Study on SMEs access topublic procurement markets and aggregation of demand in the EU.
Date: 2016-02-29
Institutions: Directorate-General for the Internal Market and Services
Subjects: EU Member State, European Economic Area, electronic government, market access, public contract, public expenditure, report, small and medium-sized enterprises

A study commissioned 
by the European 
commission, DG 
Internal Market and 
Services 

February 2014 

SMEs' access to public 
procurement markets 
and aggregation of 
demand in the EU  

 
 
 
 
 
 
 
 
 
 
The information and views set out in this study are those of the authors and do not necessarily 
reflect  the  official  opinion  of  the  Commission.  The  Commission  does  not  guarantee  the 
accuracy of the data included in this study. Neither the Commission nor any person acting on 
the  Commission’s  behalf  may  be  held  responsible  for  the  use  which  may  be  made  of  the 
information contained therein. 

DOI: 10.2780/93799 

ISBN: 978-92-79-29924-7 

© European Union, 2014. 

Reproduction is authorised provided the source is acknowledged. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contents 

Executive summary .......................................................................................................................................... 4 

Definitions and abbreviations ........................................................................................................................ 10 

Introduction ..................................................................................................................................................... 15 

1  Development of the public procurement market in Europe ................................................................... 18 

2  Trends and patterns in SMEs’ access to public procurement ................................................................. 24 

2.1  Introduction and past trends ............................................................................................................. 24 

2.2  SMEs in above-threshold procurement............................................................................................. 28 

2.3  SMEs in below-threshold procurement ............................................................................................ 37 

2.4  SME participation and success rate ................................................................................................... 41 

2.5  Additional channels for SMEs’ participation .................................................................................... 43 

2.6  Factors influencing SMEs’ share in winning public contracts ......................................................... 49 

2.7  Compound analysis of the factors ...................................................................................................... 61 

2.8 SMEs and cross-border procurement ................................................................................................ 65 

2.9  Review of facilitating measures in CIP countries ............................................................................. 69 

3  Trends and patterns in market aggregation ............................................................................................ 80 

3.1  Introduction to market aggregation .................................................................................................. 80 

3.2  Overall on demand aggregation in European public procurement ................................................. 82 

3.3  Centralized purchasing ....................................................................................................................... 84 

3.4  Framework agreements ..................................................................................................................... 112 

4  Cost effectiveness of market aggregation ............................................................................................... 130 

4.1  Introduction ...................................................................................................................................... 130 

4.2  Process cost with demand aggregation............................................................................................. 131 

4.3  Monetizing cost ................................................................................................................................. 136 

4.4  Competition ...................................................................................................................................... 144 

4.5  Potential gain/loss in quality by use of market aggregation ........................................................... 151 

4.6 Potential gain/loss in compliance .....................................................................................................153 

4.7 Potential changes in the level of transparency ................................................................................ 154 

4.8 Aggregation and impact on SME market access ............................................................................. 156 

4.9  Enhancement in competition by use of eProcurement tools ......................................................... 162 

5  Concluding remarks ................................................................................................................................. 167 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

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This study is prepared for the European Commission by PwC, ICF GHK and Ecorys.  

Lead authors are Gunnar Wessel Thomassen (PwC), Pernille Orderud (PwC), Ivar Strand (PwC/Abyrint 
AS), Máté Péter Vincze (ICF GHK), Patrick de Bas, Maarten van der Wagt and Anastasia Yagafarova 
(Ecorys). Please contact team lead Gunnar Wessel Thomassen (PwC) for enquiries. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

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Executive summary 

Objectives 
Public procurement is of tremendous economic significance for European business. Estimates made by 
the European Commission put the total value of expenditure by general government and utilities on 
public works, goods and services for 2011 at 2.406 billion euros, some 19 percent of the EU’s gross 
domestic product, and a large part of this purchasing is subject to public procurement rules, either 
national or EU regimes. Public contracts under the latter – normally purchases above a set of value 
thresholds set in EU legislation – accounted for about 425 billion euros in 2011 (3,4 percent of GDP)1, 
showing a steady growth over the past decade.  

Given this large overall volume and the weight of public purchasing in selected sectors, it is of vital 
importance for many European companies to be able to access public contracts. Especially smaller 
economic actors may face obstacles to successfully participate in public procurement. The aim of this 
study is to improve understanding of Small and Medium-sized Enterprises' (SMEs) access to the public 
procurement markets in the EU, as well as to review how contracting authorities or entities (CAEs) 
aggregate demand and what this means in terms of access and costs. The analysis covers 27 EU Member 
States2 and the three European Economic Area (EEA) countries (Iceland, Liechtenstein and Norway). 
The study has been prepared for the European Commission to help inform decision-makers about 
future policy. 

Data sources and structure 
The analysis of trends and patterns in the European public procurement market is largely based on 
contract award notices from the years 2009-2012, sourced from the TED (Ted Electronic Daily) 
database maintained by the European Commission. These notices contain detailed information of 
almost all purchases above the EU-thresholds by authorities or entities in the abovementioned 30 
countries. These purchases represent more than 1,4 trillion euros in value. Data were also collected via 
two online surveys. One of the surveys was conducted among CAEs in the EU/EEA, while the other one 
– among companies based in the EU or local affiliates of third-country companies (these were 
predominantly businesses which have been awarded public contracts in the past few years). The two 
surveys were an important supplement to the official data retrieved from contract award notices, 
especially as they allow collecting primary information on the perceived costs and benefits of different 
procurement processes and on the different channels through which firms can participate in public 
procurement. In total, 1.198 procurers and 1.375 businesses have responded. In addition, about 215 
semi-structured interviews have been conducted with authorities and businesses to help enrich our 
understanding of the costs and benefits of individual procurement procedures. 

 The first part of the report gives an overview of the main trends and developments on the above-
threshold public procurement market in Europe, while the second chapter provides a detailed analysis 
of SMEs' access to the public contracts. Here we describe and provide estimates of the channels through 
which SMEs enter and win public procurement contracts. We furthermore look into the profiles of 
SMEs who are active in public procurement, which sectors they bid and win contracts in, and the factors 
influencing SMEs' participation in public procurement. The next part of the paper analyses trends and 
patterns in the aggregation of demand by looking at the evolution of the methods used for aggregation 
over time, and the overall volume of the use of framework agreements and centralized purchasing 
approaches. The last part of the study provides an analysis of the cost-effectiveness of market 
aggregation techniques and their impact on competition and market access for SMEs. 

1 The estimated aggregate value of public contracts published by 27 EU Member States on TED, the EU’s public 
procurement portal (this corresponds to the volume of above-threshold procurement). 
2 The EU comprised 27 Member States in 2011, the cut-off date for the quantitative analysis. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

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Overview of procurement developments in the EU 
On the basis of contract award notices published, the total volume of the above-threshold public 
procurement market in the 30 EU and EEA countries was estimated to be at the level of about 400 
billion euros for 2011 in this study3. Following at least five years of a steady growth, the aggregate value 
of tenders published on TED declined in 2011, especially in Spain, Greece, Belgium, the Netherlands 
and Ireland, where the above-threshold market shrank by more than the EU-average, thus losing 
‘market share’.  

The typical contract size has been declining over the last five years, with significant difference in average 
contract value across countries. Another notable trend is a decrease in the degree of competition in the 
marketplace, again with substantial differences between Member States. We find that there is a 
significant correlation between average contract value and the degree of competition. Contracts that are 
awarded using market aggregation techniques show a higher degree of competition.  

