12. 12. 89 Official Journal of the European Communities No C 311/7 
II 
(Preparatory Acts) 
COMMISSION 
PUBLIC PROCUREMENT 
Regional and social aspects 
COM(89) 400 final 
(Commission communication of 22 September 1989) 
(89/C 311/07) 
I. INTRODUCTION 
The problem 
1. The liberalization of public procurement is part of 
the programme for the progressive establishment of the 
internal market in the period up to 31 December 1992, 
provided for under Article 8a of the EEC Treaty. 
2. Article 8c provides that the Commission, in making 
its proposals, shall take into account the extent of the 
effort which the establishment of the internal market will 
require of economies showing differences in devel­
opment, and that it may propose appropriate provisions. 
3. Article 130(a) and (b) further lays down that the 
internal market shall take into account the strengthening 
of economic and social cohesion and shall contribute to 
their achievement. 
4. This makes clear the obligation for the Commission 
to consider, both for the period during the establishment 
of the internal market and for the period after its 
completion, measures which would reinforce ' the 
Community's economic and social cohesion. 
5. The concern with implementing the internal market 
in public procurement in a way that takes fully into 
account the needs of economic and social cohesion has 
been a consistent concern of the European Parliament. 
In its consideration of the different proposals which form 
the legislative programme on public procurement, the 
Parliament has adopted a series of amendments with this 
end in view. In particular, the Parliament has been 
concerned about measures intended to reduce regional 
disparities and to promote job creation in the least 
advantaged areas and in areas of industrial decline. 
However, its concerns have ranged wider, including 
actions to help in the fight against long-term unem­ployment and in the insertion of young people in work; 
the respect for the appropriate provisions concerned with 
employment protection and working conditions; and 
sub-contracting, in the execution of public contracts. 
6. The problem of regional preferences has also been 
discussed in Council on several occasions in connection 
with the modernization of the supplies and works 
Directives. A number of Member States have insisted on 
the need to ensure that preferences do not interfere with 
the proper functioning of the internal market. 
7. The present communication represents the 
Commission's response to the requirements of the Treaty 
and the concerns expressed by the European Parliament 
and Council. 
II. Economic effects of opening up public procurement 
8. The economic importance of public procurement 
derives in the first place from its scale. Some 15 % (ECU 
592 000 million at 1989 prices) (') of Community GDP is 
devoted to purchasing by the public sector and its 
agencies and of this some 7 to 10 % (') (ECU 260 000 to 
380 000 million) takes the form of contracts subject to 
formal purchasing procedures (the rest is accounted for 
by rents, heating, electricity, telephone, post, insurance 
and similar charges). 
9. It is evident that the achievement of efficiency in 
public procurement is of major importance to the 
economic health of the Community. 
(') See European Economy: No 35 March 1988 para 54, para 
3.4 and Tables 3.4.1 and 3.4.2: 1989 values assume no 
change in the ratio of public procurement to GDP as 
between 1985 and 1989: 1989 prices estimated on basis of 
implied deflators of private consumption given in Table 6: 
EEC Economic Forecasts, January 1989. 
No C 311/8 Official Journal of the European Communities 12. 12. 89 
10. This requires both the fullest possible participation 
of all potential suppliers in the market place and the allo­
cation of contracts in a way which ensures that the 
goods, services and works required by bodies in the 
public domain are obtained under the most favourable 
conditions. 
11. Public procurement policy as expressed in the 
Directives on the procurement of supplies and public 
works and in the proposal for directives on the excluded 
sectors aims to enhance the efficiency of public 
procurement by organizing markets in a transparent 
manner that ensures that market information is available 
to would-be suppliers and contractors and facilitates 
their participation. 
12. The efficient organization of public procurement 
in this way will have a significant positive economic 
effect. The estimates developed in the study of the cost 
of non-Europe show that the achievement of the internal 
market in public procurement will give rise to economies 
rising to as much as 0,5 % of Community GDP over the 
medium to long term. 
These estimates assume: 
(ECU WO million) 
(1989 prices) 
(a) Savings to public procurement 
through selection of most 
competitive suppliers: 5,5 
(b) Savings due to increased compe­
tition leading to alignment of 
domestic and external suppliers: 2,8 
(c) Savings due to rationalization of 
production structures: 8,9 
Total: 17,2 O 
Additional savings in the defence sector would bring the 
total to over ECU 22 000 billion, at 1989 prices. The 
macro-economic consequences of such savings could, of 
themselves, provide the room for manoeuvre for a 
substantial enhancement to aggregate demand with 
consequential reinforcement of economic activity and 
employment. The cost of non-European study estimates 
the net gain in employment to approach 400 000 (2) if 
this room for manoeuvre is used appropriately. sector contracts can have an important, indeed deter­
minant, influence on the economic strength and devel­
opment of particular firms, sectors and regions. 
14. The importance of this instrument is further 
enhanced by the uneven distribution of public 
procurement across different economic sectors. As was 
explained in a previous communication (3), some 85 % 
of public procurement of supplies is concentrated on one 
third of the industrial sectors, including 28,6 % in 
building and construction, 13,7 % in the three major 
energy sectors (coal, refined petroleum products, elec­
trical power), 8,3 % in transport equipment other than 
motor vehicules, 4,4 % in electrical goods, 3,2 % in 
chemical goods. 
15. Many high technology markets including telecom­
munication and medical equipment depend heavily on 
public procurement. In information technology, 
generally, the public share amounts to some 60 % of the 
total market. The share of public procurement in 
building and civil engineering is around 30 %. The 
involvement of major equipment suppliers, particularly in 
the supply of the telecommunications, transport, energy 
and water sectors, means that the choice of one supplier 
rather than another, the rationalization of a sector, 
dramatic changes in technology or swings in the overall 
volume of demand for supplies can have a major impact 
on a regional or local economy and on the situation of 
its workforce. 
16. It is implicit in the programme for the estab­
lishment of the single market in public procurement that 
removal of internal barriers will give rise to changes in 
the distribution of contracts and therefore to more 
efficient procurement. The overall benefits of this process 
have been described above. It is inevitable that such 
changes will imply rationalization; this is indeed the 
source of much of the saving referred to above. Although 
the studies already undertaken by the Commission show 
some of the scope for such rationalization, its regional, 
industrial and social consequences are not predictable (3) 
in detail at this stage and are, in any case, tied up with 
other major economic developments, with the interpene-
tration of other Community measures, such as freedom 
of establishment and common technical rules and with 
developments in public procurement itself, for example, 
in the field of sub-contracting. 
