EUROPEAN COMMISSION 
Brussels, 20.12.2011 
SEC(2011) 1586 final 
  
COMMISSION STAFF WORKING PAPER 
EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 
Accompanying the document 
Proposal for a Directive of the Euro pean Parliament and of the Council 
on Public Procurement 
and  
the Proposal for a Di rective of the European Parliament and of the Council  
on procurement by entities operating in the water, energy, transport and postal sectors
{COM(2011) 896 final} 
{SEC(2011) 1585 final}  
 
EN 2   EN COMMISSION STAFF WORKING PAPER 
EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 
Accompanying the document 
Proposal for a Directive of the European Parliament and of the Council 
on Public Procurement 
and  
the Proposal for a Directive of the Eu ropean Parliament and of the Council  
on procurement by entities operating in the water, energy, transport and postal sectors 
1. BACKGROUND  
Public procurement (PP) is the process us ed by government inst itutions and public 
sector organisations (CAEs) to buy supp lies, services and public works. Such 
expenditure is a significan t and influential component  of the economy. In 2009, 
contracts governed by EU PP rules accounted for 3.6  % of EU GDP (€  420 billion). 
Several recent reports and policy statemen ts highlight a need to review these 
Directives. Reviewing the PP framework is a priority of the Single Market Act. 
This Impact Assessment analyses the current challenges facing EU PP policy and 
explores the options to support and ad apt Directives 2004/17/EC and 2004/18/EC. 
2. STAKEHOLDER CONSULTATION  
This report builds on the extensive external expertise, consultation and analysis that 
underpins the 2011 evaluation of PP and the 2010 evaluation of the 2004 Action Plan 
for e-procurement. It draws on the findi ngs of 2 Green Paper consultations on: 
(a) the modernisation of EU PP policy (over 620 replies) 
(b) expanding the use of e-procurement in the EU (77 replies). 
Both Green Papers were supported by well- attended conferences in Brussels where 
stakeholders had a further opportu nity to express their views. 
Member State (MS) representatives were consulted via the Advisory Committee for 
Public Contracts (ACPC). 
3. PROBLEM DEFINITION  
3 key problems have been identified: 
 
EN 3   EN • Insufficient cost-efficiency — current EU  rules generate estimated savings of 
approximately €  20 billion on €  420 billion p.a. but procedures may be unduly 
burdensome as the associ ated cost is around €  5.6 billion. 
• Missed opportunities for society — cu rrent rules may not always allow 
stakeholders to optimise the use of th eir resources and/or make the best 
purchasing choices. 
• National rather than EU PP market — over 98  % of contracts awarded 
according to EU rules are won by national bidders (approximately 96  % of total 
value). 
Further analysis has identified the following ca uses of these problems, classified into 
5 main areas. 
3.1. Scope 
Cause: complex rules Complex and unclear EU rules defining sc ope and coverage generate uncertainty, 
lead to risk-averse circumvention and ‘ box-ticking’ behaviour by public purchasers 
to the detriment of the quali ty of procurement outcomes. Costly regulatory apparatus 
is applied to large populations of purch asers or transactions without sufficient 
countervailing benefit. There are many ‘gre y zones’ regarding th e activities covered 
by the Directives (e.g. form of  public-public cooperation) an d the rules that apply to 
different types of contract. Such complexity  creates litigation costs, falling mainly on 
CAEs, who require advice on how to achieve compliance. 
3.2. Procedures  
Causes: disproportionate and inflexible procedures Disproportionate procedures generate excess costs, especially for smaller contracts. 
A typical procedure costs nearly €
 28 000 (average CAE cost €  5 500; 5.9 firms bid at 
a cost per firm of €  3 800). At the lowest EU threshold (€  125  000) such costs 
represent 18-29  % of the contract value. Further evidence is given by the significant 
variations noted in MS' performance (e.g. th e difference in time taken from dispatch 
of the contract notice to awar d spans a range of 180 days). 
Many stakeholders complain that the current procedures are inflexible and limit their 
ability to negotiate. In particular CAEs cannot make  the best use of non-standard 
procurement solutions (e.g. innovative purchasing). 
3.3. Strategic procurement 
Causes: uncertainty and insuffic ient provisions on the in tegration of strategic goals   
Despite several communications to clarify how to integrate other policy objectives 
(e.g. green, social, innovative) when applyi ng PP rules, many stakeholders find that 
problems remain. They also feel that more  can be done to help CAEs who wish to 
spend public money in a more strategically  responsible manner. A fear of litigation 
(due to non-compliance) has led to low take-up of such options and a general lack of 
 