SMEs' access to public procurement 
Small and Medium-sized Enterprises (SMEs) are considered the backbone of the European economy. 
The approximately 20,8 million SMEs registered in the EU represent 99,8 percent of all enterprises and 
produce more than a half of European GDP. Due to this, SMEs are in the prime focus of European 
public policy and one of the objectives is to facilitate SMEs access to public procurement.  

In the reference period between 2009 and 2011, an estimated 56 percent of all public procurement 
contracts above the EU-thresholds were awarded to SMEs (or groupings of companies led by an SME). 
In terms of the aggregate value of contracts awarded, this corresponds to a 29 percent market share. 
This figure is slightly below the estimates of the previous three-year period (2006-2008), although it 
cannot be determined whether this marks a genuine negative trend or merely indicates random 
fluctuations of the market or bias coming from a refined estimation methodology. 

Breaking down figures on SMEs’ share by Member State in which the public procurement took place 
shows marked differences between countries. In terms of the number of contracts won, SMEs’ share 
ranged from an estimated 84 percent in Greece to 44 percent in Spain. In terms of the aggregate value 
of public contracts awarded, there is a considerably wider difference between countries ranging from an 
estimated 19 percent in Portugal to 78 percent in Greece.  

SMEs are somewhat underrepresented in public procurement (at least in procedures above the EU-
thresholds) compared to their overall weight in the economy. The 29 percent share of European SMEs 
in the 2009-2011 period is 29 percentage points lower than it would have been (58 percent) if the share 
of public procurement they won equalled to SMEs’ share of the total gross value added produced in the 
business economy. 

Due to minimal information available about SMEs performance in below-threshold procurement, no 
robust estimated method could be employed to calculate their share. Data obtained from official sources 
confirm a rather evident hypothesis that SMEs are more successful in below- than in above-threshold 
procurement. The estimate made in this study assigns a total share of 58-59 percent to SMEs in below-
threshold procurement in terms of the aggregate value of contracts awarded.  

In terms of SMEs’ participation rates in above-threshold procurement, the results show, unsurprisingly, 
that larger companies submit more tenders on average. While the difference between micro- and small 
enterprises is small, the gap between small and medium, and medium and large companies is 
considerably larger. The success rate of companies does not seem to differ significantly by enterprise 
size class.  

In addition to being awarded a contract directly, SMEs do benefit from public procurement above the 
EU-thresholds also through other channels (e.g. as a member of a joint bid arrangement or as a 
subcontractor). It is estimated that when these additional channels are factored in, SMEs’ actual share 

3 The study’s estimate differs slightly from the European Commission’s figures due to different extrapolation 
methods used to fill data gaps.  

 SMEs' access to public procurement markets and aggregation of demand in the EU 

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in the total number of public contracts above the EU-thresholds is 16 percentage points higher than the 
volume of contracts they are directly awarded: 45 percent of aggregate contract value versus only 29 
percent of contracts in terms of value. 

Apart from inherent differences between countries, the value of public contract is one of the major 
factors that influence the extent to which SMEs can access these contracts. The larger a contract (i.e. 
single awards/lots), the less likely it will be awarded to SMEs, starting from above ca. 60.000 euros. 
This effect is not detectable among lower-value contracts. Other factors influencing SMEs' share in 
winning public contracts are: 

  The type of contract. SMEs' account for a considerably lower proportion of above-threshold 

supplies contracts than that of public works contracts 

  The sector of the goods or service. SMEs play only a marginal role in the supply of commodities 
(16 percent by value of contracts), but they accounted to more than half (57 percent) of the 
contract volume in the ‘other manufacturing’ sectors. Their share is between 25 percent and 32 
percent in the other five sectors: supply of machinery and equipment; medical products; 
construction; business services; other services.  

  The type of procurer. The share of contract volume awarded to SMEs was relatively high for 
tenders launched by regional and local authorities and agencies (37 percent) but low among 
utilities (15 percent). 

  The tender procedure chosen. SMEs take a much smaller share of the total value of contracts 

awarded under the various negotiated procedures (19 percent) than under open procedure (34 
percent) or restricted procedures (29 percent).  

  Market aggregation. Joint purchasing (procurement on behalf of others) seems to have a 

significant negative impact on SMEs’ chances4, even if the contract value is the same; whereas 
framework agreements do not influence the outcome. The latter result is also in line with 
tenderers’ perceptions. 

Between 2009 and 2011, 1,26 percent of all contracts above thresholds were awarded to economic 
operators located in a foreign country. In terms of the aggregate value of these contracts, this 
corresponds to 3,1 percent of all above-threshold procurement. The analysis does not reveal significant 
difference between the proportions of SMEs among the companies winning domestic or direct cross-
border contracts. SMEs won 56 percent of domestic public contracts and 54 percent of cross-border 
contracts. In terms of value, SMEs’ share was lower in cross-border procurement (22 percent) than 
domestic procurement (29 percent). 

Facilitating SMEs access to public procurement is also on the agenda of policymakers in many of the 
non-member countries participating in the EU’s Competitiveness and Innovation Programme (CIP)5. 
The barriers are similar to what small businesses within EU face – large volumes and broad capabilities 
required restricted access to certain contracts, disproportionately high technical and financial 
qualification levels, etc. Similarly, most of the legislative and non-legislative measures undertaken to 
level the playing field for SMEs mimic those practiced in the EU (use of lots, reducing technical and 
financial requirements, mitigating the administrative burden, etc.). The proportion of SMEs in 
economic operators winning public contracts is not known for the CIP countries reviewed. The opinion 
of local stakeholders seem to vary, with some being more or less satisfied, others seeing more room for 
improvement in the extent to which SMEs have access to public procurement market. Moreover, the 
extent to which SME access to public contracts has been out on the policy agenda varies across 
countries. 

Trends and patterns in market aggregation 
Aggregation techniques (see: Definitions and abbreviations) are used to improve cost-saving and the 
efficiency of procurement. In the EU, the most common instrument used is a framework agreement. 

4 This differs from the results and feedback from the survey and interviews. 
5 Albania, Croatia, the Former Yugoslav Republic of Macedonia (FYROM), Israel, Liechtenstein and Serbia were 
covered. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

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Framework agreements establish the contractual terms which will apply to subsequent orders made for 
a period of time. Another aggregation technique commonly used is centralized purchasing. This involves 
centralized procurement bodies (CPBs) purchasing on behalf of others, collaborations between 
procurers, and the use of service providers/entities to manage the purchasing process. 

The use of framework agreements has increased in recent years. As of 2011, framework agreements 
constitute nearly 25 percent of the total value of all contracts awarded above the EU-thresholds. In 
terms of numbers, they represent 1 in 6 of all contracts awarded. Centralized purchasing accounts for 
about 5 percent of the market in terms of number of awards, and about 20 percent of the total value of 
contracts awarded between 2009 and 2011. For this aggregation technique there has been a remarkable 
growth in terms of value. In many instances, a combination of CPBs and the use of framework 
agreements can be observed: more than half of all centralized purchases are done through a combined 
use of CPBs and framework agreement. 

Four factors drive both the use of centralized purchasing and the use of framework agreements. First, 
the cultural environment: Northern and North-Western European countries tend to show an inclination 
towards the use of centralized purchasing and framework agreements, while Southern Member States 
use it less (with some exceptions). 

The second factor is the effect of fiscal austerity. We see a tendency to conduct more centralized 
purchasing procurements from 2008 onwards. As from 2008, many (if not all) Member States saw an 
increased pressure on public budgets, leading them to search for opportunities to reduce the price of 
goods and services procured. One of the solutions found was a higher aggregation of demand in the 
form of centralizing procurement to harvest the economies of scale. A significant increase in the number 
of very large contracts in UK illustrated this trend. 