13. At the same time it is clear that the direction of 
such a major share of economic resources constitutes a 
powerful economic instrument. The allocation of public 
O op. cit. p. 57: Table 3.4.4 with 1989 prices estimated on the 
same basis. 
(2) op. cit. (v. footnote p. 160). 17. In other words, while the overall consequences for 
economic demand and employment will be positive, the 
distribution of the pain and the gain between firms, 
groups and regions will only become apparent with time. 
(3) COM(88) 376. 
12. 12. 89 Official Journal of the European Communities No C 311/9 
18. The Commission is, however, committed to 
continuing the study of the regional effects of opening 
up public procurement in the excluded sectors (see 
paragraph 25). 
19. It has also initiated a more general study on the 
threats and opportunities posed by the internal Market 
in the peripheral Member States. Results so far suggest 
that negative regional effects of opening-up public 
procurement are only likely to be significant in sectors 
such as construction, pharmaceuticals and textiles. 
Increased competition may not necessarily threaten 
domestic markets. There may, however, be a risk that 
the opportunities created by the opening-up of public 
procurement will not be seized, because of the historic 
legacy of protection, technological backwardness, low 
productivity, failure to organize markets, and poor 
exporting skills. 
20. In summary, the completion of the internal market 
in public procurement affects economic and social 
cohesion by: 
— increasing efficiency, and so reducing the burden on 
the public purse and enhancing macro-economic 
growth, 
— promoting re-structuring and adjustment, 
— creating the opportunity for firms, sectors and 
regions to exploit their particular skills and 
advantages to their economic benefit, 
— influencing the direction in which many firms, sectors 
and regions develop, which may pose problems for 
economically weaker areas. 
21. The economic and social effects of public 
procurement described above give rise to three distinct 
areas of policy development. These concern: 
— policies for efficient procurement. These are the 
subject of the various proposals relating to public 
procurement which are to be found in the internal 
market White Paper (x). They are not further 
discussed here, 
— policies to facilitate restructuring and adjustment 
arising from the liberalization of public procurement 
and its subsequent development; these are briefly 
discussed in paragraphs 22 to 25 below, 
— policies to ensure the full exploitation and devel­
opment of particular resources, particularly relating 
to regions, small businesses and particular groups of 
individuals. These are discussed under four headings 
in chapter IV below. 
(») COM(85) 310. III. Restructuring and adjustment arising from liberali­
zation of public procurement 
22. Restructuring and adjustment is inevitable as a 
result of the achievement of the internal market in public 
procurement. Indeed, as was pointed out in the earlier 
communication referred to above, restructuring and 
adjustment of a number of major sectors appears to be 
inevitable quite independently of the changes in public 
procurement associated with the achievement of the 
internal market. The communication of 11 October 1988 
predicted significant structural adjustment in the railway 
equipment industry, the heavy electrical industry and the 
telecommunications industry. Since then, important 
regrouping within each of these industries has indeed 
taken place. 
23. The earlier communication also pointed out that, 
while some information was available as to the existing 
regional distribution of employment in the sectors 
concerned, it was impossible to predict, at this stage, the 
detailed impact of restructuring. This would depend, 
quite apart from the development of the general 
economic situation, on the speed and success with which 
individual firms moved to exploit new opportunities or to 
face new competitive pressures. Even if some of the firms 
at risk could be identified, the distribution of their 
productive plant means that the regional incidence of 
restructuring will depend on investment, development 
and rationalization plans adopted within those firms. For 
example, some 11 major production sites were identified 
for fossil boiler production, nine for steam turbine 
generators and 17 for transformers. The regional conse­
quences of restructuring of the industries concerned will 
clearly depend on which, if any, of these sites expand or 
contract their employment. 
24. To describe the difficulties in predicting problems 
is neither to deny that such problems may arise nor to 
resolve them. Even if the liberalization of public 
procurement produces an overall improvement in activity 
and employment and if the measures taken under the 
Structural Funds or as described elsewhere in this 
communication ensure full participation of the regions in 
these benefits, there will be a need for constant vigilance 
to ensure that the real readjustment problems, which are, 
in the end, experienced by individuals, are resolved satis­
factorily. 
25. The Commission has established a continuing 
study to identify as early as possible any emerging 
problems. If particular problems do emerge, appropriate 
social and regional policy measures may then be taken 
by the Community under the Structural Funds, and 
through recourse to the European Investment Bank and 
to other financial instruments. 
No C 311/10 Official Journal of the European Communities 12. 12. 89 
IV. Fuller exploitation and development of economic 
resources 
26. Regional enterprises and small businesses may not 
have the access to opportunities for specialization, to 
capital and to know-how which often reinforce the 
position of the centrally located areas of greatest 
economic advantage. Low wages in the peripheral areas 
do not necessarily compensate for higher productivity, 
better infrastructure serving industry and a more sophis­
ticated approach to marketing and product development. 
With the completion of the internal market, regional 
enterprises are further being challenged to reach the 
average European performance level at a time when 
European standards of quality and efficiency in tradi­
tional labour-intensive industries are evolving rapidly. 
27. Ignoring their vulnerability not only risks exposing 
regional enterprises to competition for which they are 
ill-prepared, organizationally, financially and technically. 
It also risks blocking the process of completing the 
internal market by encouraging apprehensive and 
defensive attitudes. Subsequent sections of this chapter 
examine ways in which the Community could respond to 
the specific challenges posed in the fields of employment, 
SME and regional policy. 
IV. 1. Preference schemes in public procurement 
28. Preference schemes in public procurement are 
operated by certain Member States in favour of less-
favoured regions, with the object of influencing the 
spatial distribution of economic activities. They 
constitute an addition to the classic instruments of 
regional development and generally aim at compensating 
for the handicaps faced by firms due to their location in 
the less-favoured and peripheral regions. In the case of 
the Federal Republic of Germany, the aim is to 
compensate for the economic disavantages caused by the 
economic division of Germany. As a way of compen­
sating for these handicaps, preference schemes in public 
procurement are policies which discriminate, by reserving 
markets or in terms of price or other conditions, in 
favour of suppliers or contractors of poor regions. 
29. In general, it may be said that preferences in the 
area of supplies procurement have tended to be used to 
favour longer term regional development aims whereas, 
in the area of public works procurement, much more 
importance has been attached to the use of work 
contracts to provide an immediate response to 
employment problems. 
30. The adoption of the Directives on public 
procurement of works (1971) and supplies (1976) led to 
the abolition of a number of such schemes and practices. 
Regional preferences have continued to operate in the 
Federal Republic of Germany, Greece, Italy and the 
United Kingdom. An outline of these schemes is given in 
the Annex hereto. 31. Such schemes raise a number of questions 
including their effectiveness as instruments of regional 
policy; their compatibility with the economic objectives 
of Community policy on public procurement; and not 
least their compatibility with Community law and the 
Community's international obligations. 
