Opinion of the European Economic and Social Committee on International public procurement
Date: 2008-05-29
Institutions: European Economic and Social Committee
Subjects: administrative transparency, award of contract, competition law, consultation procedure, international competition, public contract

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Opinion of the European Economic and Social Committee on International public procurement

(2008/C 224/06)

On 25 October 2007, Mr Jean-Pierre Jouyet, the French Minister of State with responsibility for European
affairs, asked the European Economic and Social Committee, on behalf of the forthcoming French presidency
of the Council, to draw up an opinion on:

International public procurement.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the
Committee's work on the subject, adopted its opinion on 6 May 2008. The rapporteur was Mr Malosse.

At its 445th plenary session, held on 28 and 29 May 2008 (meeting of 29 May), the European Economic
and Social Committee adopted the following opinion by 70 votes, with 2 abstentions.

1. Recommendations

1.1
The EESC urges the European Commission to be stead-
fast in pursuing its goals of further opening public procurement
and to ensure that the principles of transparency, equal treat-
ment, and social and ecological responsibility are respected.

1.2
In connection with the renegotiation of the GPA, the
EESC recommends that the Commission oppose vigorously the
protectionist practices of some of the countries party to the
agreement.

1.3 With regard to public development aid, the EESC is in
favour of a gradual and reciprocal abandonment of ‘tied-aid’
systems and considers that the key criteria for this must be
effectiveness and transparency.

1.4
At European Union level, the EESC is in favour of more
transparency and modern methods of procurement and notifica-
tion of tenders. In this regard, the EESC will be opposed to any
moves to raise the thresholds of the European directives which
provide safeguards for transparency. The EESC supports the
European Commission's communication, which aims to increase
the transparency of public procurement procedures that fall
beneath the thresholds of the directives.

1.5
The EESC is against the introduction of a quota system
for SMEs like that applied under the US Small Business Act, but
in favour of a ‘roadmap’ for European SMEs, particularly VSEs
(very small enterprises), complete with concrete initiatives, a
timetable and a multi-annual budget and channelled towards
encouraging innovation and business start-ups, particularly in
the key areas of energy efficiency and protection of the environ-
ment.

1.6
The roadmap could be made more effective and imple-
mented more easily if it is accompanied by information systems
that draw on SMEs as natural relay points, together with genu-
inely transparent and equitable consultation mechanisms and
simple European legal instruments.

should,
These concrete initiatives and arrangements
1.7
wherever possible, apply the principle of ‘putting the smallest
first’,
for example, by establishing one-stop procedures for
cutting red tape. This would enable administrative and technical
procedures to be designed with the scale and characteristics of
small businesses in mind and would also meet the objective of
reducing the burden that falls on them.

2. Presentation

2.1
On behalf of the forthcoming French presidency of the
European Union, the French Minister of State with responsibility
for European Affairs sent an official letter asking the EESC to
draw up an exploratory opinion on International public procure-
ment.

2.1.1
The request refers explicitly to the ongoing negotiations
on the revision of the WTO (World Trade Organisation) Agree-
ment on Government Procurement
involving twelve
countries (1) plus the European Union (there are also eighteen
countries with observer status).

(GPA),

in the autumn of 2007, the French
2.1.2
In this regard,
government was concerned that
the European Union was
making an overly generous offer, given that some countries
(USA, Korea, Japan) have clauses restricting access to certain of
their public procurement markets to their own small and
medium-sized enterprises.

2.2
The French position, backed by several Member States,
was to ask either for better access to public procurement
markets in these countries as part of a revised GPA, or for
similar restrictions to be applied in favour of European SMEs in
the European Union.

2.3
At present, the GPA concerns procurement thresholds
similar to those that exist to meet the requirements set out in
the EU's own internal directives (2), meaning that, in practice,
enterprises from the 12 other signatory states of the GPA may
take part in any public procurement within the European Union
that is above these thresholds.

(1) Canada, Korea, the United States, Hong Kong (China), Iceland, Israël,
Japan, Liechtenstein, Norway, Aruba (The Netherlands), Singapore and
Switzerland.

(2) Directives 2004/18/EC and 2004/17/EC, of 31/3/2004.

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2.4
The EESC has already stated its views on the opening-up
of public procurement markets in the European Union. In par-
ticular, it has deplored the low level of cross-border involvement
in public procurement on the part of enterprises in the Euro-
pean Union (3).

3. At international level

At

level,

international

3.1
the European Union's markets
could be classed as particularly open to international competi-
tion. The same goes for a growing number of procurement
contracts funded by the European Union under development aid
(the EU is the world's foremost donor). However, the EESC
regrets the existence of a practice in the Member States whereby
the obtention of development aid is made dependent on the
award of contracts to businesses from the donor country (4).

As well

as making widespread use of

3.2
‘tied aid’
programmes, some of our partners have also introduced protec-
tion systems of various kinds (such as the ‘Buy American’
scheme and ‘Small Business Act’ in the USA). The opening of
international public procurement markets must be seen as
advantageous for the EU, in view of the fact that many of its
enterprises, including SMEs, are global leaders in the fields of
construction, public works, alternative energies and environ-
mental protection.

As well as measures to support SMEs, America's ‘Small
3.3
Business Act’ also includes a provision which reserves 25 % of
federal public procurement for American SMEs.

the Government
3.4 With regard to the renegotiation of
Procurement Agreement
that,
(GPA),
although the principle of reciprocity needs to be highlighted, the
EU should not adopt protectionist measures similar to those of
our competitors, since this would not help achieve the overall
objective the EU must have of opening markets.

the EESC considers

3.5 Moreover,
this objective must apply not only to the
signatories to the GPA but also to other countries where
procurement procedures are particularly lacking in transparency
and generally closed to European enterprises.