The third factor is the level of standardization, or similarity of the procured goods and services. The 
more similar (homogenous) the procured products are, the easier it is to aggregate orders without losing 
out too much in flexibility in meeting the demands of individual authorities. The importance of 
homogeneity in demand aggregation is underlined by the fact that framework agreements are mostly 
used for supplies, especially for the supply of commodities. 

The fourth and perhaps the most important, although the least tangible, factor is the level of 
professionalism (a combination of experience and capacities) of the procuring authorities. We found 
strong indications that this is indeed very important in explaining the use of centralized purchasing. The 
more experienced a procurement authority is, the more likely other authorities are willing to take 
advantage of their expertise. Alternatively, the more ‘professional’ an authority is in its procurement 
procedures, the more likely it is to engage in centralized purchasing. Nevertheless, despite all the 
indications in support of this explanation, the study methodology did not allow to test this factor. 

The relative flexibility of the regime from the point of view of CAEs, as well as the lower administrative 
burden involved, seem to be only a minor driver of the use of a framework agreement.  

Cost effectiveness of market aggregation 
Demand aggregation - whether it is a framework agreement or a centralized procurement – has certain 
impacts on the overall costs of the procurement procedure. In this study, we estimated the level of 
reduction in transaction costs, which appears to be considerable. Indeed, our surveys and interviews 
support the notion the use of demand aggregation techniques is to a large extent motivated by its lower 
cost and simplified procedures. We have, however, found that the use of demand aggregation has 
detectable impacts on the level of competition. 

The EU public procurement directives offer considerable flexibility with regard to the national 
implementation. This is seen in the great diversity in the use of aggregation techniques, both between 
countries and within a country. 

The lion’ share of the costs of the procurement process is given by the cost of labour. Correspondingly, 
this study estimated the costs of both centralized purchasing and framework agreements in terms of 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

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person-days (in full-time equivalent), which were subsequently monetized by multiplying the number of 
person-days by the country’s average labour cost.  

Centralized purchasing requires more staff time (30 person-days on average) than the broad average for 
all procurements (22 person-days), but when disaggregating the results by how many authorities or 
entities (i.e. individual buyers) the contract involves, we find that the average staff time per buyer 
decreases as the number of buyers involved increases. We therefore find that centralized purchasing has 
a significant cost saving potential. 

Framework agreements are the procurement technique with the smallest amount of staff time required, 
and thus allows for significant cost savings for CAEs. Individual contracts under framework agreements 
take on average 8 person days’ of staff time per request, compared to all procurements with an average 
number of person-days of 22. 

When monetizing the cost we find a significant difference in procurement costs between countries. The 
costs naturally tend to be higher in high-wage countries; but in the case of centralized purchasing, it is 
not only high-wage countries that are at the top of the league table. The average cost of a centralized 
purchase is 6.700 euros across the EU. When dividing this cost by the number of authorities involved in 
the contract the average cost is around 1.300 euros per authority. For framework agreements with the 
maximum duration under normal circumstances (i.e. four years) the average yearly total cost has been 
estimated at 9.500 euros. For framework agreements we find lower costs in low-wages countries. The 
average cost per individual request under a framework agreement is 1.200 euros.  

When comparing the cost per request for framework agreements and the cost per CAE participating in 
centralized purchases (on a typical purchase with an average total cost of 5.500 euros) we find that the 
aggregation of demand can significantly reduce the time input of procurers’ staff and hence lead to 
increased savings for CAEs. 

The effects of demand aggregation on the level of competition draw a mixed picture. On one hand, 
competition is usually rather strong in the first stage of awarding framework agreements and also 
among large centralized contracts. The first stage of framework agreements is likely the most 
competitive tool in the European public procurement market. On the other hand, when the contracts 
are implemented, a different picture emerges. 80 percent of framework agreements are implemented 
under a single supplier-arrangement or use techniques that do not involve any competition among 
suppliers. In addition, incumbents seem to be usually favoured when new framework agreements are 
launched.  

Interestingly, SMEs' access is not particularly affected by the use of aggregation techniques as compared 
to stand-alone contracts. Businesses report broadly similar success rates as for stand-alone contracts. 
We should note however that a very important determinant of SMEs' level of access is the value of the 
contracts, while aggregated contracts tend to have higher values. 

EProcurement tools affects competition, but not aggregation of demand 
The main impacts for the usage of eTools are the reduction of process costs by establishing lean-
procurement processes and reuse of data in the complete electronic procurement process. In addition 
the eTools will contribute to increase competition (eNotification) and possibilities for SMEs to compete 
cross-border. For the CAEs the eTools have marginal effects on the aggregation of demand. The 
aggregation of demand will be decided in the evolution of the procurement strategy of each category, 
depending on the business ambition of the CAE.  

Use of CPBs increases professionalism  
The study reflects that the transparency has increased (80 percent) by the use of centralized purchasing. 
However, the execution of stage two in framework agreement is important for the transparency and 
competition. The selection of procedures for call-offs in stage two (see chapter 4.4) decides the 
distribution of call-offs among the supplier(s). The call-offs is just distributed to the awarded suppliers 
and in that case less transparent to the market, than an open procedure. For call-offs there are no 
required award notice. The survey for enterprises confirms that 39 percent of respondents disagreed 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

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that the selection of providers under framework agreements is transparent. Only 22 percent of the 
respondents agreed with the statement. 

Regarding compliance, the professionalism in CPBs would increase the compliance to the legislation. In 
addition, the CPBs and the CAEs have to increase the use of resources significantly to implement the 
CPBs' awarded contract and ensure the compliance to the contract clauses if the number of CAEs 
increases above 6.  

The results of the study indicate that the professionalism of the procurement activities is not only 
concentrated to the improvement of the processes and reducing the process cost. It is also taking into 
account the theory of portfolio models and smart procurement by implementing category strategies as 
tools for public procurement to reduce cost and meet budget challenges. 

In conclusion, the use of demand aggregation as a policy to strengthen the internal market offers some 
dilemmas. There is evidence for certain benefits, in particular process cost savings. The implications on 
competition and especially the longer-term dynamics of reduced competition and lock-in of suppliers 
should be a concern however. Demand aggregation does not seem to be particularly negative for SMEs, 
but it should be kept in mind that this is against a baseline (stand-alone contracts of comparable, i.e. 

relatively high-value) where SMEs have disproportionately lower chances for success to begin with. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

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Definitions and abbreviations 

Definitions 
Aggregation of demand: Public sector purchasers from within the same body, and/or from different 
public sector bodies or other entities combining individual requirements to procure common goods and 
services from the market to achieve cost reduction through economies of scale. 

Aggregation techniques: Techniques used to aggregate demand for public procurement 

Awards: Allocation of contracts in compliance with procedures described in EU Directive 2004/18/EC 
(procedures of public sector bodies) and Directive 2004/17/EC (procedures of entities operating in 
utilities. 

Call-off: Individual contracts that can be made throughout the term of a framework agreement 

CANs: Contract Award Notices published in the TED database. 

Centralized purchasing: An aggregation technique including either activities using centralized 
procurement bodies (CPBs), purchasing on behalf of others, collaborations between entities and/or 
using of service providers/entities to manage the purchasing process. The term is described in the TED 
databases as whether "a contract award is on behalf of other contracting authorities or entities". 

Central Purchasing Bodies (CBPs): Article 11, Directive 2004/18/EC defines a Central Purchasing 
Body: Contracting authority that: (i) Acquires goods or services intended for one or more contracting 
authorities; (ii) Awards public contracts for works, goods or services intended for one or more 
contracting authorities; or, (iii) Concludes framework agreements for works, goods or services intended 
for one or more contracting authorities.  