32. As regards their effectiveness as instruments of 
regional policy, the following observations may be made 
on the economic characteristics of the different schemes. 
33. The preference scheme in favour of the eastern 
frontier areas of Germany including Berlin appears to 
have been of limited economic significance in recent 
years. In 1986, the last year for which figures are 
available, the regions in question contained approxi­
mately 15 % of the population and enterprises located 
therein accounted for approximately 15,4 °/o of federal 
public procurement. The value of the contracts to which 
the preferences were in fact applied amounted to slightly 
more than ECU 142 million, that is 0,25 % of total 
federal public procurement. The cost to the federal 
budget was approximately ECU 2 million, that is, less 
than 1 % of the total expenditure on aid to the regions 
in question. 
34. Although the preference scheme operated in the 
United Kingdom applied to 18 % of the country by 
population share, in 1981, the last year for which figures 
are available, enterprises located in those regions 
accounted for only 3,3 % of central government 
procurement. The preferences were actually applied to 
contracts representing only 0,02 % of total public 
procurement, the value of those contracts amounting to 
ECU 10,8 million. The cost to the public purse can be 
estimated to have been in the region of ECU 17 000. 
This very low figure refers to the cost of the 5,0 % price 
preference regime in Northern Ireland, the other scheme 
requiring preferred firms to be price competitive with the 
lowest bidder. 
35. In neither the British nor the German case is there 
reliable evidence of the preference schemes having made 
a significant contribution to the development of the 
regions concerned. At the same time, there is no 
evidence either of them giving rise to significant 
distortions to trade whether within those countries or 
between them and other Member States. 
36. The Greek regime applies to over 90 % of the 
national territory in which regions live 65 % of the 
population. Detailed information on the preferred 
regions' share of public procurement, the proportion and 
value of public contracts to which preferences are 
actually applied and the budgetary cost of the regime 
have not been made available to the Commission. 
12. 12. 89 Official Journal of the European Communities No C 311/11 
However, it is reported that due to the absence of 
competitive suppliers in any Greek region, approximately 
40 % to 45 % of public procurement is represented by 
imports, a figure which is far above the Community 
average. 
37. The aim of the scheme operated in Greece is to 
avoid too great a concentration of economic activities in 
Greater Athens, already a zone of high congestion, and 
to favour the development of other regions. However, 
while this scheme and other regional policy measures 
may have had some positive effects, they have not been 
sufficient to reverse the trend towards the concentration 
of modern, industrial sectors in Attica, with traditional 
activities located in the regions and islands. 
38. In Italy, the schemes work by reserving a high 
percentage of contracts to firms in the regions 
concerned. Those regions contain approximately 40 °/o 
of the Italian population. Under the national regime, 
there is a basic reservation of 30 % of procurement 
which rises to 50 % in the case of supplies for public 
works financed by special intervention funds. Moreover, 
the reservation can be even greater because when in a 
given case it is not fully applied, the unused portion must 
be added to the future reserved allocation of the 
purchasing body. No public figures are available, but a 
recent submission to the Commission has estimated the 
amount of public procurement to which the reservations 
apply to be in the region of ECU 16 to 26 billion a year. 
39. No compelling evidence exists as to whether the 
Italian preference regime has contributed significantly to 
the long-term economic development of the regions in 
question. In recent years, however, the regime has given 
rise to objections from firms situated in other parts of 
Italy and other Member States on the ground that it is 
an unacceptable restriction on their activities in those 
regions. 
40. Historically, it may be argued that preferences 
may have contributed to a more balanced functioning 
of the economy, by helping to limit the widening 
of regional disparities through guaranteeing certain 
markets. They may also, in certain cases, have served 
more than a positive function, in providing the minimum 
of financial security necessary to the development of new 
technically innovative industries. There is no compelling 
evidence that, in general, the existing schemes have had 
the desired effects of long-term economic development. 
The absence of evidence, one way or the other, 
concerning the effect of these schemes is no doubt due in 
large part to the difficulty of analysing the effects of one 
policy instrument when so many other factors are 
present which influence the long-term economic devel­
opment of the regions in question. In the case of the German and British schemes their effects in general 
appear to be rather limited. The absence of sufficient 
data on the Greek regime make its impact hard to assess. 
On the other hand, the Italian regimes are significantly 
different both in their mechanisms and orders of 
magnitude. There is little doubt that contracts have been 
diverted to enterprises of the regions concerned to the 
point where the resulting distortions are causing 
problems not only in terms of the restrictive effects on 
imports from other Member States but also as regards 
the sales and development of firms in other Italian 
regions. 
41. Indeed, in so far as the existing regional pref­
erence schemes privilege enterprises from particular 
regions to the exclusion of all others, they all pose 
problems from the point of view of their compatibility 
with the fundamental aims of Community procurement 
policy and indeed the Treaty itself. They do not operate 
in a way which ensures that similarly situated enterprises 
are treated equally. They may have as their effect 
directly to deprive particular suppliers, situated outside a 
given region, including those in regions at a similar level 
of economic disadvantage, of the award of a contract to 
the benefit of others, situated within that region. Even if 
they are not very successful at doing so, this appears to 
constitute an infringement of the EEC Treaty, notably its 
Articles 30 and 59. Article 92, notably its paragraphs 2 
(c) and 3 (a), might appear to provide a framework 
within which schemes which operate as State aids could 
be accomodated. However, even if some schemes could 
be considered to be State aids within the meaning of the 
Treaty, which is itself an arguable matter, this does not 
resolve the overriding problem of the infringment of 
Article 30 and 59 for which a solution would remain to 
be found. 
42. The Court of Justice has been requested by several 
Italian courts to give preliminary rulings concerning the 
compatibility with Community law of the preference 
system operated in Italy. The Commission in its written 
intervention has taken the view that the Italian system is 
incompatible with Article 30. The Court has not yet 
delivered its ruling. The condemnation of the Italian 
regime would of course have implications for the regimes 
of the other Member States, exposing such regimes to 
legal attack at national level. 
IV.2. Non-discriminatory contract conditions 
43. A further possible means of favouring the full 
exploitation of available economic resources arises from 
the use of non-discriminatory contract conditions. 
