On 24 May 2024, the Council released its conclusions assessing the problematic practices and systemic inefficiencies that undermine the implementation of the public procurement directives. These were identified in the European Court of Auditors (ECA) Special Report No 28/2023 and commented upon by the Commission in its reply on 28 November 2023. The Council acknowledged the ECA’s report as a potential driver for positive change in the field of public procurement and proposes the launch of an EU-wide strategic action plan as one of the priorities for the Commission’s next mandate.
In this blog post we summarise the Council’s main conclusions and recommendations on the actions that could be taken by the Commission in the short term in the area of public procurement.
As part of EIPA’s series on ‘The Future of Public Procurement’, this blog post aims to build on our analysis of the findings of the ECA’s Special Report 28/2023, taking into account the recent Council Conclusions. Future entries will continue to follow developments when the new Commission takes office.
1. Background setting – the ECA’s special report 28/2023 and the Commission’s reply
In 2023, the European Court of Auditors (ECA) issued a report expressing concern about the decreasing competition in public procurement procedures across the EU over the period between 2011 and 2021. The alarming title of the report speaks for itself: ‘Less competition for contracts awarded for works, goods, and services in the 10 years up to 2021’. It called on the Commission, on the one hand, to clarify and prioritise public procurement objectives and on the other, to deepen the root cause analysis and put forward an action plan to overcome key obstacles to competition in public procurement. In particular, the report criticised:
- the decreasing competition in public procurement over the last decade, mainly with regard to the large proportion of direct awards and single bidder procedures followed in some Member States;
- the low proportion of contracts awarded to SMEs, as well as insufficient use of strategic public procurement;
- the low level of direct cross-border procurement;
- the lack of monitoring of the public procurement market by the Commission and the Member States.
The Court concluded that while public procurement is key in the realisation of the Single Market, competition for public contracts has decreased in the last decade, and only scattered actions are taken to identify and reduce the causes and obstacles. The goals of the 2014 legislative package in public procurement to ensure competition have not been met.
The reaction by the Commission was of nuanced agreement. As analysed in our previous post, it accepted the recommendations put forward by ECA, with some qualifications. For example, while the Commission welcomed the objective of a potential action plan and the proposed topics that could be addressed, it believed that taking stock of the initiatives taken at national level would be the first necessary step. Then, the design of a specific action plan addressing all the concerns raised by the Court could be considered. The Commission stated in its reply that other options, such as the use of legislation, would also be explored.
2. Council Conclusions on the ECA’s Special Report No 28/2023
The Council adopted the conclusions of the ECA’s report on 24 May 2024, entitled ‘Improving fair and effective competition for EU public procurement contracts awarded for works, goods, and services’. The conclusions reflect the response of competitiveness ministers to that report and propose the launch of an EU-wide strategic action plan for public procurement as one of the priorities for the Commission’s next mandate.
The conclusions welcomed both the ECA’s report and its recommendations, and recalled the essential role of public procurement in achieving the green transition and a socially responsible economy. The Council took note of the reply by the Commission to the ECA’s report and its post-2021 actions, including the Big Buyers and the public procurement data space initiatives.
In essence, what was loudly echoed by the competitiveness ministers was the lack of improvement in competitiveness and the failure to reach the objectives pursued by the 2014 public procurement directives. These related to the low proportion of contracts awarded to SMEs, and the insufficient use of strategic procurement and cross-border procurement.
2.1 Analysis on the existing legal framework
The Council echoed that Directive 2014/24/EU is overly complex and administratively burdensome particularly for SMEs, which struggle to navigate the procurement processes effectively. The complexity of legislation and excessive administrative burden may hinder the participation of certain economic operators, and this is a situation that needs to be redressed. The Council calls the Commission and the MS to work in partnership to ensure compliance with the existing directives, while removing obstacles to sustainable procurement and effective competition. This underlines the need to consider the differences in implementation practices and therefore needed targeted actions, depending on the different MS, regions, and economic sectors.
Public procurement accounts for about 14% of the EU’s gross domestic product, and the Council recognised – once more – its great potential to achieve the strategic policy objectives of the EU. Such a high financial percentage is a strong indicator of public procurement’s power to mobilise private economic operators towards strategic directions. The Council concluded that the Commission needs to undertake an in-depth analysis to better understand the root causes behind the decrease in competition as well as to urgently assess whether a revision of the Directives is needed during the 2024–2029 term. It also asks the Commission to present the actions taken so far since the latest Council Conclusions 2022 on the development of sustainable public procurement, and the measures derived from the French presidency report on bottlenecks in public procurement implementation.
The Council considered that this deep assessment is needed in view of the commitments that the EU has made in relation to the Sustainable Development Goals to be achieved by 2030. It indicated that this could result in a regulatory impact assessment where the conclusions could serve the basis for new rules to:
- promote sustainable procurement and effective competition, while ensuring public buyers’ flexibility in determining the inclusion of strategic requirements in their procedures;
- facilitate access to SMEs;
- remove administrative barriers.
Furthermore, given the worldwide geopolitical instability affecting the EU economy, the Council highlighted that the analysis to be implemented by the Commission should consider the need for public buyers to strengthen the existing tools to limit risks to security. They pointed out as an example the model set out in Directive 2009/81/EU, which allows for a good level of flexibility to assess security risks.
It also recommends that due consideration is given to the multiple sectoral legal acts containing procurement provisions, and highlights the need to find the balance between the many different objectives to achieve coherence and legal certainty, and to cut red tape.
2.2 Availability of high-quality data
The Council calls on the Commission and the MS to work together to improve the quality and readability of data through advanced tools, (such as artificial intelligence technologies) and explicitly refers to the Single Market Scoreboard indicators. It also urged that data on sustainable public procurement should be published regularly.
2.3 Ensuring professionalisation for public procurement
The Council calls on the Commission to support capacity building to promote the implementation of strategic procurement and to scale up initiatives with Member States, aiming to increase the professionalisation of civil servants following the ProcurCompEU framework. One example of this approach is the Council’s warning against focusing solely on the lowest price as the award criterion. While a low price does not necessarily impact quality negatively if the technical specifications are well drafted in the tender documents, the strategic dimensions of a contract depend on how contracting authorities design and manage their contracts, and their competence level in this field. This also involves the market, particularly SMEs and micro enterprises. Therefore, capacity-building efforts are crucial.
Finally, the Council agreed with the ECA’s proposal that the Commission should promptly adopt an EU-wide strategic action plan for public procurement, outlining future steps towards a more strategic public procurement that fosters effective and fair competition. The Council urged the Commission to consider a programme of review and reform of the public procurement framework, promoting greater transparency, integrity, and accountability in public spending to combat collusion and corruption.
Conclusion
In conclusion, the Council largely welcomed the points raised by the ECA regarding the need to analyse how to improve competitiveness and efficiency, and to reform the legislative landscape of EU public procurement. Stimulating competition and reinforcing the strategic role are key to establishing a dynamic and effective framework that unleashes public procurement’s full potential. It will now be up to the new Commission to redesign an approach that addresses the identified inadequacies.
The views expressed in this blog are those of the authors and not necessarily those of EIPA.
More for professionals in public procurement
The European Commission recommends the overall improvement of the professional skills and competences of the people conducting public procurement at all levels of government. EIPA supports the Commission’s efforts through training and research, and offers a wide selection of public goods on the topic.
Public Procurement Certification
Blogs and news articles on the topic
- The Future of Public Procurement: Round-table discussions on the European Court of Auditors’ special report 28/2023
- Enacting ENs in times of crisis: An effective solution in practice?
Roundtable discussions:
