No C 189/16 Official Journal of the European Communities 28. 7. 86 
The Economic and Social Committee endorses the proposal. 
Done at Brussels, 23 April 1986. 
The Chairman 
of the Economic and Social Committee 
Gerd MUHR 
Opinion on the communication from the Commission to the Council — public supply 
contracts — conclusions and perspectives 
(86/C 189/09) 
On 28 March 1985 the Commission decided to consult the Economic and Social Committee, under 
Article 198 of the Treaty establishing the European Economic Community, on the communication 
from the Commission to the Council — Public supply contracts — conclusions and perspectives. 
The Committee for Industry, Commerce, Crafts and Services, which was responsible for the 
Committee's work on the subject, adopted its opinion on 2 April 1986, in the light of the report by 
Sir George Sharp. 
At its 236th plenary session (meeting of 23 April 1986) the Economic and Social Committee 
adopted the following opinion unanimously, less three abstentions. 
1. The Committee welcomes the candid nature of the 
communication's criticism of the non-functioning of the 
Community's internal market in respect of public purchas­
ing. Notwithstanding the difficulties of changing long-
established practices and the inherent pressures associated 
with implementing a policy which may appear to conflict 
with perceived local, regional and national interests, the 
Committee is strongly of the view that the basic legislation 
governing procurement on a Community scale must be 
respected — contrary to what has hitherto been the case — 
without exception by all parties. In view of the lip-service 
paid to the realization of this goal, by the heads of those 
very governments who have failed to implement the 
Community policies in this area, it is clear that more than 
pious statements of intent are called for. Indeed, the 
Committee feels that the political credibility of the 
Community legislation in this area is at stake if serious 
efforts are not made to make public authorities comply 
with the spirit as well as the letter of the Community 
legislation in this matter. 
1.2. The present communicaton is long overdue; in fact 
the Council in its resolution of 21 December 1976 asked the 
Commission within three years of the adoption of Directive 
77/62/EEC, which is the basic Directive for the Community 
system of public procurement, to present a report on how 
the system worked. 
1.2.1. The delay in the publication of the communi­
cation, however, is apparently due not only to Commission 
tardiness but aslo to negligence on the part of the Member States in carrying out even the 'apparently rudimentary 
statistical requirement' of Directive 77/62/EEC. The 
Committee, faced with the problem of establishing whether 
the statistical information of the present communication is 
sufficiently significant, representative and reliable to draw 
valid conclusions, wishes to impress upon the Commission 
the necessity of laying down more complete and detailed 
statistical requirements. It is extremely important, e.g., to 
establish more clearly the extent to which local subsidiaries 
and agents are securing contracts in the public sector on 
behalf of manufacturers from other Member States. While 
there is evidence to demonstrate that many public 
purchasing organizations are placing their contracts within 
their own countries the actual volume of goods originating 
within other Member States but ordered locally could be 
considerable. 
1.3. The Commission document is divided up into a 
factual, analytical part, describing the system and pointing 
out its deficiencies; and an action part with remedying 
proposals which should also now be seen in conjunction 
with the relevant part of the White Paper on the internal 
market of mid-1985, the object of which is to achieve a 
single, unified internal market by 1992. 
1.4. Public procurement represents a significant pro-
potion of expenditure within each Member State and it is of 
vital importance in the development of a true internal 
market that the Directives designed to achieve this 
objective are observed and implemented. 
1.5. The non-existence of any effective common market 
in the area of public procurement has been estimated to 
result in an annual cost to the taxpayers of some 40 billion 
28. 7. 86 Official Journal of the European Communities No C 189/17 
ECU (the Ball-Albert report 1983). The European Com­
munities' budget for 1985 by comparison was approxi­
mately 28 billion ECU. 
1.5.1. This figure is derived by taking the 15 % share of 
Community GNP represented by public contracts includ­
ing purchases of military and space equipment and 
calculating 10 % as additional cost incurred by marked 
partitioning (which is a fairly conservative estimate of the 
average extra cost of non-competitive public purchasing). 