44. In a recent case (31/87, Gebroeders Beentjes B.V. 
and the Netherlands) the Court of Justice was requested 
to rule on the compatibility with Community law of 
attaching a condition to the award of a public works 
contract under which the contractor was required to 
No C 311/12 Official Journal of the European Communities 12. 12. 89 
engage a given number of long-term unemployed 
registered with a regional employment office. The Court 
held that such a condition is compatible with the public 
works Directive (71/305). It was nevertheless subject to 
the Treaty, particularly those provisions on freedom to 
provide services, freedom of establishment and non­
discrimination on grounds of nationality. The Court 
referred the affair back to the national tribunal to 
establish whether or not the particular clause was, in the 
light of all the circumstances, compatible with the 
Treaty. 
45. This judgement raises a number of interesting 
questions: 
— could such conditions legitimately be applied to 
objectives other than the reduction of long-term 
unemployment; and if so, to what? 
— within what limits can such conditions be applied? 
— does the use of such conditions offer a useful policy 
instrument? 
(a) Legitimate objectives of contract conditions 
46. Although the Beentjes case concerned long-term 
unemployment, there is no reason to suppose that 
objectives other than the reduction of long-term unem­
ployment would fall outside the area of liberty left to the 
Member States by Directive 71/305. Other categories of 
unemployment, for example, of the young, would appear 
to be an equally legitimate concern. The same probably 
applies to a broad range of social matters including, for 
example, professional training, health and safety, labour 
relations and the suppression of racial, religious discrimi­
nation or discrimination on the grounds of sex. In these 
areas too, the procurement Directives neither forbid nor 
expressly authorize Member States to regulate the 
matter. Accordingly, they and procuring entities are free 
under Community law to pursue such objectives, 
provided they respect the Directives' provisions and the 
constraints of the Treaty. It also follows that Member 
States are free under Community law to restrict the 
capacity of procuring entities to pursue objectives of this 
kind. 
(b) Limits to the application of contract conditions 
47. The Court drew a distinction between the 
contractual condition concerning long-term unem­
ployment on the one hand and the criteria for selection 
of firms and the criteria for the award of a contract on 
the other. The condition was not relevant to an 
assessment of the bidders' economic, financial or technical capacity to carry out the work. Nor did it form 
part of the criteria applied by the purchasing authority to 
decide to whom to award the contract. It was simply an 
obligation which the firm securing the contract would 
have to accept. 
48. However, in some cases, conditions of the 
contract will concern matters also relevant to the 
selection criteria or to the award criteria. For example, 
making the extent to which tenderers would employ the 
long-term unemployed into one of the criteria for iden­
tifying the most economically advantageous tender, even 
if the obligation to employ the number of long-term 
unemployed indicated in his offer was expressed as a 
contract condition, would raise difficulties with Article 
29 of the Directive on public works. The 'various 
criteria' given as examples in that Directive all relate to 
matters which affect the economic benefit to the 
contracting entity of the offer in question in the context 
of the subject matter of a particular works contract. A 
tenderer's capacity to employ the long-term unemployed 
does not normally have any impact on the economic 
benefit of the contract to the procuring entity. Economic 
benefits which may result, for example, through the 
reduction of welfare payments or an increase in spending 
by those employed, are indirect and quite extraneous to 
the subject matter of the contract itself. Unless particular 
circumstances could be shown to exist under which 
employment of the long term unemployed would 
improve the economic benefits of the contract to the 
procuring entity, this criterion would not be compatible 
with the Directive. The same applies to other criteria 
which have nothing to do with the subject matter of a 
particular contract. 
49. Further, the Court stressed that contract 
conditions must in any event respect relevant provisions 
of Community law. It referred in particular to 
restrictions flowing from the Treaty principles of right 
of establishment and freedom to provide services and 
to the principle of non-discrimination on grounds of 
nationality. In this context, it considered that the 
contract condition could breach the non-discrimination 
principle if it appeared that it could only be fulfilled by 
national firms or if it would be more difficult to fulfil for 
bidders coming from other Member States. 
50. Much will therefore depend on the precise 
condition imposed and its practical effects on bidders 
from other Member States. Some examples may serve to 
clarify the problem. 
51. A simple condition requiring the winning tenderer 
to employ a given number or percentage of unemployed 
or long term unemployed or young unemployed for the 
execution of the works contract would not seem to 
12. 12. 89 Official Journal of the European Communities No C 311/13 
discriminate against bidders from other Member States. 
All bidders, national and other, will have to take on 
persons presently unemployed and all have similar 
opportunities (and difficulties) to do so. 
52. But a requirement that the winning tenderer 
employ a given percentage of persons resident in the area 
in question would, on the face of it, be discriminatory. 
Local firms will in all probability already employ local 
residents and, in any case, will be familiar with the local 
labour market. Firms from outside the locality and a 
fortiori from other Member States will be much less 
likely to employ residents and will have to prospect the 
local labour market from scratch. They clearly risk being 
disadvantaged. 
53. In between these extremes lie cases which would 
require careful evaluation. For example, a requirement 
for the winning tenderer to recruit a given number or 
percentage of long term unemployed registered with the 
local employment office, the kind of clause that gave rise 
to the Beentjes case, would raise the question as to 
whether it is easier for the local firm to do so than an 
outsider. A commitment by the local authorities to make 
available a supply of the appropriate labour, for example 
through an employment agency, might give some 
guarantee that it is not. Where action is taken in 
accordance with the plans referred to in the Structural 
Funds Regulations or in the context of a project financed 
by an aid notified to the Commission, the fact that the 
plan was considered or the aid examined at Community 
level without objection would imply that the Commission 
considered it non-discriminatory, unless some particular 
factor arose to show the contrary which was- not 
apparent earlier. 
54. A further dimension of the problem needs to be 
considered. The Court limited itself in Beentjes to the 
suggestion that the condition might discriminate against 
outside contractors. However, discrimination might also 
arise against other Community workers. Cases will have 
to be evaluated from this point of view also. 
55. Thus it is apparent that the compatibility of 
contract conditions with Community law requires, on the 
basis of present legislation, a case by case analysis. This 
applies not only to conditions addressing unemployment, 
but to other fields that could be imagined. 56. In the field of training, for example, a condition 
that firms employ a given number or proportion of 
trainees exclusively from national training programmes 
would appear to discriminate against trainees in equi­
valent schemes in other Member States. It would 
accordingly not be admissible. On the other hand, an 
obligation to employ trainees which does not limit their 
provenance on national lines would not appear to pose a 
problem. 
57. In the area of equal opportunities, an obligation to 
employ a given number or proportion of women or 
persons from some other category not based on 
nationality would also not appear to give rise to 
difficulty, though of course a definitive judgement neces­
sarily depends on an appreciation of all the material facts 
of a particular case. 
