The European Commission unveiled yesterday its Strategy for a Deeper and Fairer Single Market. In its communication, the Commission generally indicates that it "will work hand in hand with Member States and market participants to create a real culture of compliance for Single Market rules. Particular attention will be paid to the services sector and to public procurement, which is essential to spend taxpayer money efficiently".
This is a welcome development in the area of EU public procurement regulation, particularly if it results in more legal stability and a focus on enforcement and voluntary compliance as an alternative to continuous legislative reform. Indeed, this seems to commit the Commission's efforts to make the most of the existing (recently reformed) legislative framework and, beyond the on-going process of reassessment of the remedies Directive, to focus on creating trickle-down effects through technical support and education of the business and practitioner communities.
In more detail, the European Commission's focus on public procurement is as follows:
More transparent, efficient and accountable public procurement
Snapshot: Public procurement is critical to the European economy. EU rules aim to ensure the efficient use of taxpayer money, reduce corruption and modernise public administration. Public expenditure on goods, works, and services represents close to 19% of EU GDP: more than €2.3 trillion are spent annually in the EU. Transparent and competitive public procurement across the Single Market creates business opportunities and contributes to more efficient public administration, economic growth and job creation. EU law sets out minimum harmonised public procurement rules which have to be transposed into national law by April 2016 (by October 2018 in the case of e-procurement).
Approach: To speed up investment and avoid protracted litigation, the Commission will assist Member States with a voluntary ex ante assessment mechanism of the procurement aspects of certain large-scale infrastructure projects. It will promote networking between first instance review bodies and provide legal and technical assistance for Member States to establish fast and fair remedy bodies. The Commission together with Member States will establish contract registers covering the whole life cycle of contracts. This will improve the transparency and the quality of national procurement systems and support the development of a data analytics and anomaly-detection tool. In a nutshell, we propose a better governance of one fifth of our GDP. This voluntary ex-ante assessment does not prejudge the Commission’s prerogatives under the Treaty.
2017: Voluntary ex ante assessment mechanism of the public procurement aspects of certain large infrastructure projects
2017-2018: Initiatives for better governance of public procurement through establishment of contract registers, improved data collection and a networking of review bodies
- Does the Commission only want to improve national tenders or foster more pan-European awards? Both. Currently, the proportion of public procurement contracts awarded cross border is low. This in effect restricts competition for public contracts which means tax payers are not getting value for money and not getting the best public goods and services.
- Won't the assessment mechanism for infrastructure projects just delay the building of projects that Europe badly needs? No – on the contrary. Presently, too much time is spent in finding out whether a large scale investment project conforms or not to the procurement rules. Under the proposed mechanism, the Commission will deliver its opinion within a timeframe which should not generally exceed three months following the notification of the project.
In my view, the general approach to the creation of a culture of procurement compliance is positive. However, there are two aspects in which I would like the implementation of the Strategy for a Deeper and Fairer Single Market to operate with caution.
The first one refers to the action concerning public procurement registries. The Commission has indicated that "together with Member States [it] will establish contract registers covering the whole life cycle of contracts. This will improve the transparency and the quality of national procurement systems and support the development of a data analytics and anomaly-detection tool." However, as stressed here, those registers can create very significant unwanted consequences in terms of collusion in public procurement settings. Thus, I hope that a balanced approach on the accessibility of those registers will be adopted.
The second aspect concerns the assumption that a low level of cross-border awards is a restriction of competition in itself: "the proportion of public procurement contracts awarded cross border is low. This in effect restricts competition for public contracts which means tax payers are not getting value for money and not getting the best public goods and services". In my view, this is a very broad and sweeping assumption and I would like to see a more refined analysis before the European Commission pushes for measures that pursue cross-border awards for their own sake.
There are many ways in which tendering contracts on an EU-wide basis is limited, and most importantly language plays a major role in that [see discussion in A Sanchez-Graells, “Are the Procurement Rules a Barrier for Cross-Border Trade within the European Market? — A View on Proposals to Lower that Barrier and Spur Growth” in C Tvarnø, GS Ølykke & C Risvig Hansen, EU Public Procurement: Modernisation, Growth and Innovation (Copenhagen, DJØF, 2012) 107-133]. Therefore, (re)engaging in a blind quest for cross-border awards would not be necessarily positive and, given the insurmountable language implications, it could also be a potentially doomed effort if it reached the EU Courts (see the critical discussion here, which can be easily extrapolated).