1.5.2. The Committee is of the opinion that such 
calculations are very approximate and questionable. It is 
convinced that savings can indeed be very significant but 
fears that overly simplistic calculations could be counter­
productive by raising expectations and goals to an 
unrealistic level. A situation where all tenders published 
under the Directives' are in fact awarded Community-wide 
is in practice most unlikely to arise since the local supplier, 
all other things equal, will always be at an advantage, for 
reasons of proximity, language etc. 
2. The following are main problem areas: 
2.1. As far as the incorporation in national law of the 
Community rules (i.e. Directives 77/62/EEC and 80/767/ 
EEC) is concerned, the Committee is disappointed and 
concerned that the Commission has not managed to ensure 
the implementation by the Member States of the basic 
Directive which whether transposed or not presumably 
became legally binding as of 18 months after its notifi­
cation in mid-January 1977. Its insists that the Commission 
proceed to bring about the necessary progress in this area. 
2.2. Practical Impact of the Community rules — even 
though the number of invitations to tender by central, 
regional and local government in the Official Journal of the 
European Communities has risen steadily the impact of the 
public supply Directives according to the Commission has 
been marginal. 
2.2.1. The following reasons are given by the Commis­
sion for this insufficient impact of the Directives: 
(a) purchasing authorities' ignorance, (innocent or de­
liberate) of the Community Directives. Indeed, local and 
regional authorities purchase little or in some cases not 
at all under the procedures of the Directives; 
(b) 'deliberate underestimate of contract values and over 
zealous division of projects' in order to circumvent the 
200 000 ECU threshold which bring the contract below 
the publication and non-discrimination stipulations of 
the basic Directives; 
(c) exaggerated use of single tendering (which is permitted 
in certain exceptional cases) i.e. non-competitive 
bidding; (d) a deliberate playing along with the rules, i.e. pro-forma 
going through the open procedure only to declare it null 
and void later on a technicality. 
2.3. Though not wishing to dispute the Commission's 
analysis of the reasons for the lack of progress, the 
Committee would like to add another and perhaps even 
major reason for the Community's lack of success so far: 
Communication. The Committee is convinced that not 
enough effort at Community level has been put into 
communicating to all interested parties at central, regional 
and local level both the spirit and the letter of the Directives 
and the mutual long-term advantages of applying them. 
This new communicative effort must be a corner-stone in 
the Commission's attempts to redress the situation, 
involving if necessary the Community offices in the various 
Member States. Not even the best legislation in the world 
will succeed if it is not known, understood and accepted by 
the parties involved. As a practical example it is perhaps 
significant that the Commission's brochure from 1982 on 
public purchasing places great emphasis on the tech­
nicalities of public purchasing but little emphasis on why it 
is potentially mutually advantageous to all parties involved 
and indeed indispensable .for a true common industrial 
policiy. 
3.1. The Committee supports the actions proposed by 
the Commission to remedy the lack of progress in achieving 
a true common market in public purchasing. It particularly 
invites the Commission in its efforts to improve existing 
Directives to put more emphasis on studying and 
alleviating the practical problems facing potential suppliers 
who wish to pursue an invitation to tender following 
publication: such as for example language problems, 
longer bid-times. Many contracts in the public sector recur 
annually. It should therefore be possible to publish 
comprehensive lists of these contracts well in advance of 
the commencement of the official tendering process. This 
would give a fair and reasonable opportunity to suppliers 
to assess and clarify likely problem areas. 
3.2. The Committee also supports the Commission's 
emphasis on improving the transparency of non-competi­
tive bidding, i.e. the requirement for prior information on 
whether non-competitive or negotiated tendering is to be 
used — and not least why. It sees the required notification 
of the awards of contracts as an important step in the right 
direction. 