58. The same applies to clauses designed to ensure 
that firms respect prevalent terms and conditions of 
employment when working in a particular locality. All 
firms whether local, national or from another State are 
treated equally. Neither foreign firms nor foreign 
workers are disadvantaged by comparison with nationals 
of the Member State in question. However, a condition 
that all persons employed in execution of the contract 
benefit from the local terms and conditions would pose 
problems if it were intended to apply also to persons in 
other Member States. Even in the works context, some 
employees who work on the contract may be employed 
outside the territory of the State of the contracting 
authority. In the supplies context, this situation is of 
course much more common. It is difficult to see what 
justification there could be for admitting requirements 
which would permit national contracting authorities to 
export local terms and conditions of employment to 
other Member States. Such requirements could provoke 
intolerable conflicts of law and policy and also eliminate 
important elements of the competitive advantage of firms 
in States with lower labour costs, in particular, less 
developed regions. The Court did not address this issue 
in the Beentjes judgement and great care should be taken 
in drawing any inferences about it from that source. 
59. In summary, the doctrine of the Court in the 
Beentjes case leaves the application of contract 
conditions limited in three ways: 
— the contract condition should be independent of the 
assessment of the bidders capacity to carry out the 
work or of award criteria, 
No C 311/14 Official Journal of the European Communities 12. 12. 89 
— it should not infringe other principles of Community 
law, particularly that of right of establishment, 
freedom to provide services and non-discrimination 
on the grounds of nationality. In practice this appears 
to require a case-by-case examination, 
— it only authorizes conditions which seek to realize 
objectives on the territory of the State of the 
' contracting authority. 
(c) Do such conditions offer a useful policy instrument? 
60. The usefulness of the possibilities offered by the 
judgement in the Beentjes case as a policy instrument is 
limited in three ways. 
61. In the first place, the scope for the use of 
conditions is much more limited in the area of supplies 
than in the area of public works. Given that supplies 
contracts are largely executed in the factory, it is hard to 
imagine how conditions of a social nature could be 
applied in the award of a supplies contract without either 
discriminating between domestic and other suppliers or 
seeking to achieve objectives outside the territory of the 
State of the contracting authority. It is in the case of 
works contracts, where the work is for the most part 
carried out on the territory of the State of the 
contracting authority, that the possibility of satisfying the 
Court's requirements is most likely to be met. 
62. In the second place, the usefulness of the 
instrument is in practice limited by the primary objective 
of the contract itself. A contracting authority which plans 
the construction of a building or a bridge is likely, in 
most cases, to want the construction to be carried out 
under the circumstances which give rise to the best and 
most efficient construction giving best value for money. 
This limits the extent to which other goals may be 
pursued which may adversely affect the contract's 
primary objective. 
63. In the third place, the need for a case-by-case 
examination of the compatibility of particular conditions 
with the circumstances of individual contracts limits the 
confidence with which particular conditions can be 
imposed. The risk that a condition will be contested by a 
participant in an award procedure, leading to delays and 
additional costs, with a possible reduction in efficiency as 
well, makes the use of the instrument uncertain as to its 
results. While the uncertainty may diminish as experience 
is gained in using this type of clause, it inevitably calls 
for a cautious approach at present. 
' 64. However, despite these limitations, contract 
conditions do appear to offer a policy instrument which, 
in circumstances where there is a ready supply of labour, such as long-term unemployed or unemployed young 
people, can be used to help in the insertion of unem­
ployed people in work. In view of the difficulties 
inherent in establishing non-discriminatory conditions, 
additional security as to the legitimacy of such schemes 
could be obtained by discussing them with the 
Commission in advance. They could also be used for 
other ends, where not forbidden by national law, such as 
ensuring that work carried out on a particular site 
respects certain working conditions, for example, those 
generally prevailing in the area in question. 
IV. 3. Promoting the participation of SMEs in public 
procurement 
65. Promoting the participation of SMEs in public 
procurement is an important factor in economic and 
social cohesion, both at national and Community level. 
Small and medium-sized firms are often less well 
informed of the opportunities offered in this field, or 
hesitate to venture to negotiate transnational contracts 
with administrations, with which they are not acquainted 
(problems of language, contract terms, movement, delays 
in payment, legal remedies in case of dispute). SME 
participation in public procurement has, in any case, 
been relatively low in the Community, compared with 
the United States, Canada and Japan. The Commission 
is assessing in depth all the aspects of the problem, in the 
light of a recent study ('). A more detailed and compre­
hensive communication to the Council will be prepared 
on SME participation in public procurement and also a 
draft Commission recommendation to the Member 
States on certain aspects of this problem (see paragraphs 
99 and 100 below). 
66. At the national level, the problem is perhaps less 
sensitive, but it is real. That is why, for several years, in 
the majority of industrialized countries, contracting 
authorities have implemented measures to increase the 
share of SMEs in public procurement. 
67. In addition, the Community has already 
implemented measures to stimulate the participation of 
SMEs in public procurement on a Community scale. 
Their coverage could be developed later. These measures 
are analysed through the six facets presented below. 
(a) Better information of SMEs concerning public 
procurement markets 
68. The Community provides means whereby 
contracting authorities and the SMEs themselves can 
obtain information about public procurement; in 
particular, the network of Euro-info-centres, linked to 
(') 'SMEs and Public Procurement', prepared by WS Atkins for 
the Commission in 1988. 
12. 12. 89 Official Journal of the European Communities No C 311/15 
the TED data base, ensures the circulation of contract 
notices and assists SMEs in responding to those which 
are of interest to them. There is provision, within the 
scope of the amended Directives on public procurement, 
for the publication of information on purchasing 
programmes for supplies ('pre-information' procedure) 
and also of information concerning the award of 
contracts. 
69. These actions in the information field could be 
further developed by complementing the provisions in 
the Directives with other measures of a non-obligatory 
character. These could include: 
— the development of data banks permitting those 
contracting authorities that wish to do so to pub­
lish, efficiently and at low cost, contracts below the 
thresholds in the Directives and so make them 
available to SMEs throughout the Community, 
— the incorporation in such data banks of information 
on potential SME suppliers indicating their field of 
activity, their previous experience in supplying the 
public sector, and other information relating to 
equality assurance, 
— the organization of public procurement fairs designed 
to bring SMEs into new relationships with the 
contracting authorities of other Member States. 
Useful information could be made available to SMEs 
through the TED data base. 
(b) Training of managers of firms 
70. The training of managers of firms is an essential 
dimension in the integration of SMEs in the single 
market. This is why the Commission has recently 
adopted a programme 'Preparing the SMEs for the 
Europea of 1992' through which it will support relevant 
training projects. The better the training of managers of 
small and medium-sized enterprises, the more these 
enterprises will be disposed to develop their business, the 
field of public procurement included, on a Community 
scale. 