EN 4   EN monitoring prevents the id entification of successes and wider promotion. There is 
also a lack of convergence in the way MS use the available measures and the 
resultant different standards / labels actua lly risk fragmenting the market further 
along national lines. 
3.4. Access 
Causes: regulatory and ‘natural’ market barriers Difficulties affecting market access across Europe lower the involvement of SMEs 
and reduce cross-border bidding. Many bidders  have never attempted to bid in 
another country, due to a mix of natura l (e.g. language, geographic) and regulatory 
administrative barriers. Both SME and cross-border bidders are hampered by 
administrative requirements (e.g. provision of  evidentiary documents) and problems 
in obtaining information. The share of SMEs winning PP contracts has not changed 
significantly since 2002, nor have cross-bo rder participation rates improved. The 
most significant factor aff ecting SME participation is c ontract value — SMEs have 
problems bidding for or fulfilling contracts over €
 300  000. 
3.5. Governance  
Causes: different models and admin istrative capacities across MS  
Significant differences in the administrative organisation put in pl ace by MS have led 
to inconsistent application, control and m onitoring across the EU. This has resulted 
in errors, an increased risk of fraud and sub-optimal management of resources. 
Recent audits of EU-funded pr ojects found significant erro r rates due to incorrect 
application of PP rules and in some in stances, incorrect transposition of EU 
Directives. Analysis of the infringemen t procedures launche d by the Commission 
since 2005 identified a similar range of errors and issues, implying that such 
mistakes are not one-offs but occur repeatedly. 
3.6. Consequences 
Taken together, these 3 key problems lead to  the conclusion that the Internal Market 
is not achieving its full potential in PP.  Without action, this situation will at best 
continue and could even get worse as diffe rences become more marked and the lost 
opportunity costs of a sub-optimal framework are taken into account. 
Given that many of the problems identified ar e the result of action and interpretations 
stemming from 2 EU Directives, it follows th at EU level action is  justified and could 
be required to address these issues. 
4. OBJECTIVES  
The evaluation recognised that the genera l objectives of existing PP policy remain 
valid, particularly given the current financia l strain in many MS. Hence the EU will 
continue to promote fair, non-discriminato ry and EU-wide competition in order to 
deliver the best value for money whilst achieving the best possible procurement 
outcomes for society. It will also remain  active in the fight against corruption. 
 
EN 5   EN Specific objectives have b een identified to respond to the main problems identified 
above. They are to: 
(1) improve the cost-efficiency of EU PP rules and procedures; 
(2) take full advantage of all opportunities to deliver the best possible outcomes 
for society; 
(3) create EU rather than national markets for PP. 
9 operational objectives have also been id entified to address the causes of the 
problems. Achieving these operational objec tives should help achieve the specific 
objectives and lead to improved perfo rmance against the overarching goals. 
5. OPTIONS  
A wide range of options have been c onsidered, although ra dical action (either 
complete abolition or full harmonisation of  EU legislation) wa s quickly discarded. 
Using the operational objectives as a gui de, a range of non-leg islative (SOFT) and 
legislative (LEGI) options, based on certain  critical choices, was developed to 
address each of the 5 main problem areas . A high-level approach has been adopted, 
since microscopic examination of all the possible legislative changes would produce 
a document of several hundred pages. 
After further screening, 12 options were se lected for further analysis against the 
baseline (no change) scenario. 2 LEGI opti ons were retained for each problem area, 
differing in their degree of ambition, and so ft law options for problems in access and 
governance. 
For a given problem area, it is not always  an ‘either/or’ choice in favour of one 
option. For the solutions proposed relating to  scope, procedures and governance, the 
best solution could be to combine both LEGI options or LEGI and SOFT. 
6. IMPACTS AND COMPARISON OF OPTIONS  
The key impacts of these options are summarised below. In general, the most 
immediate impacts are economic with limite d social and environmental effects, 
except for the options relating to strategi c use which are, by their very nature, 
intended to create (positive) so cial and environmental impacts. 
6.1. Scope 
Options 
SCO.LEGI.TARGET:  targeted adjustments to scope of PP legislation 
SCO.LEGI.REDUCE:  significant amendments to exclude certain 
purchasers/purchases 
Impacts 
 
