Opening public procurement to SMEs

Public procurement covers a wide range of supplies, services and works required by governments, local authorities and public organisations, utilities and agencies. The size of such contracts varies hugely, and so whilst some are clearly outwith the capabilities of SMEs to fulfil, a significant proportion of the public procurement opportunities in Europe are well within the scope of SMEs. With a market in the EU estimated at around 16% of GDP, or about €1 500 billion in 2002, procurement contracts represent a major opportunity for very many enterprises.

But even when the value of the contract is of a size appropriate for SMEs, there are many barriers which discourage SMEs from responding to tenders or even lead them to avoid such opportunities altogether. These include basic difficulties in finding information about tenders, or about the procedures for bidding, or there are problems in understanding jargon; too short a deadline for responding and/or the costs of responding are too high; the administrative procedures are too complex, or particular certification is required; a high financial guarantee is required to bid; or companies may face discrimination on the basis that they are located in a different country from the contracting authority.
Changing practice

Whilst these difficulties that SMEs face are now widely understood, significant efforts are still required to change public procurement practice across the Union. After all, those responsible for awarding contracts on behalf of governments and public authorities are required to safeguard public funds, and many need to be convinced that reforming their procedures will not jeopardise this.

In 2004, the Council and Parliament adopted a package of directives on public procurement, designed to reduce the administrative burden and costs related to tendering, make procurement systems more transparent and easier for SMEs (in particular) to access, and encourage the use of information technology systems (e-procurement) to simplify the process. These directives were due to be transposed into national law in all Member States by January 2006, although it will take some time before administrators adjust to the new rules and SMEs across Europe feel their full benefits.

In the context of the Lisbon Strategy, the European Council has underlined the importance of public procurement for SMEs’ economic performance, calling for SME access to public procurement markets to be improved. The European Commission is now working to identify examples of good practice in opening public procurement to SMEs, both within Member States and elsewhere, and encourage Member States to learn from each other as they implement the new rules under the public procurement Directives.

It will also undertake a study, updating a 2004 report, on the position of SMEs in public procurement markets across Europe. This will cover both larger-scale procurement contracts (i.e. valued above minimum thresholds, and so have to be published in the Official Journal of the EU (TED), making information more readily available across the Union) which represent less than one-fifth of the total market, and smaller contracts in different Member States.


Author: EARSC

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