(c) Improved access to larger contracts: division of larger 
contracts into lots 
71. The break up of larger contracts carries the risks 
of adding to administrative costs and offering a pretext 
for evasion of the thresholds of application of the public 
procurement Directives. It is not therefore attractive, if 
the only objective is to encourage the participation of 
SMEs. This does not, however, apply to the division of a 
larger contract into lots. The contracts for the lots would 
still be subject to the Directives, including their publi­
cation provisions. This would allow smaller firms, which 
could not bid for the whole, to try for a part of the 
work. 72. The objection may be made that such approaches 
may be inconsistent with the search for economies of 
scale. This objection seems to be without foundation, as 
long as bids may be made for all the lots. In these 
circumstances, an SME bidding for one lot will have to 
make an offer as economically attractive as another 
enterprise bidding for the whole and exploiting the 
economies of scale. The SME's chances of winning the 
lot will then depend on it having a compensating 
competitive advantage, for example, greater flexibility or 
lower overheads. 
73. Division of larger contracts into lots is compatible 
with the Directives. However, it should be possible to 
make this clearer either in the texts of the Directives 
themselves or, if that must await a more convenient time 
in the future, in a Council resolution or recommendation 
which would in effect be a formal interpretation of how 
the Directives may be applied in this area. 
(d) An active sub-contracting policy 
74. Sub-contracting also plays an important role in 
improving the access of SMEs to larger contracts. It is 
perceived in most Member States as an effective means 
of encouraging greater competitivity and greater effi­
ciency and fairness in public procurement. The Com­
munity might seek to develop the use of sub-contracting 
to favour SMEs in the following ways: 
— clarify the extent to which the Directives already 
provide scope for sub-contracting to be used for this 
purpose, 
— facilitate the development of new relationships 
between prime contractors and sub-contractors by 
making more information available, particularly as 
regards the indication by the tenderer, when he 
submits his tender, of his intention to sub-contract, 
and through the publication of such information 
when notice is given of the award of a contract, 
— treating SMEs on a basis of equality with prime 
contractors, particularly from a legal, technical and 
financial point of view, 
— clarifying the legal status of sub-contractors as 
regards their rights and obligations. 
75. Nothing, however, should be done which permits 
abuse of sub-contracting to the detriment of respect for 
the obligations of prime contractors and sub-contractors. 
Particular attention should therefore be paid to abuses in 
the fields of tax and social security, to ensuring that 
prime contractors are in a position to pay 
sub-contractors on time. In certain cases, contracting 
authorities should be prepared, perhaps, to ensure direct 
payment themselves. 
No C 311/16 Official Journal of the European Communities 12. 12. 89 
76. Steps should also be taken to see that prime 
contracting authorities fulfil their responsibility to give 
sub-contractors no less favourable terms than they 
receive from contracting authorities and possibly assist 
them in meeting quality requirements. 
77. The availability of effective remedies for sub­
contractors in case of unjustifiable non-payment or 
failure of the prime contractor or possibly other unfair 
practices such as unreasonable certification requirements 
could also serve to strengthen the security of SMEs. 
78. Finally, standard contractual provisions on 
sub-contracting might be developed, with the object of 
producing broadly similar legal results in all Member 
States. This would allow SMEs to seek sub-contracts in 
other countries with greater confidence. Prime contrac­
tors would also have the advantage of increased 
confidence that a sub-contractor from another Member 
State was aware of the main legal provisions determining 
his rights and responsibilities. 
(e) Mutual guarantees of fair and effective performance 
79. An important constraint on SME participation 
public contracts is the lack of confidence on both sides 
that the relationship will lead to an outcome that is 
effective and fair. Measures have been taken in some 
national contexts to address this problem by reducing 
difficulties relating to: 
— availability of financial guarantees to ensure that 
SMEs do not withdraw offers once made and 
perform contracts to time and specification, 
— improvement in the conditions for granting such 
guarantees, 
— the creation of mutual insurance systems to guarantee 
the solvency of enterprises, as well as the good 
execution of contracts, 
— ensuring efficient and fair payment systems. 
(f) Association of enterprises 
80. Cooperation between SMEs can help to 
compensate for their weaknesses. For example, 
contracting authorities could assess the capacity of a joint venture to undertake a contract on the basis of the 
combined financial and technical capacity of the asso­
ciation as such. Such cooperation between SMEs in 
various Member States could take place within the legal 
framework of the European Economic Interest Grouping 
(EEIG) from July 1989 onwards. 
IV.4. Greater regional participation in Community public 
procurement 
81. Opening up the public procurement market poses 
specific challenges to the enterprises of the less-favoured 
regions. These include historic dependence on regional 
preferences or other forms of protection, the relative 
absence of economies of scale, due to the smaller scale 
of regional firms, and the need for greater adaptability 
and mobility of labour, of capital and of know-how. 
Specifically, regional firms will need to be able to adapt 
to the high technical standards of the larger market 
rather than depend on traditional relationships with 
established, often local, purchasers and they will need to 
develop a marketing capability appropriate to the needs 
of a wider, more competitive market. 
82. The measures discussed, under non-discriminatory 
contract conditions and promotion of the participation 
of SMEs in public procurement, can be applied 
anywhere in the Community. Although, they may be 
more difficult to apply in the less developed regions, they 
are, nevertheless, of particular relevance to the problems 
of those regions. This appears clearly on close exam­
ination. Non-discriminatory contract conditions directed 
at the alleviation of unemployment or underemployment 
will have a particular relevance in areas where these 
problems are most serious. Those areas include in 
particular the declining industrial areas but also less 
developed regions of the Community. Similarly, 
measures to help SMEs participate in public contracts 
have a particular relevance to the less developed regions 
in view of the dominance of SMEs in the local economy. 
In addition, in both categories of less favoured region, it 
is small and medium-sized firms which frequently hold 
out the best prospects of growth. Further there exist 
possibilities in eligible areas for the Structural Funds to 
contribute towards the support measures outlined for 
SMEs. 
83. Measures could be addressed to enterprises in 
particular regions to improve their participation in public 
procurement contracts, concentrating on established 
12. 12. 89 Official Journal of the European Communities No C 311/17 
areas of vulnerability: planning and organization; 
marketing; access to information about the wider public 
procurement market; access to capital and technical 
support; and improvement of labour and management 
skills. 
84. Measures could include the introduction or 
expansion of advice and assistance mechanisms and 
services intended to help regional enterprises take the 
fullest advantage of public procurement. This could public procurement may well impose on some 
regional enterprises, 
vocational training related to changed production 
requirements. 
