Public procurement in the European Union ensures the efficient use of public funds while promoting fair competition, transparency, and non-discrimination. The EU procurement harmonises procurement procedures across the EU member states, ensuring public contracts are awarded in a manner that is open, transparent, and competitive. This guide provides a comprehensive overview of EU procurement, covering the legal framework, key principles, procurement procedures and practical considerations for both contracting authorities and bidders.

1. Legal Framework

1.1. EU Directives on Public Procurement

The EU procurement framework is governed by a set of directives transposed into the national laws of each member state. The main EU directives are:

– Directive 2014/24/EU: Covers public procurement of goods, services, and works by public sector entities.
– Directive 2014/25/EU: Governs procurement by entities operating in the water, energy, transport, and postal services sectors (utilities).
– Directive 2014/23/EU: Regulates the award of concession contracts, which are contracts where the contractor bears the operating risk.

These directives were adopted in 2014 and have been in force since April 2016. They aim to modernize public procurement rules, simplify procedures, and promote the strategic use of procurement to achieve broader policy goals, such as innovation, sustainability, and social inclusion.

1.2. Thresholds for Application

EU procurement rules apply to contracts whose value exceeds certain thresholds. These thresholds are revised every two years and are expressed in euros. As of 2023, the thresholds are:

– Public sector contracts: €139,000 for supplies and services, €5,350,000 for works.
– Utilities contracts: €428,000 for supplies and services, €5,350,000 for works.
– Concession contracts: €5,350,000 for both works and services.

Contracts below these thresholds are subject to national procurement rules, but they must still comply with the general principles of EU law, such as non-discrimination, equal treatment, and transparency.

1.3. Principles of EU Procurement

The EU procurement framework is based on key principles:

– Transparency: Procurement processes must be open and transparent, ensuring that all potential bidders have access to relevant information.
– Equal Treatment: All bidders must be treated equally, without discrimination.
– Non-Discrimination: Bidders from any EU member state must have the same opportunities to participate in procurement processes.
– Proportionality: Requirements and conditions must be proportionate to the subject matter of the contract.
– Mutual Recognition: Certificates and standards from one member state must be recognized in others, reducing barriers to cross-border procurement.

2. Procurement Procedures

2.1. Open Procedure

In an open procedure, any interested economic operator may submit a tender. This is the most transparent and competitive procedure, as it allows for maximum participation. The contracting authority publishes a contract notice, and all interested bidders have the same amount of time to prepare and submit their tenders.

2.2. Restricted Procedure

In a restricted procedure, only those bidders who have been pre-selected by the contracting authority may submit a tender. The procedure involves two stages: first, a call for expressions of interest is published, and bidders are invited to apply. The contracting authority then selects a limited number of bidders to submit tenders.

2.3. Competitive Procedure with Negotiation

This procedure allows for negotiation with bidders after the initial submission of tenders. It is used in complex projects where the contracting authority needs to discuss and refine the solutions proposed by bidders. The procedure is subject to strict conditions and must be justified by the nature of the contract.

2.4. Competitive Dialogue

The competitive dialogue is used for particularly complex contracts where the contracting authority is not able to define the technical means or the legal and financial make-up of the project. The procedure involves a dialogue with selected bidders to develop one or more suitable solutions. Once the dialogue is concluded, bidders are invited to submit final tenders.

2.5. Innovation Partnership

The innovation partnership is a relatively new procedure introduced by Directive 2014/24/EU. It is designed to foster innovation by allowing contracting authorities to establish a partnership with one or more economic operators to develop innovative products, services, or works. The partnership is structured in successive stages, with the possibility of terminating the partnership if the desired results are not achieved.

2.6. Negotiated Procedure without Prior Publication

This procedure is used in exceptional cases, such as extreme urgency or when only one supplier is capable of delivering the required goods or services. It allows the contracting authority to negotiate directly with one or more suppliers without prior publication of a contract notice. However, its use is strictly limited and must be justified.

