it accounts for 23 % of the value on procurement in the EU, and that there is still room for improvements.

The document presents that possibilities to use public procurement strategic is not sufficiently exploited. 55 % of the procedures being used, is using lowest price as the only award criteria. This is an under consumption of “Economically most advantageous”, which can entail a variety of different qualitative criteria.  

 

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Innovative procurement

With regards to public procurement, the EU Commission points to several barriers. The directives from 2014 open up for an innovative partnership, and by now 17 procedures have been initiated in the EU.

In the document from the EU commission shows concert for the competition situation in public procurement. Five percent of contracts in the TED database is awarded through negotiations without prior notice. In the period from 2006 to 2016, the number of competitions with only one bidder increased from 17 % to 30 %. This average, in the same period, decreased from five to three. This illustrates that suppliers have several challenges to achieve access to the public procurement market, especially across borders. Small to medium business only win 45 % of the contracts across EU/EEA thresholds in value, obviously below their own importance in the economy.

 

Lack of data

In many of the member countries, the central government is not able to indicate the exact extent of their use of public procurement, even though significant numbers of money is involved. In the EU there is no agreement on what data, measures, and actions that are needed. This makes it hard to get a data-driven policy development.

Public authorities rarely purchase together. Only 11 % of the procurement in the EU area is announced as a cooperation. Not all acquisitions are suitable for large volumes through cooperation, but as the situation is now, the EU Commision suggest lost opportunities.

 

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This article first appeared at Anbud365, Norway’s leading online newspaper for public procurement. Published by Lennart Hovland on 8th of November 2017. The full article can be found in Norwegian here.

 

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