85. Taking measures along those lines in particular 
regions would not preclude Community assistance to 
maximize the impact, where most needed, of certain of 
the proposals put forward for SMEs in Chapter IV.3. 
market research and services, including research and 
evaluation services for diagnosis of the capacities and 
potential of firms to respond to the needs of 
contracting entities, 
the setting up of seminars and hearings related to 
specific potential public sector demands, allowing 
dialogue between public and private decision makers 
and encouraging the active participation of the latter, 
assistance with product and process development, 
including financial aid such as under-writing of the 
development of new products designed to meet the 
needs of the public sector, 
better dissemination of the results of the Community 
research programmes to regional enterprises and 
administrations, 86. Such measures could take the form of State aids. 
Such aids would have to be notified in accordance with 
the provisions of Article 93 of the EEC Treaty with a 
view to seeking their approval by the Commission. 
87. It is clear that measures of this type should be 
prepared and executed in a way consistent with the 
ultimate objective of putting regional firms in a position 
to make serious bids for contracts, not only in their own 
regions, but also in the wider Community public 
procurement market. The aim is not to protect regional 
markets. Specific conditions might therefore need to be 
imposed by the Commission to ensure that the contacts 
established between contracting authorities and suppliers 
were not such as to distort the markets. It could be 
necessary, for example, to ensure that the public 
procurement function and the function of providing 
technical or financial assistance were kept strictly 
separate and, if necessary, carried out by separate bodies. 
support for converting production to European 
technical standards and specifications, which are now 
becoming obligatory for contracting authorities; the 
provision of technical laboratories for testing and 
certifying conformity of products and processes with 
such standards, 
technical assistance related to bid preparation for 
non-local contracts, including assistance with 
language problems, 
facilitating access, perhaps via the European 
Investment Bank to capital needed for participation 
in public contracts, 
reinforcement of the Europartenariat and other 
measures to encourage joint ventures, including, 
participation of banks and financial institutions where 
Feder guarantees are in operation, 
training in marketing, including Erasmus-type 
exchanges of managers to prepare them for the 
choice of specialization which the opening-up of V. Policy on regional and social aspects of public 
procurement 
88. As was made clear in Chapter II, the operation of 
the internal market is such as to create opportunities for 
businesses to exploit. 
89. The Commission's concern, in developing its 
policy for social and economic cohesion in the operation 
of public procurement, is to ensure that the opportunities 
for participation are widely spread among all groups and 
regions; and to assist the less advantaged to participate 
in the market and to exploit their opportunities to the 
full. 
90. Thus whereas the creation of a transparent public 
procurement regime with readily available information 
facilitates participation, policies could be developed in 
favour of particular groups or regions positively to 
encourage them to exploit their capacities within the 
single public procurement market. 
No C 311/18 Official Journal of the European Communities 12. 12. 89 
91. Such an approach does not admit of a simple 
policy decision which is self-executing — in the sense 
that the single market, once brought into existence, may 
tend to be. Rather, it requires the identification of a 
series of measures, which may be used in different 
combinations in different circumstances, and which may 
be put into effect at national, regional or local level with, 
where appropriate, Community measures too. 
92. The following sections review, each of the policy 
areas discussed in Chapter IV with a view to setting out 
the Commission's policy orientations. 
V.I. Approach to the problem of regional preferences 
93. The Commission intends to undertake urgent 
discussions with the Member States concerned with a 
view to bringing any infringements to an end at the latest 
by 31 December 1992. It will give priority to the elimi­
nation of infringements resulting from the operation of 
preferences above the thresholds in the existing 
Directives ('). In addition, measures to help regional 
enterprises to exploit fully the opportunities in the single 
market will also be explored. Such measures could 
include those outlined in the previous chapter on 
promoting greater SME and regional participation in 
public procurement (paragraphs 65 to 87). 
94. It should be recalled that the thresholds in the 
Directives have been fixed to identify the level at which 
there is a real prospect of cross-frontier trade. Following 
this line of thinking, it will be possible in certain cases to 
demonstrate that preferences operating in these circum­
stances are not economically significant. This will only 
be possible where the regime is, itself, transparent. 
Procurement regimes which simply reserve public 
purchases to national firms can hardly be regarded as 
falling within this category. Where a regime operates 
through a transparent mechanism such as second bidding 
or an acceptable price preference, in the range of 5 % to 
10 %, however, the demonstration should be possible. 
The Commission will examine systems which operate 
below the threshold in terms of the transparency of the 
procurement mechanism and of the impact on trade and 
will adopt the appropriate decision. 
95. The Commission will present a report during 1995 
on the operation of the regimes as modified and their 
effects on the internal market. 
(') In the case of supplies contracts, the thresholds are ECU 
137 000 for central government authorities covered by the 
GATT code and ECU 200 000 for other authorities. 
The threshold for work contracts is being raised to ECU 
5 million. 96. The Commission, in its general approach to pref­
erence schemes, must also take account of the 
Community's international obligations under the GATT 
Agreement on Government procurement, adopted in 
1980, and modified in 1987. The Agreement applies to 
the procurement of supplies above a threshold, at present 
equivalent to ECU 137 000, by listed entities, which are 
in practice agencies of central government. The 
Commission, in particular, must take account of the 
provisions of Article 11 on national treatment and 
non-discrimination. With regard to preferences applied 
by central government entities questions might be raised 
as to their compatibility with Community obligations 
under the code, when they have not been notified and 
accepted by the other parties. The Commission will 
remain vigilant in ensuring that the Community's obli­
gations in this connection are respected. 
V.2. Measures to exploit the single public procurement 
market 
(a) Non-discriminatory contract conditions 
97. The opportunities for the exploitation of 
non-discriminatory contract conditions under the 
Directives as presently drafted are, as was shown in IV.2, 
wide in scope but subject to limitations which can only 
by evaluated on a case-by-case basis. 
98. Publicity in the contract notice for such conditions 
is in any case indispensable, as was made clear by the 
Court. On this basis, the Commission will strictly 
monitor use of such conditions with a view to ensuring 
that they do not infringe Community law. 
(b) Measures in favour of the participation ofSMEs 
99. As has been explained in section IV.3 above, a 
series of measures has already been taken with a view to 
assisting SMEs fully to exploit their competitive 
advantages within the public procurement market. The 
Commission will continue to seek ways of further 
developing such actions, including the communication 
referred to in paragraph 65. 
100. Certain of these measures will be included in a 
draft Commission recommendation to Member States 
which will be the subject of consultation with the 
Advisory Committees on public procurement and 
interested parties. 
