Brussels, 7 June 2011
New external public procurement policy - Frequently Asked Questions
1. What do public procurement rules do?
Public procurement is about how public authorities (and the entities which they control) spend public money when buying goods, works or services on the market.
Public procurement rules establish specific contract award procedures to ensure that public purchases are made in a transparent and fair manner. Solid public procurement rules prevent public authorities from favouring a specific economic operator and guarantee sound competition between economic operators, so as to ensure that public authorities get best value for European taxpayers' money.
2. Why is public procurement relevant for the European economy?
In economic terms, public procurement makes up a significant part of national economies (10-25% of GDP). In the EU, the purchases of goods and services corresponds to 16% of GDP. In absolute terms, government procurement in the EU amounts to some 1,800 billion EUR, and globally to well over 4,000 billion EUR.
In 2009, the value of calls for tender published in the Official Journal of the European Union (i.e. advertised in the whole Internal Market) represented approximately €420 billion for the 27 Member States. This figure represents those purchases which are subject to compulsory advertisement EU-wide, as they are above the respective thresholds stipulated in the EU public procurement rules. The overall value of the calls for tenders published in the Official Journal of the European Union represents 18.3% of the total expenditure on public works, goods and services.
Dynamic pan-European and international procurement markets with easy access to public contracts also mean enormous business opportunities for European companies. The procurement market can therefore be seen as an important stimulator to a competitive European industry, creating jobs and sustainable economic growth.
3. What are the current procurement rules and to whom do they apply?
The current European legislative framework for public procurement consists of the following Directives:
Directive 2004/18/EC, which sets out common rules and procedures for the award of public works, supply and services contracts by public authorities of the Member States.
Directive 2004/17/EC, which contains rules and procedures for contract awards by public authorities and utility operators in the water, energy, transport and postal services sectors.
Directives 89/665/EEC and 92/13/EEC, as modified by directive 2007/66/EC, which set common rules and procedures for the review of award procedures conducted on the basis of Directives 2004/18/EC and 2004/17/EC
The EU public procurement Directives apply to all public contracts above certain thresholds.
4. What is the international dimension in this?
At international level, the EU is a strong advocate for an ambitious opening of international public procurement markets. It has therefore granted access to its public procurement market to economic operators from non-EU countries for certain foreign goods, services and companies. The legal framework is the WTO Government Procurement Agreement (GPA) and the bilateral and regional Free Trade Agreements (FTAs). The scope of these commitments can vary and is set out in the various agreements. These agreements also contain a number of explicit reservations, i.e. exclusions from market access in certain areas where the countries in question have not been prepared to undertake commitments.
Currently, 13 countries outside the EU are covered by the GPA, and a number of bilateral trade agreements, already agreed or under negotiation, include such mutual procurement commitments, that is South Korea, Chile, Mexico, Cariforum, Columbia, Peru, Switzerland, etc.
5. Why is the Commission considering this initiative?
Procurement markets represent a substantial part of the EU's and other trading partners economies. Whilst the EU procurement market is one of the most open in the world, European businesses cannot always get equal or easy access to non-EU markets. This means limited business opportunities for EU companies in these markets. Particularly since the recent economic turmoil, some key trading partners have resorted to adopting and/or reinforcing protectionist measures, in particular in the area of public procurement.
6. What are the key intentions of this new policy?
The Commission intends to make a legislative proposal for an EU instrument to set the terms of access to the EU's public procurement market and to help secure and increase symmetry in access to public procurement markets in developed countries and large emerging market economies. The objective of this initiative is therefore to:
Improve the conditions under which the EU businesses can compete for public contracts outside the European Union.
Strengthen the EU negotiation position when negotiating access to public procurement markets of third countries so as to obtain further/the opening of those markets.
Clarify the rules governing the access to European Union's public procurement market by companies , goods and services from outside the EU.
Create a level playing field for public procurement within the European market by ensuring that EU companies and third country companies will compete for public contracts on a equal footing
7. What are the benefits of such an initiative?
European companies could obtain greater access to procurement markets outside the EU and more equal competition on the EU's public procurement market. In addition, European procuring entities would enjoy a clarification of the legal framework regarding participation in public contracts of companies, goods and services from outside the EU.
Moreover, the European Union would have at its disposal an instrument to gain leverage for the (further) opening of trading partners' procurement market in trade negotiations.
8. Is the EU taking a protectionist path?
No, the new legislation for access to the European Union's procurement market is not meant to create additional barriers for suppliers from outside the EU. The envisaged policy will help clarify the agreed terms of access and will bring more legal certainty for both the public entities who need goods or services and the international suppliers. In addition, the EU expects to have increased leverage when negotiating market access with other trading partners. The new set of measures will help expand business opportunities within the EU and its trading partners. As a result, this new piece of legislation would help market opening.
9. What are the policy options being considered?
The Commission is currently assessing the economic and political impact of a number of options, which range from leaving things as they currently are to transposing our existing international commitments in the area of public procurement to adopting fine-tuned measures where negotiations on further market access are not possible or where a third country applies restrictions that discriminate EU bidders. A combination of several of these options could also be envisaged.
10. Does the Commission already have an idea of what any future legislative proposals will look like?
The final design of the future legislation in this area will largely depend on the outcome of the impact assessment that is currently being conducted by the European Commission. The contributions to this consultation will be taken up in the Commissions´analysis.
11. What are the next steps?
Stakeholders are invited to submit their contributions by 2 August. These contributions will be published on the Internet unless otherwise indicated by the respondent.
As mentioned above, the Commission is currently carefully assessing the possible impact of various policy options. The results of this consultation will be an important element in this impact assessment.
In addition to this consultation, the Commission intends to organise a public hearing with interested stakeholders. Details concerning the logistics for this event will be posted on the following websites:
The legislative proposal of the Commission is due to be tabled before the end of 2011.