Cross-border procurement: Cross-border procurement takes place when a public contract in a 
Member State is partly or fully performed by economic operators from abroad. 

Contracting authority or entity (CAE): A buyer purchasing under Directives 2004/18/EC and 
Directives 2004/17/EC 

Contract: An agreement having a lawful object entered into voluntarily by two or more parties, each of 
whom intends to create one or more legal obligations and awarded according under Directives 
2004/18/EC and Directives 2004/17/EC 

Direct cross-border procurement: When there is at least one contractor, a single contractor or a 
member of a joint bid, is registered in a different country than the country of the contracting authority 
or entity (CAE).  

Dynamic Purchasing Systems: A dynamic purchasing system (DPS) is a completely electronic 
process for making commonly used purchases, for a limited period, which is open to any economic 
operator who meets the selection criteria and has submitted a technically compliant indicative tender. 
No specific threshold applies. 

Electronic auction: Procurement between contracting authority or entity (CAE) and tendering firms, 
which takes place on an electronic marketplace. 

E-Notification: A public electronic message where the procurement body announces publicly his 
needs in a systematic way and delivered as an open message available for the public. 

E-Procurement: Electronic means of collecting demand information. Often these tools are integrated 
with the go-to-market and may offer online catalogues, scheduled purchasing of specific items, and 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

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links to established contracts with suppliers. The eTools may also extend into the post-contract phases 
and provide support for contract and supplier management. 

EU Members States: States which are members of the European Union 

EU procurement directives: EU Directive 2004/18/EC covers the procurement procedures of 
public sector bodies. Directive 2004/17/EC covers the procurement procedures of entities operating in 
utilities. 

European Charter for Small Enterprises: Main policy initiatives from recent years include the 
European Charter for Small Enterprises6 (adopted in 2000).  

EU threshold level (below): Below EU threshold means public procurements of works, goods or 
services with a contract value below:  

  General public supply and service contracts: 130.000 euros (central government)/200.000 

euros (local government) 

  Public works contracts: 5.000.000 euros 

Framework agreement: An aggregation technique that is defined by the EC Directive as: "an 
agreement between one or more contracting authorities and one or more economic operators that 
purpose of which is to establish the terms governing contracts to be awarded during a given period, in 
particular the terms as to price and, where appropriate, quality envisaged."7  

Indirect cross-border procurement: When the economic operators with whom the contract was 
concluded are domestic, but a substantial part of the contract is performed by foreign firms.  

MEAT/Most economically advantageous tender: Criterion that enables the CAE to take account 
of criteria that reflect qualitative, technical and sustainable aspects of the tender submission as well as 
price when reaching an award decision. 

Negotiated procedure: Negotiated procedure means the procedure whereby the CAEs consult the 
economic operators of their choice and negotiate the terms of the contract with one or more of these. 

Open procedure: Anyone interested in a specific contract will be invited to tender the competition in 
order to ensure maximum competition. 

Participant: CAEs that the CPBs procure on behalf of. 

Pre-market phase: The two first phases of the value chain for procurement; Mobilize demand 
information, Categorization and preparation 

Procurements: The acquisition of goods, services or works from an outside external source. 

Public procurements: CAEs acquiring goods, services or works from an outside external source 
under Directive 2004/18/EC and Directive 2004/17/EC8  

Restricted procedure: The buyers limit the number of suppliers that are invited to tender for a 
contract. 

Request: Individual contracts that can be made throughout the term of a framework agreement 
(synonym for call-off) 

6 See the original document, best practices and additional information at the Charter’s website: 
http://ec.europa.eu/enterprise/policies/sme/best-practices/charter/  
7 Article 1(5), Directive 2004/18/EC, Official Journal of the European Union. 
8 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32004L0018:EN:HTML and http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2004:134:0001:0113:en:PDF  

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Small and Medium-sized Enterprises (SMEs): Independent enterprises or groups of enterprises 
with less than 250 employees, and with total annual turnover not exceeding 50 million euro, or a 
balance sheet not exceeding 43 million euro9 

SMEs' quotas: Legislative arrangements introducing an explicit positive discrimination of small 
businesses in public procurement procedures  

The TED database (OJ/TED): The Official Journal Tender European Daily is the online version of 
the Supplement to the Official Journal of the European Union, dedicated to European public 
procurement. The database contains detailed information of all purchases by authorities above 
threshold level in 30 countries over the period 2009-2012. (http://ted.europa.eu).  

Utilities: Entities operating in the water, energy, transport and postal services sectors and purchasing 
under Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004. 

Value chain for procurement: The value chain for procurement consist of four phases; Mobilize 
demand information, Categorization and preparation, Go-to-market, Post-contract management.  

9 The official European definition of SMEs is given by a Commission recommendation from 2003. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

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Abbreviations  
AT 
BE 
BG 
CAE 
CAN  
CIP 
CP 
CPB 
CPV 
CY 
CZ 
DE 
DG 
DK 
DPS 
EC 
EE 
EEA 
EL 
ES 
EU 
EU-27 

Austria 
Belgium 
Bulgaria 
Contracting Authority or Entity 
Contract Award Notice 
The Competitiveness and Innovation Framework Programme 
Central Purchasing 
Central Purchasing Body 
Common Procurement Vocabulary (Regulation (EC) 213/2008) 
Cyprus 
Czech Republic 
Germany 
Directorate-General  
Denmark 
Dynamic Purchasing System 
European Commission 
Estonia 
European Economic Area 
Greece 
Spain 
European Union 
BE, BG, CZ, DK, DE, EE, IE, EL, ES, FR, IT, CY, LV, LT, LU, HU, MT, NL, AT, PL, PT, 
RO, SI, SK, FI, SE, and UK 
Finland 
France 
Former Yugoslav Republic of Macedonia 
Gross Domestic Product 
Gross Value Added 
Government-Wide Acquisition Contracts 
Croatia 
Hungary 
Hungarian forint 
Ireland 
Israel 
Iceland  
Italy  
Lichtenstein  
Lithuania  
Luxembourg  
Latvia  

FI 
FR 
FYROM 
GDP 
GVA 
GWAC 
HR 
HU 
HUF 
IE 
IL 
IS  
IT  
LI  
LT  
LU  
LV  
DG MARKT  The Internal Market and Services Directorate General 
MEAT   
MK 
MT  
NACE 

Most economically advantageous tender 
Former Yugoslav Republic of Macedonia 
Malta  
Statistical classification of economic activities in the European Community 
(Nomenclature statistique des Activités économiques dans la Communauté 
Européenne). 
Netherlands  
Norway  
Organisation for Economic Co-operation and Development 
The Official Journal Tender Electronic Daily 
Prior Information Notices 
Poland  
Public procurement office 
Portugal  
Romania  
Small Business Act 
Eurostat’s Structural Business Statistics 
Sweden  

NL  
NO  
OECD 
OJ/TED 
PIN 
PL  
PPO 
PT  
RO  
SBA 
SBS 
SE  

 SMEs' access to public procurement markets and aggregation of demand in the EU 

13 

 
 
 
 
 
SI  
SK  
SR 
SMEs 
TED 
UK 

Slovenia  
Slovak Republic  
Serbia 
Small and Medium-sized Enterprises 
Tender Electronic Daily 
UK 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

14 

 
 
 
 
 
Introduction 

Scope and objective 

The aim of this study is to improve the understanding of Small and Medium-sized Enterprises' (SMEs') 
access to public procurement markets and the aggregation of demand10 in the European Union (EU). 
The study provides a description and analysis of SMEs' presence in the overall public procurement, 
trends in the market aggregation and the impacts of the latter on the way public purchasing is carried 
out. The study is representative for all 27 Member States and the EEA countries, with data from the 
years between 2009 and 2011. This study is prepared on behalf of the European Commission and has 
been carried out during 2013. 