3.6
The idea of temporarily excluding from the GPA public
procurement financed from European funding for countries that
maintain national protection schemes is an interesting one
which the EESC has already put forward in previous opinions.

The EESC emphasises that the issues of concern for the
3.7
environment and the minimum social standards established by
the ILO Conventions (and collective inter-sectoral, sectoral and
company agreements concluded by the social partners and
applicable in the countries concerned) must be taken into
account in the negotiations, particularly with respect to bilateral
agreements with countries which have not ratified the Kyoto
Protocol or the ILO Conventions, or which fail to apply them
or apply them poorly.

(3) OJ C 287, 22/9/1997.
(4) Tied aid: Annamaria La Chimia ‘Effectiveness and legality issues in
development and procurement for EU Member States’, European
Current Law, March 2008.

4. In the European Union

Drawing on the example of America,

4.1
the European
Commission has announced that it may introduce a European
version of
the ‘Small Business Act’, which, without offering
specific public procurement quotas for SMEs as in the USA,
would nonetheless give SMEs easier access to public contracts
and, more generally, would propose concrete measures to
support SMEs.

The question of introducing quotas for SMEs is irrelevant
4.2
in Europe, since (according to 2005 sources) enterprises cate-
gorised as SMEs under EU terminology currently account for
around 42 % (according to the European Commission) of the
total volume of public procurement in the EU (5).

4.3 Within the EU,
the European dimension of public
procurement needs to be developed in order to make the most
effective use of public money. Despite a significant increase in
contracts awarded to enterprises from other EU countries, busi-
nesses are complaining of a lack of transparency and a shortage
of appropriate information that would enable them to take part
in cross-border procurement markets, particularly those that fall
beneath the thresholds for the application of
the European
directives requiring Europe-wide publication. Entrepreneurs are
also complaining that the European directives are made more
difficult by the transposition procedures, which are not always
transparent (deadlines and delays) and often result in the accre-
layers of specific national regulations. The
tion of additional
regulations on public
Committee recognises
procurement, but
transparency and legal
certainty.

the need for
for more

calls

4.4
The EESC believes that thresholds, beyond which princi-
ples of openness, transparency and notification apply, are the
best possible way of ensuring that economic players, particularly
very small enterprises (VSEs), can take part in public procure-
ment procedures. Within the EU itself,
it is the procurement
procedures situated below these thresholds, where the principles
of equal treatment and non-discrimination on the grounds of
nationality ought nonetheless to apply, that are the subject of
numerous complaints by SMEs because of lack of openness.

Although European entrepreneurs' federations are not in
4.5
favour of establishing ‘American-style’ quotas, they do acknowl-
edge the importance of a proactive support policy, particularly
with regard to procurement contracts below the thresholds of
the EU directives and contracts relating to new technology,
energy efficiency or protection of the environment.

4.6
The EESC strongly supports a ‘roadmap’ for European
SMEs, setting out a series of specific and binding provisions
and accompanied by a timetable and a funding plan. This
would build on the twenty years of European policy in support
of small enterprises, particularly the European Charter for Small
Enterprises adopted at the June 2000 European summit in Santa
Maria de Feira and the conclusions of the Stuttgart Conference
on Craft and Small Enterprises in April 2007.

(5) OJO C 241, 7/10/2002.

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4.7

The most appropriate measures might include:

4.7.3 Properly funded initiatives at European level

4.7.1 Legislative proposals with a timetable for adoption:

— A code of conduct for public authorities awarding contracts,
which would foster an interest in making it possible for the
smallest SMEs to take part in public procurement awards as
well as encouraging good practices with regard to the
simplification and dematerialisation of procedures.

— Single European measures like the Community patent or the
European statute for small and medium enterprises (Own-
the European Economic and Social
initiative opinion of
Committee on a ‘European Company Statute for SMEs’, 21
March 2002) which aim to simplify the European Union's
legal framework and develop a ‘European identity’ for enter-
prises.

— Strengthening the Directive on payment deadlines, as the

EESC has urged (6).

4.7.2 Information mechanisms on public procurement

with a timetable for their implementation:

— Supporting and developing information and mediation
systems on cross-border public procurement and creating
links between enterprises by making effective use of the new
Enterprise Europe network and by supporting local initia-
tives from SME associations.

— Supporting pilot projects relating to electronic procurement,
enterprise networks, information portals and one-stop-shops
on cross-border public procurement, based on existing
structures recognised by the economic actors concerned.

Brussels, 29 May 2008.

— Introducing a financial engineering scheme encouraging
SMEs to take part in public procurement, in the shape of
guarantee and surety funds and credit insurance, and using
the European Structural Funds for this purpose.

— Launching European training and pilot programmes for
SMEs to encourage energy efficiency and protection of the
environment (particularly in the construction sector). This
new provision could draw on the unused EU funds which
are paid back to the Member States each year.

— Extending the mechanisms for promoting the participation
of SMEs to the European Union's research programmes and
initiatives (feasibility subsidies and cooperative research) and
encouraging the Member States to put the same kind of
mechanisms in place at national level, particularly in sectors
linked with new technologies,
including the defence and
health sectors.

4.7.4 Consultation and mediation procedures:

— Lastly, reviewing the European Commission's consultation
and evaluation procedures, which often fail to take account
of the reality of Europe's actual economic fabric, which is
largely composed of SMEs, by consolidating the SME impact
assessments, making more systematic use of EESC explora-
tory opinions and relying more on the organisations repre-
senting civil society.

— Strengthening the Enterprise Europe network, which has
over 600 contact points across the EU in existing local
structures recognised by local economic actors, and the
enterprises involved in it, so as to develop a real Europe-
wide network for alerting and providing mediation and
support for small and medium enterprises.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

(6) OJ C 407, 28/12/1998.