3.3. The Committee is, however, convinced that more 
efforts should be made by the Commission in the following 
areas: 
3.3.1. Uniform guidelines for the interpretation and 
implementation in practice of the Directives so that 
uncertainties and diverging, often bona fide, misinterpre­
tations are avoided; some authorities thus interpret the 
NoC 189/18 Official Journal of the European Communities 28. 7. 86 
sectoral exemptions, e.g. defence, to cover not only primary 
supplies (weapons etc.) but also secondary and supporting 
activities such as food, textiles, stationery etc. Some find 
ways of considering goods, e.g. medical instruments, as 
services, which are, of course, not covered by the 
Directives. Also the Committee has come across examples 
of a national authority, consistently and in good faith, 
advising local authorities to consider so-called open-ended 
contracts (i.e. contracts where there is an agreed contract 
price per unit but no predetermined quantities) as exempt 
from the Directives — although the Commission clearly 
interprets such contracts as included. 
3.3.2. Thus, although there are no doubt some quite 
deliberate attempts to avoid the stipulations of the basic 
Directives, the Committee feels that there is ample evidence 
to suggest that such is by no means the case in general. The 
Commission would therefore do well to put emphasis on 
explaining and developing the benefits of adopting a 
Community-wide approach in this area as well as 
concerning itself with more efficient policing measures. 
3.3.3. The Commission appears to place great import­
ance on the Directives but to date have not made the 
resources available to achieve their successful implemen­
tation. 
3.3.4. The Committee suggests that a public procure­
ment unit be set up within the Commission with clearly 
defined terms of reference and with adequate financial 
resources. It would be responsible for: 
Implementation 
— supervising the performance of every Member State in 
terms of the Directives, 
— identifying itself as a point of contact for queries; 
Communication 
— emphasizing and explaining the benefits of a Com­
munity-wide approach leading towards an internal 
market, 
— embarking on a two-way awareness campaign to ensure 
that all public bodies are aware of their obligations 
under the Directive and are declaring all contract 
opportunities and to encourage business and commerce 
to be more active in identifying and exploring the public 
procurement market, 
— examining the most appropriate methods of circulating 
information in all cases; 
Statistics 
— establishing records to provide a meaningful picture of 
Community public procurement, 
— liaison with appropriate government departments in 
Member States to identify true public procurement 
budgets; Monitoring 
— continuously examining contracts being advertised and 
using the transparency system to identify defaulters, 
— taking appropriate action by reminding those who are 
not complying with the Directives. 
— identifying practices contrary to the spirit of the 
Directives. 
— random checking specifications and special conditions 
the inclusion of which deliberately limits the number of 
companies able to compete, 
— investigate complaints about unfair practices or 
grievances from unsuccessful tenderers. 
3.3.5. The Committee suggests that consideration be 
given to setting up a system of secondment from national 
authorities on a short-term basis or recruiting additional 
staff, the cost of which should be more than offset by the 
potential savings of the realization of a common market in 
public procurement mentioned earlier. 
3.3.6. The Commission should initially concentrate its 
efforts on central government and large local purchasing 
contracts which are easier to identifiy. It is invited to study 
the feasibility of concentrating on these contracts in one or 
two main sectors in order to identify major contracts and 
act as intermediary between the parties involved with a 
view to demonstrating the opportunities of mutual benefit 
within the Community. The earlier, more global approach 
having proven inadequate on its own, the Commission 
must explore new complementary avenues, not aiming for 
short term results but carefully picking out pilot sectors, i.e. 
limited areas that can be relatively easily monitored and 
which are particularly conducive to achieving the results 
aimed, seeking above all the consent and cooperation of 
purchasers and supplying industries. 
3.4. The Committee also wants to draw the Com­
mission's attention to recent legislation in the United States 
which has led to significant savings by increasing 
competition in big government contracts and helped 
involve small and medium-sized manufacturers qualified 
for participation in the contract. 