Sources and methodology 

The analysis is based on data from both public sources as well as from and proprietary surveys and 
interviews conducted during 2013. The important data sources are: 

- Records of European public contract awards during 2009-2012 from the TED 
database11. The data are for contract award notices from 30 countries during this period. Awards 
above the EU threshold level are required to be published in the TED database maintained by the 
European Commission. Based upon these data we have performed various statistical presentations and 
used a variety of techniques, from straight forward cross-tabulations to more advanced econometric 
modelling. An indication of the overall volume of public procurements in Europe is derived from the 
TED database for Contract Award Notices that is maintained by the European Commission. Due to 
limited official statistics of awarded contracts below EU threshold two different methods have been 
used for estimation of values for this segment.  

- Two surveys of purchasing authorities and businesses. An important supplement to the 
official data is the use of data from surveys conducted during this analysis. The surveys gather 
information on distribution data not covered by the official statistics, cost and perception of 
effectiveness by authorities in relation to various aspects of the procurement process. In total, 1.198 
authorities (748 responded on questions concerning framework agreements and 450 
responded on questions concerning centralised purchasing) and 1.375 businesses 
responded, providing a robust statistical basis for the analysis. 

- Business data from Dun & Bradstreet’s. Samples of businesses have been matched with business 
data to enable a categorization of the business size (i.e. small, medium and large). Data from the TED 
database contains very little information about the characteristics of the firms that win contracts. 

- Interviews and discussions. 215 semi-structured interviews have been conducted with 
authorities and businesses to help enrich the understanding of SMEs' access to public procurement 
markets, and the aggregation of demand in the EU.  

Details of the methodology, including respondent profiles, survey questionnaires and econometric 
output tables are found in a technical annex (separate file). 

10 Aggregation of demand is defined as: Public sector purchasers from within the same body, and/or from different 
public  sector  bodies  or  other  entities  combining  individual  requirements  to  procure  common  goods  and  services 
from the market to achieve cost reduction through economies of scale. 
11 The Official Journal Tender European Daily is a database with Contract Award Notices maintained by the 
European Commission. TED contains detailed information of all purchases by authorities above threshold level in 
30 countries over the period 2009-2012. (http://ted.europa.eu). See Annex for more details. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

15 

 
 
 
 
                                                             
 
Content 

  The first chapter gives an overview of procurement developments in Europe. This section 

provides an important background for the more detailed analysis of the issues that are of focus 
in this report. 

  Chapter two looks into SMEs' access to the EU public procurement market. The chapter 
describes and provide estimates for the channels through which SMEs get access and win 
public-procurement contracts, the profiles of SMEs active in public procurement, which sectors 
they bid on and win contracts, and factors influencing SMEs' participation in public 
procurement.  

  The next part of the paper (chapter three) analyses recent trends in market aggregation in 

public procurement. This part of the study investigates the way in which EU Member States 
have made use of both aggregation over time and volume with methods of framework 
agreements, centralized purchasing and e-procurement.  

  The last part of the study (chapter four) analyses the cost-effectiveness of market aggregation 

and its impact on competition and market access for SMEs.  

A separate file of annexes provides a number of data tables pertaining to the most important figures 
presented in the main section of the study.

 SMEs' access to public procurement markets and aggregation of demand in the EU 

16 

 
 
 
Overview of 
procurement 
developments 
in Europe 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

17 

 
 
 
  
 
1 Development of the public 
procurement market in 
Europe 

This section contains an overview of the developments of the European public procurement markets. 
Firstly, a theoretical procurement framework is going to be discussed followed by concepts, market 
situation, volumes, the number of transactions, contract values and a competition. This information 
constitutes an important background for the more detailed analysis of the issues that are of focus for 
this report. It also represents the benchmark for measuring the developments in SMEs' market access 
and the demand aggregation. 

Sourcing and procurement development - theory 
There has been an increased focus on procurement and sourcing during the past years. The general 
financial situation in most European countries has forced the decision-makers responsible for a budget 
to reduce costs and in general increase public effectiveness. Within an extensive European legislation 
within the area of public procurement, the decision-makers have to explore and develop innovative 
processes to meet the overall requirements for the budget reduction, transparency and compliance. The 
development and strengthening of procurement and sourcing competence both within the SMEs and 
the CAEs have been actualized. Some nations have started cost-cut programs through cost reductions in 
procurement processes and the launch of category management.  

The theory behind the implementation of 
category management is the use of portfolio 
models in procurement. The Kraljic- matrix12 
has become the dominant approach to what the 
profession regards as "operational 
professionalism"13 Kraljic highlights the 
financial impact and complexity in supply 
market as classification indicators for 
developing sourcing strategies for each 
category. Every category is grouped within each 
square (Exhibit 1-1) and each square/portfolio 
has their own "go to market" strategy. 
Traditionally, the portfolio approach is more 
common in private sector supply chain 
challenges than public procurement. The use of 
aggregation technics in public procurement 
may move the attention from procurement as a 
clerical duty to a more strategic agenda item for 
the public sector. The public procurement 
officers will have to use their procurement 
professionalism within the framework of and 
compliance with the EC procurement 
legislation. We will in addition use the data 
acquired in this study to see if change in 

12 Kraljic (1983) introduced the first comprehensive portfolio 
approach ‘‘Purchasing Must Become Supply Management,’’ 
Harvard Business Review, (61:5), September–October 1983, 
13 Cox, A. Business Success — A Way of Thinking about Strategic, 
Critical Supply Chain Assets and Operational Best Practice 1997. 

procurement professionalism impacts the 
CAEs' market behaviour. 

Exhibit 1-1: Kraljic – matrix classification of 
market approach 

Further in this introduction we will view the 
overall volumes on EU-level, contract volumes 
and competition, before we in detail will 
present the various technics and development 
of aggregation of demand.  

 SMEs' access to public procurement markets and aggregation of demand in the EU 

18 

 
 
 
                                                             
 
 
 
Overall volumes 
There has been a consistent and robust growth in the public procurement markets for many years and 
up until quite recently. Over the last seven years, we have seen almost a doubling in the number of 
transactions, from about 90 thousand in 2006 to 154 thousand in 2011. The market value has increased 
by about 40 percent during 2006-2011. There are now annual purchases for about 390 billion euros (of 
above EU threshold level purchases) by the 30 states who report to the European Commission. It is 
likely that the observed reflects an increased reporting as it exceeds the growth of public sectors in 
general across Europe in the same period. 

Exhibit 1-2: Number of total procurements in 
Europe 

Exhibit 1-3: Value of total procurements in 
Europe (observed and extrapolated14)15 

Sources: The TED database; Team Analysis. 

Public procurement volumes have possibly been declining since 2010. The decline is seen throughout 
Europe, but with some relative shifts within shares of different countries. For example, a declining share 
of the overall market can be observed in for instance Spain, Greece, Belgium, the Netherlands and 
Ireland. Most countries show little change in their overall share, indicating that the absolute values of 
their markets have declined in line with the overall trend. There is however considerable increases 
observed in Finland, Romania and also in UK. The latter is also the largest public procurement market 
under the scope of the EU procurement directives. 

