Public procurement is a cornerstone of the European Union’s single market, representing around €2 trillion or 14% of the EU’s GDP annually. This critical function helps public authorities achieve the best value for money when acquiring works, goods, and services. However, a recent audit by the European Court of Auditors (ECA) has revealed significant challenges and a decline in competition in the public procurement sector over the past decade.

Key Findings

Decline in Competition

The ECA’s audit, covering a period of 10 years, shows a worrying trend: the level of competition for public contracts has decreased. Notably, the share of single bidding procedures has almost doubled, and a high number of direct awards are prevalent in several member states. Direct cross-border procurement remains low, accounting for only about 5% of all contract awards .

2014 Reform Objectives Unmet
The 2014 reform of the EU’s public procurement directives aimed to simplify procedures, improve SME access to public contracts, and promote strategic procurement. However, these goals have largely not been met. Instead of simplification, administrative procedures have become more complex and lengthy. The share of contracts awarded to SMEs has not seen significant improvement, and strategic procurement remains underutilized by most member states .

Monitoring and Data Issues
There are significant shortcomings in the monitoring of public procurement. National reports often lack detailed information on the competitive landscape, and the data from the Tenders Electronic Daily (TED) is incomplete and sometimes inaccurate. The Commission’s Single Market Scoreboard does not provide a comprehensive view of public procurement’s state, limiting the ability to analyze and address competition issues effectively .

Scattered Mitigating Actions
Both the EU and its member states have taken limited and scattered actions to address the obstacles to competition in public procurement. There is a notable lack of systematic use of available data to identify and tackle the root causes of limited competition. This fragmented approach has resulted in missed opportunities to enhance competition and value for money in public procurement .

Recommendations for Improvement

1. Clarify and Prioritize Objectives
The EU should clarify and prioritize its public procurement objectives. This involves a balanced focus on simplifying procedures, enhancing SME access, and promoting strategic procurement without compromising competition.

2. Enhance Data Collection and Monitoring
Closing the gaps in public procurement data collection is crucial. Improving the completeness and accuracy of TED data and enhancing the Commission’s monitoring tools will enable better analysis and more informed decision-making.

3. Deepen Root Cause Analysis
There needs to be a concerted effort to systematically analyze the root causes of limited competition in public procurement. This includes investigating market concentration, administrative capacity, and other factors that impact competition.

4. Implement a Comprehensive Action Plan
The EU should develop and implement a comprehensive action plan to address key obstacles to competition in public procurement. This plan should include clear timelines, responsibilities, and measurable outcomes to ensure effective implementation and monitoring .

The findings of the ECA’s audit underscore the critical need for reforms in public procurement to enhance competition and ensure value for public money. By addressing the identified shortcomings and implementing the recommended actions, the EU can strengthen its public procurement framework, ultimately benefiting the single market and public authorities across member states.

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This article provides an overview based on the ECA’s comprehensive report on public procurement in the EU. For detailed insights and data, the full report is available on the ECA’s website.