EN 6   EN Both these options should improve clar ity and hence improve cost-efficiency. 
SCO.LEGI.TARGET should address the cu rrent grey areas and improve legal 
certainty without triggering any expected international conseque nces. Creating a new 
lighter regime for social services contracts above €  500  000 and applying the full 
regime to all other services should improve clarity and the application of EU rules. 
The impacts, and hence benefits, of SC O.LEGI.REDUCE would be limited to the 
excluded procurement and are based on the assumption that any substitute national 
regime is lighter than the EU one. While national (below EU thresholds) 
procurement rules may be less prescriptiv e, a substantial regulatory cost would 
remain for such exempted purchases and th e inherent and unavoida ble costs of sound 
management of PP. Exclusions would also  reduce transparency at EU level, but 
probably also nationally, with the associ ated negative impact on competition and 
price paid. Depending on the ex act exclusions, additional co sts may be incurred if 
they contravene international obligations , triggering the fore closure of partner 
country markets with potentially significan t negative impacts for EU firms trading 
with these countries. 
Improving legal clarity (SCO.LEGI.TARGET) would not address issues affecting the 
capture of stakeholders and transactions . The decision as to  whether the right 
stakeholders and subject matter would be covered is more complicated (and to a 
certain extent political given the po ssible international consequences). 
6.2. Procedures 
Options 
PRO.LEGI.DESIGN:  correct and enhance existing procedures. 
PRO.LEGI.FLEXIB:  expand menu of procedural opt ions available to CAEs and 
alleviate procedures that resu lt in disproportionate costs. 
Impacts  
PROC.LEGI.DESIGN would improve the desi gn of certain procedures, and give 
greater legal clarity on what was required. This should improve cost efficiency and 
the overall proportionality of the PP pro cess. Whilst greater use of repetitive 
purchasing techniques should ha ve overall positive benefits  for CAEs, there are some 
concerns about market closure and the longer- term access of firms to such tools. This 
would have to be addressed to ensure  transparency and non-discrimination and 
prevent a restriction of competition. Enforci ng tools and measures that can facilitate 
up-take of e-procurement should significan tly improve cost-efficiency and strengthen 
the integration of EU PP ma rkets, although there would be  set-up costs and technical 
barriers to be overcome (to avoid market fragmentation). 
PROC.LEGI.FLEXIB would increase the ch oice and flexibility available to CAEs 
which could also improve procurement outco mes, particularly through the use of 
greater negotiation (although with certain caveats relating to appropriate use and 
potential costs of developing negotiating e xpertise). A lighter regime for contracts 
tendered by sub-central aut horities should improve cost  efficiency and, assuming 
 
EN 7   EN certain minimum transparency requirements  (use of a Prior Information Notice), 
there should be no marked drop in competition and no international consequences. 
6.3. Strategic procurement 
Options 
STR.LEGI.FACILIT:  enable CAEs to frame their PP needs in ways that integrate 
other policy goals. 
STR.LEGI.ENFORC:  remove discretion from CAEs. They  must award (all or part of) 
contracts on the basis of perf ormance on other policy goals.  
Impacts  
Broadly speaking, the measures under both th ese options are very similar. Their 
impacts would differ mainly according to whether a permissive or a coercive 
approach was adopted at  EU level. Both would aim to improve the ability of CAEs to 
achieve wider strategic goals. The strate gic impacts of the FACILIT option would 
generally be lower than for ENFORC, due to likely variations in implementation 
across MS depending on choices taken. Howe ver, national authorities and CAEs 
would retain the ability to make choi ces depending on actual circumstances and 
available resources, which is particularly im portant in the current financial climate. 
ENFORC would ensure greater consistency and uptake across the EU. Both options 
have costs to CAEs and firms due to the increased information requirements and the 
need for greater knowledge and controls ac ross a range of policies. Both options 
could, in the short term at least, increa se complexity and the administrative burden. 
6.4. Access 
Options 
ACC.SOFT:  further EU guidance and training on acce ss e.g. to facilitate cross-border 
buying and selling.  
ACC.LEGI.FACILIT:  remove administrative barriers  to SME participation and cross-
border access. 
ACC.LEGI.ENFORC:  introduce prescriptive measures to reserve parts of PP markets 
for SMEs or require structuring of purchas es in ways that favour SME participation.  
Impacts  
Again, the 2 LEGI options contain similar c ontent and the main difference in impact 
relates to whether a permissive or coerci ve approach is adopted. Whilst coercive 
measures should lead to more SME and possibly cross-border access and generally 
improve the internal market for PP, it is  not necessarily clear that this would 
streamline and simplify the rules. Increa sing information requirements  could 
increase complexity and the administrati ve burden for CAEs and firms. Some of 
these costs could be lower under a permi ssive approach, which could be more 
targeted to local needs. 
 