14  Figure  shows  total  value  as  sum  of  recorded  values  and  estimated  value  of  the  missing  observations.  The 
estimation is based on a study with a ratio of 18-20 percent, increasing every year. 
15  Estimated  value  of  total  procurement  differs  from  the  DG  MARKT  indicators  due  to  different  methods  of 
calculation. The DG MARKT indicators  are, in billion euros; 2006: 377,1, 2007:  367,2, 2008: 392,4, 2009:420,4, 
2010: 447, 2011: 425,4  

 SMEs' access to public procurement markets and aggregation of demand in the EU 

19 

90 117 129 140146154154040801201602006200820102012Thousands01002003004002006200820102012Billions euroest.277301332377414390 
 
 
 
 
                                                             
Exhibit 1-4: Share of total value 
compared:2006-2009 vs. 2010-2011 

Exhibit 1-5: Extract of lower range in Exhibit 1-4, 
Share of total value compared (0%-3%) :2006-
2009 vs. 2010-2011 

Sources: The TED database; Team Analysis.  

The declining market size is also manifested through fewer contracts being awarded. Growth of the 
number of contract awards declined, slightly, for the first time in many years during 2012. In large 
procurement markets such as UK, Spain and Italy there is a declining number of transactions. There are 
however some countries, including Poland and Germany, that show growth in the number of public 
procurements. 

Exhibit 1-6: Total procurements in select 
countries (numbers) 

Exhibit 1-7: Share of total value by country 
2011 (80 percent of total value in nine 
countries) 

Sources: The TED database; Team Analysis. 

The declining volumes in recent years may reflect on going austerity measures across European 
governments. Before drawing such conclusions, however, we should note that these data do not capture 
the full scope of market expenditures by European governments. There is additional public 
procurement volumes that fall below the threshold values of the EU directives, or that otherwise are not 
covered by the regulations. It is possible that spending could have been shifted to these other market 
areas although we have no specific indications that such is the case. 

Contract sizes 
The typical contract size has been declining consistently over the last five years. While the median 
contract value was about 390.000 euros during 2006-2009, it has now declined to about 300.000 
euros. The decline in average value of each contract awarded is consistent across the six largest 
procurement markets except in UK where the price changes are more irratic over the same period. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

20 

DEESFRUKITPL0,0%5,0%10,0%15,0%20,0%25,0%0,0%5,0%10,0%15,0%20,0%25,0%2010-20112006-2009= Equal shareIncreased shareDecreasedshareATBEBGCYCZDKEEFIELHUIEISLILTLULVMTNLNOPTROSESISK0,0%1,0%2,0%3,0%0,0%1,0%2,0%3,0%2010-20112006-2009= Equal shareIncreased shareDecreasedshare13 27 33 40 41 43 46 010203040502006200820102012ThousandsFRAll othersPLDNESUKIT24 15 12 10 9 5 2,5 2,5 1,9 U.K.FranceItalySpainPolandGermanyCzech Rep.RomaniaDenmarkPercent of totalUKFRITESPLDECZRODK 
 
 
 
 
 
 
 
France and Poland have relatively small contract sizes close to the European average. Values in Italy, 
UK, and Spain are conciderably higher. These differences reflect varying practises across Member States 
with regards to market approaches and also possibly with regards to market aggregation. The latter will 
be considered further and more in-depth in the following study. 

Exhibit 1-8: Contract values 2009-2012 (median)  Exhibit 1-9: Contract value by country (median, 

2011-12 average) 

Sources: The TED database; Team Analysis. Note: Bids calculation with 1pct of awards with highest 
bids per segment excluded. Segments are: (i) Framework; (ii) Centralized purchasing; and (ii) All 
others. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

21 

01002003004005006007008002006-092009201020112012ThousandeuroFRAllPLDEESUKIT960 772 765 700 630 598 591 540 436 430 417 413 412 408 377 370 363 332 320 314 312 301 281 280 268 243 242 236 224 121 93 ISITDKUKSELINOLUNLSKFIPTESATBEROHUIEELCYAllDESIMTLVPLFRCZEEBGLT 
 
 
 
 
 
 
Exhibit 1-10: Number of bids per competition (mean and 
median) 

Exhibit 1-11: Number of bids by country (mean and 
median) 

Competition 
A worrying trend is that the degree of 
competition in the marketplace may be 
declining. We can measure the degree of 
competition by summarizing the bidders 
for each contract awarded. Generally, 
most tenders receive about 2-4 proposals. 
The median is at three and this has not 
changed since 2006. The mean 
measurement has however declined every 
year since 2009. Also, the number of 
contracts that are awarded without 
comptetion, or with only one bidder, has 
increased from about 20 percent during 
2006-2009 to about 25 percent.  

There is a significant difference when 
studying the level of competition between 
Member States. The median measure is 
somewhat more stable across countries, 
while the mean measurement varies 
more. There is a relationship between 
average contract values and the degree of 
competition which we have explored in 
previous work16. We will revisit some of 
the same issues in the case that they 
pertain to SMEs and market aggregation 
in chapter 0 and 4.4. 

Contracts that are awarded using market 
aggregation techniques show a higher 
degree of competition. This is especially 
the case for framework agreements and 
centralized purchasing. This will be 
analysed more in depth in chapter 4.4. 

Sources: The TED database; Team Analysis. Note: Bids 
calculation with 1 percent of awards with highest bids per 
segment excluded. Segments are: (i) Framework; (ii) 
Centralized purchasing; and (ii) All others. 

16 Public procurement in Europe: Cost and effectiveness. Strand/Ramada/Canton 2011 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

22 

0123456782009201020112012Number of bids13 8 10 4 6 5 4 5 4 5 4 5 5 4 4 3 3 5 3 3 3 4 4 3 4 4 3 3 3 2 2 16,0 15,6 11,0 10,9 10,4 10,0 9,9 8,9 8,6 8,2 7,7 7,3 7,1 6,7 6,5 6,4 6,3 5,8 5,6 5,5 5,4 5,2 5,2 4,8 4,5 4,3 4,0 3,8 2,8 2,5 ISUKIELVSEESELFIBGPTRONODEDKFRAllLTNLCYSIEEBEATITLULICZHUMTSKPL//30,5 
 
 
                                                             
 
 
Trends and 
patterns in 
SMEs’ access 
to public 
procurement 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

23 

 
 
 
 
 
2  Trends and patterns in SMEs’ 
access to public procurement 

2.1  Introduction 

and past trends 
Small and Medium-sized Enterprises 
(SMEs) are considered the backbone of 
the European economy. The 
approximately 20,8 million SMEs 
registered in the EU represent 99,8 
percent of all enterprises. They produce 
more than half of European GDP and 
account for about two out of three jobs 
in the private sector.18 SMEs are key 
drivers for European economic growth, 
competitiveness, innovation, 
employment and social integration.  

Due to their significance, SMEs are also 
in the prime focus of European public 
policy, with a host of corresponding 
initiatives focusing on identifying 
SMEs’ specific challenges and on 
promoting a favourable business 
environment for them. Main policy 
initiatives from recent years include the 
European Charter for Small 
Enterprises19 (adopted in 2000), the 
re-launched Lisbon Programme20 
(2005) and the Communication on 
implementing a “Modern SME Policy 
for Growth and Employment”21 (2005), 
the European Small Business Act 
(SBA)22 (2008), the European Small 
Business Portal23 (2010) or the 

The official European definition of SMEs is given by a 
Commission recommendation from 200317. According to this 
definition, SMEs are, somewhat simplified, independent 
enterprises or groups of enterprises with less than 250 employees 
and with total annual turnover not exceeding 50 million euros, or a 
balance sheet not exceeding 43 million euros (only one of the latter 
two criteria needs to be met). SMEs are further broken down to 
micro, small and medium-sized enterprises, forming three nested 
categories, with the larger categories including the smaller ones. 
The respective thresholds are the following: 

Size class 

Employee 
number 

Annual sales 
(euros) 

or 

Balance 
sheet total 
(euros) 

Micro 

Small 

< 10 

< 50 

≤  2 million 

≤ 2 million 

≤ 10 million 

≤10 million 

Medium-sized 

< 250 

≤ 50 million 

≤ 43 million 

The above thresholds apply to consolidated figures at group level, 
taking into account partner and linked organisations. Furthermore, 
companies in which public bodies have a stake of at least 25 
percent are normally not considered SMEs, with some exemptions. 