3. Key Stages in the Procurement Process

3.1. Planning and Preparation

Before launching a procurement procedure, the contracting authority must carefully plan and prepare. This includes:

– Defining the needs: Clearly identifying the requirements and objectives of the contract.
– Market analysis: Conducting research to understand the market, potential suppliers, and available solutions.
– Budgeting: Ensuring that the necessary funds are available and that the procurement is financially viable.
– Risk assessment: Identifying potential risks and developing strategies to mitigate them.

3.2. Publication of Contract Notice

The procurement process begins with the publication of a contract notice in the **Official Journal of the European Union (OJEU)** via the **Tenders Electronic Daily (TED)** platform. The notice must include essential information about the contract, such as the subject matter, estimated value, selection criteria, and deadlines for submission.

3.3. Selection of Bidders

In procedures like the restricted procedure or competitive dialogue, the contracting authority must first select the bidders who will be invited to submit tenders. This selection is based on pre-defined criteria, such as financial capacity, technical ability, and professional experience.

3.4. Submission and Evaluation of Tenders

Bidders submit their tenders by the specified deadline. The contracting authority evaluates the tenders based on the criteria set out in the contract notice. These criteria may include price, quality, technical merit, and environmental or social considerations.

3.5. Award of Contract

Once the evaluation is complete, the contracting authority awards the contract to the bidder that offers the best value for money, taking into account the stated criteria. The award decision must be communicated to all bidders, along with the reasons for the decision.

3.6. Contract Management

After the contract is awarded, the contracting authority must manage the contract effectively to ensure that the supplier delivers the agreed goods, services, or works. This includes monitoring performance, managing changes, and resolving any disputes that may arise.

4. Strategic Use of Procurement

4.1. Green Public Procurement (GPP)

Green Public Procurement (GPP) is an approach where contracting authorities use their purchasing power to choose goods, services, and works with a reduced environmental impact. The EU encourages GPP as a way to promote sustainability and achieve environmental policy goals.

4.2. Socially Responsible Procurement

Socially responsible procurement involves considering social criteria in procurement decisions, such as promoting fair labor practices, supporting disadvantaged groups, and ensuring compliance with human rights. The EU procurement directives explicitly allow for the inclusion of social considerations in procurement processes.

4.3. Innovation Procurement

Innovation procurement aims to stimulate innovation by using public procurement to drive the development of new products, services, or processes. The EU supports innovation procurement through procedures like the innovation partnership and by encouraging the use of pre-commercial procurement (PCP).

4.4. Small and Medium-Sized Enterprises (SMEs)

The EU is committed to ensuring that SMEs have fair access to public procurement opportunities. Measures to support SMEs include dividing contracts into lots, reducing administrative burdens, and providing training and support to help SMEs participate in procurement processes.

5. Challenges and Best Practices

5.1. Challenges in EU Procurement

– Complexity: The EU procurement framework can be complex, particularly for smaller contracting authorities and SMEs.
– Administrative Burden: The procurement process can be time-consuming and resource-intensive, particularly for high-value contracts.
– Cross-Border Participation: Despite the principles of non-discrimination and mutual recognition, cross-border participation in procurement processes remains relatively low.

5.2. Best Practices

– Early Market Engagement: Engaging with the market early in the procurement process can help contracting authorities better understand available solutions and refine their requirements.
– Clear and Concise Documentation**: Providing clear and concise documentation can help bidders understand the requirements and submit high-quality tenders.
– Use of Electronic Procurement: The EU encourages the use of electronic procurement (e-procurement) to simplify processes, reduce costs, and increase transparency.
– Training and Capacity Building: Providing training and support to both contracting authorities and bidders can help improve the quality of procurement processes and outcomes.

6. Conclusion

EU procurement is a complex but essential process that ensures the efficient use of public funds while promoting fair competition, transparency, and non-discrimination. By understanding the legal framework, key principles, and procurement procedures, contracting authorities and bidders can navigate the procurement process effectively and achieve their objectives. The strategic use of procurement can also help achieve broader policy goals, such as sustainability, innovation, and social inclusion. Despite the challenges, adopting best practices and leveraging available tools and support can help improve the quality and outcomes of procurement processes across the EU.

Public procurement in the EU, European Commission

Public procurement, tenders and contracts within the European Union