EN 8   EN Instruments that aim to f acilitate access to EU PP ma rkets e.g. by reducing the 
evidentiary requirements for bidding, shoul d result in simpler and less burdensome 
processes for SMEs and cross-border bi dders. Adopting the winning bidder approach 
to providing documentary evidence w ould reduce administrative costs by 80  %. Use 
of lots for contracts with a total value a bove certain thresholds would also increase 
the number of contracts accessible to SMEs. 
The ACC.SOFT option would have a minor positive impact on access rates but is 
low cost. 
6.5. Governance 
Options 
GOV.SOFT: identify and provide guidance on areas  of recurrent difficulty affecting 
governance e.g. ‘best practice’  learning and benchmarking. 
GOV.LEGI.TARGET:  leverage economies of scale and optimal outcomes for CAEs 
by using specialised prof essional bodies that a ggregate purchasing, where 
appropriate. 
GOV.LEGI.ENHANC:  oblige MS to establish a national authority responsible for PP 
implementation, control and monitoring and that reports annually on performance.  
Impacts  
Increasing the availability and role of  specialised purchasing bodies should 
significantly help the many CAEs that rare ly conduct high value procurement and are 
uncertain of how to comply with EU rules. Whilst greater aggregation raises concerns about possible market closure which would need to be addressed, 
GOV.LEGI.TARGET should have overall benefits for CAEs and firms. 
GOV.LEGI.ENHANC should create similar cond itions and architectu re for control, 
monitoring and application of PP rules at national and EU level, improving 
consistency and certainty across the EU and strengthening the internal market. 
Although MS and CAEs would probably incur some additional costs, many already have the necessary structures and should make savings due to improved coordination 
and monitoring. 
Similar, but lesser impacts could be expected from GOV.SOFT which, due to its 
voluntary nature, would be unlikely to ach ieve the same degree of adoption and 
consistency. 
7. P
REFERRED OPTIONS  
Based on this analysis, the following packag e of solutions is proposed (shaded grey):  
 
EN 9   EN Options 
 
Problem groups No change 
options 
(NC) Soft law 
options 
(SOFT) Legislative — generally 
within current framework 
(LEGI._) Legislative — new or 
significant change 
(LEGI._) 
Scope (SCO) SCO. NC  SCO. 
SOFT  SCO.LEGI.TARGET  
(clarify boundaries)  SCO.LEGI.REDUCE 
(significant re-scoping) 
Procedures (PRO) PRO. NC  PRO. 
SOFT  PRO.LEGI.DESIGN 
(improve definitions and 
design)  PRO.LEGI.FLEXIB 
(Increase choice, increase e-
proc) 
Strategic (STR) STR. NC  STR. 
SOFT  STR.LEGI.FACILIT 
(facilitate strategic public 
procurement )  STR.LEGI.ENFORC 
(enforce strategic public 
procurement)  
Access (ACC) ACC. NC  ACC. 
SOFT  ACC.LEGI.FACILIT 
(facilitate access)  ACC.LEGI.ENFORC 
(enforce tools for access)  
Governance 
(GOV) GOV. NC GOV. 
SOFT GOV.LEGI.TARGET 
(optimise the use of 
resources) GOV.LEGI.ENHANC 
(enhance control & 
responsibility)  
8. FUTURE MONITORING AND EVALUATION  
A lack of consistent and comparable data  hampers current efforts to monitor PP 
achievements and identify areas for fu rther action. Certain improvements to 
monitoring arrangements are implicit unde r several measures considered e.g. 
improving governance and e-procuremen t. Better statistics and monitoring 
methodologies should be considered to monitor: 
• Compliance costs; 
• Use and savings/costs of switching to e-procurement and de livering strategic 
goals; 
• SME and cross-border access rates; 
• Measures to address fraud, corr uption and non-competitive behaviour. 
The draft text would include a commitm ent to evaluate any new legislation.