In this study, the category ‘medium-sized enterprises’ refers to 
companies that meet the definition for medium-sized enterprises 
but not that of the smaller categories. Similarly, the category 
‘small enterprises’ groups companies that meet the definition of a 
small enterprise but not the definition of a micro-enterprise. 
Consequently, the three categories, together with large enterprises, 
will form four non-overlapping groups of companies (see Exhibit 
2-1 overleaf). 

17 Commission Recommendation 2003/361/EC concerning the definition of Micro, Small and Medium-sized 
Enterprises. http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2003:124:0036:0041:EN:PDF 
18 Data sourced from Eurostat’s Structural Business Statistics (SBS) database. 
http://epp.eurostat.ec.europa.eu/portal/page/portal/european_business/introduction  
19 See the original document, best practices and additional information at the Charter’s website: 
http://ec.europa.eu/enterprise/policies/sme/best-practices/charter/  
20 Communication from the Commission on “Common Action for Growth and Employment: The Community 
Lisbon Programme” (COM(2005) 330). http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2005:0330:FIN:EN:PDF 
21 Communication from the Commission on “Implementing the Lisbon Programme: Modern SME Policy for Growth 
and Employment” (COM(2005) 551). http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2005:0551:FIN:EN:PDF  
22 Communication from the Commission “Think Small First: A Small Business Act for Europe“ (COM(2008) 394). 
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2008:0394:FIN:en:PDF 
23 http://ec.europa.eu/small-business/index_en.htm  

 SMEs' access to public procurement markets and aggregation of demand in the EU 

24 

 
 
 
                                                             
Entrepreneurship 2020 Action Plan24 (2012). 

European SME policy extends also over the area of public procurement. Creating an even playing field 
for SMEs, facilitating their access to public contracts is an explicit policy objective of the EU. The goal 
already appears in the current Directives from 2004 governing public procurement above EU-
thresholds.25 26 Recent years have seen renewed efforts from the Commission, as well as various 
Members States, in addressing particular barriers preventing SMEs from successfully competing for 
public contracts in Europe. Related initiatives have been included in the European SBA (and 
corresponding good practices being collected), and the Commission proposals (2011) for the new public 
procurement directives27 28 put significantly more emphasis on this objective, i.e. creating a level playing 
field in public procurement where all players have equal access to information, and enjoy equal 
opportunities in all aspects of public procurement. 

Exhibit 2-1: Schematics of the official SME definition and the size classes used in the analysis 

It has been pointed out in several studies29 and by stakeholders30 alike that due to their size, SMEs 
(especially micro- and small enterprises) are facing certain barriers that make it difficult for them to bid 
for, and win, public contracts. Consequently, figures show that SMEs are somewhat underrepresented 
in above-threshold public procurement, compared to their overall weight in the economy:  

  A 2004 study on SMEs’ access to public procurement markets, prepared by EIM for the 

Commission, DG Enterprise and Industry, showed that in 2001, SMEs have won 78 percent of 
single awards in public procurement tenders covered by the Directives (i.e. “above-threshold 
procurement”) in the EU-15, securing about 43 percent of the combined value of these 

24 Communication from the Commission “Entrepreneurship 2020 Action Plan: Reigniting the entrepreneurial spirit 
in Europe” http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2012:0795:FIN:EN:PDF  
25 Directive 2004/17/EC of the European Parliament and of the Council coordinating the procurement procedures 
of entities operating in the water, energy, transport and postal services sectors. http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:2004L0017:20100101:EN:PDF  
26 Directive 2004/18/EC of the European Parliament and of the Council on the coordination of procedures for the 
award of public works contracts, public supply contracts and public service contracts. http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2004:134:0114:0240:EN:PDF  
27 Proposal for a Directive of the European Parliament and of the Council on procurement by entities operating in 
the water, energy, transport and postal services sectors (COM(2011) 895). http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0895:FIN:EN:PDF  
28 Proposal for a Directive of the European Parliament and of the Council on public procurement (COM(2011) 896). 
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0896:FIN:EN:PDF  
29 See EIM (2004), GHK (2007), GHK (2010), further referenced below; as well as European Commission (2000): 
The European Observatory for SMEs - Sixth Report, Federation of Small Businesses (UK) (2009): Public 
Procurement - Helping Small Businesses Succeed 
30 Including, among others: the European Association of Craft, Small and Medium-Sized Enterprises (UEAPME), 
Eurochambres, BusinessEurope, the European Construction Industry Federation (FIEC), the UK Federation of 
Small Businesses. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

25 

 
 
 
 
                                                             
contracts.31 The study pointed out that, considering SMEs’ economic significance, there was 
room for improvement in SMEs’ involvement in public procurement.  

  A follow-up study done by GHK in 2007 has estimated the proportion of above-threshold 

contracts awarded to SMEs in the EU-25 to be around 64 percent in 2005, corresponding to 42 
percent of the total value.32 The study confirmed that there was a discrepancy between SMEs’ 
share of public procurement and their weight in the economy, with marked differences 
identified within the group of SMEs: medium-sized enterprises secured a slightly higher share 
of public contracts than their role in the economy as measured by their share in combined 
company turnover, whilst Small and Micro-enterprises were considerably less successful than 
their overall economic significance may have predicted. 

  The last research on the subject, undertaken by GHK in 2010, aided by more robust company 
data and an extensive manual validation process, yielded lower estimates, suggesting that 
previous studies are likely to have overestimated the participation rate of SMEs. According to 
the estimates, SMEs have secured around 60 percent of above-threshold public contracts 
between 2006 and 2008, and 34 percent in terms of value. This study has followed the 
methodology of the 2010 study, albeit with even more manual validation of the initial 
classification of companies into enterprise size classes. Correspondingly, the new estimates, 
which are lower than in predecessor studies, may be considered more accurate of SMEs’ access 
to public contracts above the EU-thresholds, although they still may carry systematic bias 
(above the bias coming from random sampling). 

31 EIM (2004): The access of SMEs to public procurement contracts. 
http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=3687  
32 GHK (2007) Evaluation of SMEs’ access to public procurement markets in the EU. 
http://ec.europa.eu/enterprise/dg/files/evaluation/pme_marches_publics_report_en.pdf  

 SMEs' access to public procurement markets and aggregation of demand in the EU 

26 

 
 
 
 
 
                                                             
Exhibit 2-2: Previous estimates on the 
proportion of above-threshold contracts 
awarded to SMEs (percent) 

Exhibit 2-3: Previous estimates on SME’s share 
of the aggregate value of above-threshold 
contracts (percent) 

The estimates in all studies referred in this section concern contracts directly awarded to SMEs, as 
single or lead contractors (with subcontractors) or leaders of joint bids. SMEs may also participate in 
public procurement through other channels: as partners in consortia or joint ventures, as 
subcontractors, and more indirectly, as ultimate suppliers of goods and services without being a 
designated subcontractor. On the other hand, public contracts awarded to SMEs may be partly 
performed by large enterprises through the same channels. 

