EU proposes simpler public procurement rules which include ‘European preference’ mechanisms

The European Commission is proposing public procurement rules which aim to simplify the EU’s public procurement framework, deliver administrative savings, establish new minimum quality standards, and would introduce new European preference mechanisms.

The Commission's evaluation of existing procurement rules found that these face significant shortcomings, which it said includes high administrative burden and limited strategic use of procurement. Public procurement accounts for an estimated 15 per cent of the EU’s GDP.

The Commission held consultations with public sector buyers, businesses, trade unions, and civil society before proposing this reform, which it said aims to make public procurement simpler, more flexible, and more effective. The proposal will now have to be negotiated by the European Parliament and the Council of the European Union before moving any further. 

The Commission expects the reform to deliver significant administrative annual savings of €650 million, which would result from a burden reduction of €80 million for public sector buyers and of €570 million for economic operators.

A key tool within the proposal would be a new digital marketplace for procurement. The Commission describes it as “a one-stop shop that connects public buyers and companies across the EU.” This marketplace would consist of interconnected and interoperable Member States' eProcurement platforms. 

Its aim would be to make it easier for companies to access procurement procedures and simplify the process for public sector buyers. The Commission said that it would allow public entities to perform automated eligibility checks on companies and use integrated data to ensure transparency and accountability, while also using procurement more strategically.

For instance, public sector buyers “will be able to determine which third country companies and goods have access to EU procurement markets on the same conditions as EU companies and products, facilitating economic security and European preference considerations.”

As for how the Act would simplify the existing framework, it would consolidate three existing public procurement directives as well as procurement provisions which are spread across sector-specific legislation. The aim, the Commission said, is to make rules both clearer and simpler and reduce fragmentation.

The Commission said that the new rules allow public sector buyers more flexibility in the way they conduct their procurement. “The rules clarify situations when direct awards can be used, in particular for emergencies and crises, and how to implement security aspects,” the Commission said.

Quality weighting

The proposed legislation also places an emphasis on quality. It aims to provide stronger support for environmental, social and innovation goals, by making the Best Price-Quality Ratio (BPQR) the standard award method. As such, there would be a minimum quality weighting of 30 per cent, rising to 50 per cent for labour-intensive contracts, subject to a 'comply or explain' mechanism.

This means that public sector buyers will need to consider quality, not only price. Quality includes environmental, social, innovation, security and resilience, and “European preference” considerations.

The Commission explained that public authorities would still be able to deviate from this approach if they can explain how quality will otherwise be ensured, such as through minimum quality requirements.

Stéphane Séjourné, EU Commission Executive Vice-President for Prosperity and Industrial Strategy, said that Europe spends hundreds of billions of euros through public procurement every year, and that this money must work harder for Europe.

“With this reform, we are cutting bureaucracy, giving public buyers more flexibility and making it easier for our SMEs to compete across the Single Market. And we are making a clear political choice: European public money should, wherever possible, create jobs, investment and opportunities in Europe rather than filling the order books of our competitors,” he said.

Reducing the administrative burden for SMEs

The new rules are intended to lead to reduced administrative burden for SMEs. For instance SMEs will only need to enter their essential data once in the proposed digital marketplace.

The Commission also said that public sector buyers will need to actively consider dividing contracts into smaller lots to facilitate SME participation in procurement, and that the new Act also has provisions facilitating the formation and participation of consortia or groups and on prompt payment obligations through the supply chain, which it said should specifically benefit SMEs.

European preference framework

The proposed Act would also establish a new common EU framework of European preference mechanisms, “to ensure that public spending supports EU security, resilience and fair competition by reducing harmful dependencies, addressing unfair practices and strengthening European industrial capacity.”

It clarifies which operators and products are covered by the Union's international procurement commitments and makes this easier to check, the Commission said.

"The Commission would be able to restrict such coverage where a market access analysis establishes that a third country has failed to grant Union operators fair market access in line with its commitments, or where restrictions are needed to avoid security of supply dependencies or protect our economic security interests."