101. The Commission will continue to work with the 
appropriate authorities with a view to developing a better 
information base concerning SMEs and the markets of 
potential interest to them. If necessary, it will make 
appropriate proposals. The Commission considers that 
12. 12. 89 Official Journal of the European Communities No C 311/19 
the adoption of its proposal for the modification of the 
public works Directive ('), which provides, where appro­
priate, for publication of the share of the contract which 
the winning bidder intends to put out to subcontract, 
would constitute a useful step in this direction. 
(c) Greater regional participation 
102. Member States may include measures of the type 
indicated in both Chapter IV.3 and Chapter IV.4 above 
in the multiannual plans to be submitted under the 
Structural Funds Regulation (Regulation (EEC) No 
2052/88). These plans would then be the basis for 
Community support frameworks to be negotiated 
between the Commission and the Member States. The 
nature of the measures put forward would appear to be 
best suited to the European Regional Development 
Fund, the European Social Fund and, in certain cases, 
the European Investment Bank. 
103. The Commission will examine, in the light of 
studies on the impact of public procurement and other 
studies concerning the internal market and measures 
proposed by Member States in the development plans 
and priorities included in the Community support 
framework, if it is necessary to initiate supplementary 
measures in favour of regions eligible for the Structural 
Funds, which face problems associated with the impact 
of the opening-up of public procurement and the 
achievement of the internal market. 
104. The measures containing State aids would have 
to be notified to the Commission under the terms of 
Article 93 (3). The method of applying Article 92 to 
regional aids is set out in an explanatory memorandum 
published in the Official Journal of the European 
Communities No C 212 of 12 August 1988. 
(d) Conclusion: future work 
105. Further work is necessary to develop action both 
within the context of the promotion of small and 
medium-sized enterprises (see paragraphs 99 to 101) and 
of measures to assist regions in difficulty (see paragraphs 
102 to 104) and in other areas, where further study and 
discussion may be required. A coordinated work 
programme will embrace the following action: 
— further guidance to Member States on the use of 
non-discriminatory contract conditions to pursue 
social objectives, in the light of developments in the 
practice of contracting authorities, 
— preparation of a detailed and comprehensive 
communication on SMEs and public procurement 
with a view to bringing forward proposals, where 
appropriate, such as: 
O COM(89) 141 of 4 April 1989. — the improvement of the quality of information on 
contracts available to potential bidders, 
— further clarification of the extent to which the 
Directives permit division into lots and 
sub-contracting, 
— clarification of the legal status of sub-contractors, 
— development of standard sub-contracting pro­
visions, 
— in the light of a study recently carried out for the 
Commission, exploration of more favourable 
conditions for financial guarantees, including 
encouragement of systems of collective insurance 
to guarantee the solvency of enterprises, 
— development of more effective inter-SME and 
SME and non-SME cooperation, in particular, 
within the framework of the European Economic 
Interest Grouping (EEIG), 
— finalization of the proposed Commission recommen­
dation on measures to promote the participation of 
small and medium-sized enterprises in public 
procurement, in the light of this communication, 
— the conclusion of the study on the need for accom­
panying measures in sectors previously excluded from 
the operation of the public procurement Directives, 
— the examination, in the light of studies on the impact 
of public procurement and other studies concerning 
the internal market and measures proposed by 
Member States in the development plans and 
priorities included in the Community support 
framework, of whether it is necessary to initiate 
supplementary measures in favour of regions eligible 
for the Structural Funds, which face problems asso­
ciated with the impact of the opening-up of public 
procurement and the achievement of the internal 
market, 
— further study of the operation of other measures, 
listed in paragraph 84, and in particular those aimed 
at improving the quality and flow of information 
between potential contractors and sub-contractors 
and contracting authorities including the devel­
opment of electronic bidding information services, 
— intensified regional dissemination of the results of 
research programmes relevant to public procurement, 
— further examination, in consultation with the 
European Investment Bank, of the problems of access 
to capital needed for participation in public 
procurement. 
No C 311/20 Official Journal of the European Communities 12. 12. 89 
ANNEX 
Regimes of preference in procurement in force in the Member States 
Member State 
FEDERAL 
REPUBLIC OF 
GERMANY 
GREECE 
ITALY 
UNITED 
KINGDOM Legal basis 
Federal Law 
National legislation 
National legislation 
Regional 
Administrative 
practice (non-obli­
gatory) 
Administrative 
practice 
(non-obligatory but 
general in practice) Coverage 
(a) Demand side 
(b) Supply side 
(a) public contracts (supplies/works) 
(b) enterprises producing or persons 
established within Berlin West or 
zone within 50 km of frontier with 
DDR 
(a) public contracts (suppliers) 
(b) (i) enterprises established in 
regions i.e. at a distance of 
more than 50 km from Athens 
(ii) enterprises established in the 
Greek Islands 
(a) public supplies contracts (national 
and regional administration public 
corporations) 
(b) enterprises established in Mezzo-
giorno, Latium, Trieste 
(a) public works contracts of regional, 
local administrations, public cor­
porations 
(b) enterprises established in Sicily for 
at least three years 
A. General preference scheme 
(a) procurement of supplies by central 
government, nationalizeci indus­
tries, other public authorities 
(b) enterprises established in listed 
development areas 
B. Special preference scheme 
(a) enterprises in listed development 
areas 
(b) enterprises in listed development 
areas 
(a) procurement of supplies by 
Northern Ireland government 
departments 
(b) persons or enterprises trading 
Northern Ireland products Method of application 
— obligation to include (b) 
— in lists for selective tendertag 
— obligation to give preference to 
(b) if equal lowest tenderer or 
within a percentage of 0,5 % of 
lowest tenderer for contracts of 
DM 1 million or more 
(Note: in case of Berlin regime of 
regional preference co-exists "with 
turnover tax concessions which have a 
direct impact on tender prices) 
(b) (i) up to 7 % price advantage over 
lowest tender 
(ii) up to 10 % price advantage over 
lowest tender 
30 % quota allocated to regions 
indicated under (b), but with competitive 
tendering within quota 
50 % quota for supplies for public works 
assited from special intervention funds 
— when price considerations equal 
40 % minimum participation of 
Sicilian enterprises 
— residential, school buildings: 25 % 
pre-fabricated building: material to 
be supplied by Sicilian enterprises 
— preferences for subcontracting 
When price and other considerations are 
equal, public contracts let to (b) 
No price advantage, but qualifying firms 
(b) may be given opportunity of taking 
25 % of an order at a price which entails 
no additional cost to purchaser 
— general preference for Northern 
Ireland products given conformity 
with specifications 
— 5 % price advantage to tenderers, if 
of benefit to employment in 
Northern Ireland