Public procurement is crucial for the EU’s single market, as it spurs economic growth, creates jobs, and helps public bodies secure the best deals in an open and competitive way. In 2014, the EU reformed its procurement directives with the aim of making the procedures simpler, more transparent and innovative, as well as easier on small and medium enterprises (SMEs).
“Over the past 10 years, the EU and its member states failed to increase competition for public contracts, and we must now regrettably talk about a lost decade,” said Helga Berger, the ECA Member in charge of the audit. “The Commission should put forward an action plan to overcome key barriers to competition and make public contracts more attractive to companies.”
Trends for three key competition indicators – single bidding, direct awards, and numbers of bidders – remained unsatisfactory in most member states and there was no overall improvement in competition. In 2021, single bidding peaked as 42 % of all contracts were awarded when only one company was bidding. Moreover, single bidding across the EU nearly doubled since 2011, while the number of companies submitting bids almost halved, from roughly six to three per procedure. In addition, when contracting out, the authorities frequently asked one or more companies directly to submit a bid, without issuing a public call for tender. Such direct awards are allowed under very specific circumstances, but stifle competition and should be the exception. Instead, they were more frequent in almost all member states and accounted for around 16 % of all procurement procedures reported in 2021.
Although the Commission launched a new strategy in 2017, it and the member states did too little to pinpoint and work on the root causes of the drop in competition, which the auditors say include administrative burden, overly restrictive criteria and tailor-made specifications, as well as market concentration. Both the Commission and member states also focused more on following the rules than on performance, and there is a lack of awareness of competition as a prerequisite for value-for-money procurement.
The 2014 reform remained largely ineffective in terms of cutting red tape. On the contrary, procedures became 50 % longer over the decade, and both bidders and authorities found them burdensome when compared with more flexible private-sector procurement. The share of contracts awarded to SMEs did not go up either, and the lowest bidders still won a majority of contracts, showing that more strategic aspects (e.g. environmental, social and innovation) are rarely considered. The auditors are also concerned not only about transparency of the procedures, a key safeguard against the risk of fraud and corruption, but also about the small volume of cross-border procurement. They specifically call on the Commission to clarify public procurement objectives and put forward measures to overcome key obstacles to competition.
Background information
Each year, EU countries spend around €2 trillion – or ca. 14 % of the EU’s GDP – on public procurement. Their practices differ: in 2021, the highest share of direct awards was registered in Cyprus (42 %) and the lowest in Greece (3 %); single bidding was highest in Slovenia (73 %), and in Poland remained at a high level of around 50 % over the ten-year period. There were also differences between sectors: since 2011, there were fewer and fewer direct awards for financial services, while the highest number in 2021 were in the energy sector.ECA special report No 28/2023 “Public procurement in the EU: less competition for contracts awarded for works, goods and services in the ten years up to 2021” is available on the ECA website, together with an interactive public procurement dashboard developed by the ECA. The dashboard provides a handy comparison of trends in specific national markets and key industries
