BRUSSELS - The EU wants to make the awarding of public contracts a key instrument of its new industrial policy. Hundreds of billions of euros for infrastructure, schools, energy, or healthcare should preferably go to companies from the internal market.
To this end, the EU presented its Public Procurement Act (PPA) on Wednesday, the law on public procurement. The Commission is thus following one of the recommendations of the Draghi Report for better competitiveness.
It involves huge sums. With a volume of around 2.5 trillion euros per year, public contracts account for about 15 percent of the EU's GDP. Of this, around 600 billion euros fall under the new rules, said Industry Commissioner Stéphane Séjourné.
"It is public money that must also serve our common goals," said the French Commissioner. "This corresponds to an annual stimulus program and, measured by expenditure, is about four to five times higher than the EU budget."
The Commission also promises annual cost savings of 650 million euros for authorities, as three directives and two dozen smaller laws are consolidated. This should reduce bureaucracy.
To use procurement to strengthen European industry, the EU executive is no longer relying on price alone. "Quality" should also become a main criterion in awarding public contracts. Quality criteria should carry a weight of at least 30 percent, and up to 50 percent for labor-intensive contracts. Quality also includes environmental, social, innovation, safety, and resilience aspects.
If quality is defined by technical specifications, authorities can continue to award contracts solely based on price. Public buyers can already today prioritize ecological or social criteria. According to a Commission study, however, this is neither optimal nor EU-wide uniform. Some contracting bodies fear legal challenges if they reject the lowest-priced bid.
European preference is being introduced
The PPA proposal gives public buyers additional instruments to favor goods and services from the EU. They can restrict participation in tenders, set origin requirements, and reject bids where the share of EU performance is less than 50 percent of the contract value.
"In the future, one cannot blame the EU Commissioner if public buyers prefer European buses over Chinese ones, since everything is precisely laid down in the text and the preference for European buses is permissible," said Séjourné. The authorities of the member states can also completely exclude Chinese suppliers from tenders.
Goods that simultaneously fall under the origin rules of other legislative proposals, such as the Industrial Accelerator Act or the Critical Medicines Act, must comply with both frameworks.
Critics warn that the EU is simultaneously trying, in trade agreements with other countries like India, to facilitate access for European firms to public tenders there - while restricting this access in the EU itself.
PPA aims to simplify rules
Séjourné described the draft as "an act of radical simplification." The Commission decided against the objections of a majority of member states to opt for a regulation instead of a directive. A regulation limits the leeway of countries in national implementation.
The PPA should make it easier for companies to find and participate in tenders across the entire EU. To this end, a network of digital platforms is being introduced. Currently, there are 123 platforms EU-wide - either at national or local level. The Commission wants to ensure they all communicate with each other. Procedures are also being simplified.
Fostering innovation
The Commission also wants to address the problem that research results from the EU do not lead to innovative products or services in the market - also because start-ups lack access to the necessary capital.
The Commission's response is the "European Innovation Act," which was also announced on Wednesday. It aims to make public buyers anchor customers for new products.