3.5. Instituting a system of redress that works. The 
Committee is convinced that the lack of a workable system 
of redress is a major reason for the seemingly low 
credibility of the Community Directives: these are seen as 
lacking in teeth as a result of the present unfavourable odds 
for obtaining redress or changing an ongoing awards 
procedure because of the poor chances of (a) winning a case 
in national courts quickly enough to see a reversal of the 
decision and (b) the evident risk, by taking a central 
purchasing agency to court of being de facto barred from 
28. 7. 86 Official Journal of the European Communities No C 189/19 
winning further contracts — irrespective of the merits of 
the case. 
3.5.1. The Committee is aware of the fact that the 
Commission up till now has in a few cases had quite 
reasonable success in intervening on an ad hoc basis during 
the procedure, when participants in the tendering process 
have complained. 
3.5.2. On the basis of the principle that prevention is 
better than cure the Committee is in favour of establishing 
more formalized powers of intervention for the Commis­
sion. 
3.5.3. But irrespective of what system of redress is 
finally arrived at, the Committee wishes to underline the 
importance not only of finding a system that works but 
also, once more, of communicating to all parties involved 
the fact that such a system exists and of explaining how it 
works. 
3.6. GATT. The Committee is of the opinion that the 
opening of the Community procurement market to non-
member countries, parties to the GATT Agreement on 
Government Procurement, cannot take place unilaterally 
but must be achieved on a reciprocal basis so that European 
firms are ensured the same advantages on the markets of 
non-member countries. 
3.6.1. The Committee feels that the approach of the 
Commission seems to be hampered by the ongoing 
discussions in GATT and the existing GATT rules which it 
sees as 'a serious impediment as far as the freedom of the 
EEC to organize its internal market is concerned, since any 
amendments to Community rules may create problems 
regarding the provisions of the GATT Agreement and thus 
necessitate renegotiation of the latter'. 
3.6.2. The presence of strong United States and 
Japanese competitors could indeed pose a serious threat if 
an unqualified opening up of the European market were to 
take place. In actual fact, however, the GATT rules 
according to the statistics, have had little or no impact since 
a meagre 0,2 % of all contracts were awarded to non-
member countries in 1982, down by 2 % from 1981. The 
Committee therefore feels that a more positive approach 
might be taken, underlining the possibilities and challenges 
Done at Brussels, 23 April 1986. presented by an opening up of international government 
procurement markets for European industries stymied by 
too small national markets. 
3.7. In this context it invites the Commission to study 
the possibility of introducing a 'Eurotype product warrant' 
which could certify the European nature of new products, 
ensure their conformity with European norms and 
standards and open the whole of the internal market to 
them. 
3.8. The Committee wishes to stress once again the 
importance of setting up a real industrial policy for the 
whole of the Community not only by accelerating the 
efforts for harmonization of norms and mutual recognition 
of testing procedures at Community level, which is an 
indispensable condition for the achievement of a true 
internal market in public procurement, but also through an 
approximation of VAT rates, the promotion of European 
company law meassures, the abolition of legal barriers in 
the field of patent law and trade marks, and the abolition of 
barriers of a regional and administrative nature, etc. 
3.8.1. Allied to this is the necessity of recognition of 
testing stations in the Member States which are empowered 
to issue the necessary certification of compliance with the 
Community standards and norms as applicable or of a 
product required to meet a certain level of specification. 
3.9. Whilst the Committee is in favour of extending the 
coverage of the Directive to the whole public procurement 
areas, i.e. including the telecommunications, transport, 
energy and water sectors hitherto excluded, this should not 
be done without preliminary study of the widely differing 
characteristics of these sectors within each Member State. 
It also requires more effort and resources at Community 
level to be invested in the implementation and monitoring 
of new Directives. 
3.9.1. The exclusion of these sectors, in the Committee's 
opinion, has not facilitated the Commission's task. The 
Committee feels that the Community would be served 
better overall by across-the-board procurement Directives 
covering all areas within the remit of the Treaty of Rome. 
The Member States of the Communities must however then 
be ready to ensure that the Directives are uniformly 
understood, applied and respected. 
The Chairman 
of the Economic and Social Committee 
Gerd MUHR