These alternative channels for the years 2009-2011 are further explored in Section 2.6 of this study, 
but comparable estimates from earlier years are not available. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

27 

 
 
 
 
 
 
 
 
 
 Overall share of SMEs 

2.2 SMEs in above-threshold procurement 
2.2.1
The analysis of public procurement above the EU thresholds rests on a detailed statistical analysis of 
contract award notices published on TED (Tenders Electronic Daily), the EU’s public procurement 
portal. The records are not fully complete, as award notification for some procurement procedures has 
not been published or the information disclosed was not sufficient to be included in the analysis, and 
may contain a small number of below-threshold public contracts (which are not covered by the EU 
Public Procurement Directives but have been voluntarily published). However, these shortcomings are 
relatively benign and the database allows us to obtain a good picture of above-threshold procurement in 
the EU-27 and in countries of the European Economic Area (EEA)33. 

According to the statistical analysis conducted for this study, between 2009 and 2011, an estimated 56 
percent of all public contracts above the EU thresholds were awarded to SMEs in the EU-27 (the 
estimated proportion was between 55 percent and 56 percent in all three years). This represents a slight 
decrease compared to the previous three-year period when the equivalent figure was at around 60 
percent. SMEs were similarly successful in the EEA, winning 53 percent of public contracts. 

Exhibit 2-4: SMEs’ share of above-threshold contracts won, by number of contracts (percent) 

EU-27 

EEA 

Note: Percentages may not add up to 100 due to 
rounding 
Margin of error: ±0,9-1,3 percent 

The above analysis suggests that micro-enterprises won an estimated 18 percent of all above-threshold 
contracts in the EU-27. Small enterprises secured 21 percent, whilst the proportion of contracts 
awarded to medium-sized enterprises was estimated at 17 percent. Micro-enterprises were somewhat 
less successful in EEA countries, winning only 12 percent of above-threshold procurement, whilst 
medium-sized enterprises performed marginally better than in the EU (22 percent). The proportions 
were rather stable in all three years examined.  

A comparison of the results for EU-27 countries (no comparative figures for EEA countries exist) with 
estimates from the previous three-year period, 2006 to 2008, might suggest that specifically medium-
sized enterprises became less successful, with their proportion falling from ca. 20 percent to 17 percent, 
whereas micro- and small enterprises have more or less maintained their share. This decrease is 
seemingly significant when applying statistical tests to the data34. However, non-sampling bias might be 

33 Iceland, Liechtenstein, and Norway 
34 Mann-Whitney U test (2006-2008 versus 2009-2011 sample) and Kruskal-Wallis test (annual samples) 
performed on weighted sample data, and Pearson’s chi-square test on weighted data all suggest that the differences 
between samples from the two waves/years are unlikely to come from random sample variations. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

28 

 
 
 
 
 
 
                                                             
responsible for this apparent change. The relative drop in medium-sized enterprises’ proportion cannot 
be explained by the extended manual verification of records undertaken for the current study, as this 
focused on micro-and small enterprises. However, the differences between the two time periods are 
small and could easily be an effect of random fluctuations on the public procurement market or non-
sampling bias such as improvements in the company database referred to above. It is therefore 
concluded that the proportion of above-threshold contracts won by SMEs (and all SME size classes) has 
remained stable over this specific six-year time period. 

Although SMEs are estimated to have secured over half of all public contracts above the EU-thresholds, 
they rarely, if ever, are able to access the largest public contracts. As a consequence, the average 
contract value won by SMEs was considerably smaller than those won by large enterprises and the 
combined value of the contracts going to SMEs represented an estimated share of only 29 percent of the 
above-threshold procurement market for 2009-2011 in the EU-27 (ranging from 28 percent to 31 
percent).
was awarded to SMEs. 

 SMEs’ share was even lower in public procurement in the EEA countries: only 22 percent 

35

Exhibit 2-5: SMEs’ share of above-threshold contracts won, by aggregate value of contract (percent) 

EU-27 

EEA 

Margin of error: ±1,0-1,4 percent 

Micro-enterprises secured 4 percent of the total value of contracts in the EU, whilst small enterprises 
and medium-sized enterprises won 9 percent and 15 percent, respectively. In the three EEA countries, 
medium-sized enterprises were awarded 14 percent of all public contracts in terms of value, similarly to 
EU-27 estimates. Micro- and small enterprises, on the other hand, secured a smaller fraction of 
contracts (2 percent and 6 percent, respectively) than their counterparts in procurement launched by 
EU Member States. 

All SME size classes have performed slightly worse in the EU-27 than between 2006 and 2008 in terms 
of value secured. This decrease in the share of SMEs may to a large extent be explained by the more 
extensive manual verification of records, albeit, as mentioned above, not for the decrease for medium-
sized enterprises. The relatively small differences lead however to the conclusion that the share of the 
aggregate value of above-threshold contracts that SMEs have secured has not changed markedly in 
recent years.  

35 These estimates only take into account the total value of public procurement contracts directly awarded to SMEs 
and do not cover the value that is subcontracted to SMEs. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

29 

 
 
 
 
 
                                                             
Exhibit 2-6: SMEs’ share in terms of value, 
comparison of adjusted and unadjusted 
estimates for the EU-27 (percent)

Exhibit 2-6 illustrates the impact of the manual 
check of companies on the final estimates 
(concerning EU-27 countries only). This verification 
exercise mainly addressed companies included in the 
sample that were classified as micro- or small 
enterprise on the basis of data sources from Dun & 
Bradstreet’s company database, but which were 
winning large contracts (above 1 million euros). The 
verification was done through web search, checking 
online company databases and company websites for 
employment and/or annual revenue figures, and 
whether the company was part of a group or a joint 
venture between larger companies.  

This check has indeed identified a number of 
erroneous categorisations. In the predecessor study, 
the revision decreased the initially estimated share of 
SMEs in terms of value by 4 percentage points. In 
this study, the upgraded verification exercise has 
decreased the first estimates by 5-6 percentage points. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

30 

 
 
 
 
 
 
 Country differences  

2.2.2
Breaking down the headline figure on SMEs’ share in terms of value by Member State in which the 
public procurement took place shows marked differences between countries. In terms of number of 
contracts won, SMEs’ share ranged from an estimated 84 percent in Greece to only 44 percent in Spain. 
SMEs’ access to public procurement contracts above EU thresholds seems to be particularly high, apart 
from Greece, in some of the newer Member States (Bulgaria, Hungary, Estonia, Czech Republic), as well 
as in Cyprus, Luxembourg and Ireland. At the end of the spectrum one finds Denmark, Poland, Sweden, 
Portugal and Spain.36  

Exhibit 2-7: SMEs’ share of above-threshold contracts won, by number of contracts and 
Member State, average for 2009-2011 (percent) 

Note:  Figures  for  individual  Member  States  should  be  treated  with  caution  as  they  are  less  reliable  than  the 
aggregate estimates at EU-level due to the much smaller sample sizes. 
Margin of error: ±1,1-7,6 percent, median MoE: ±3,1 percent 

Differences among Member States are considerably wider when calculating in terms of the aggregate 
value of public contracts awarded: the volume of contracts won by SMEs decreases from 78 percent in 
Greece to 19 percent in Portugal. The rank order of Member States is similar to the above, with Greece, 
Latvia, Luxembourg Bulgaria, Hungary and Germany, Cyprus and Romania awarding relatively large 
volumes of public contracts to SMEs, or groupings of companies led by such enterprises, and Spain, 
Italy, Sweden and Portugal awarding only a small fraction of above-threshold public procurement to 
SMEs. Small business’ level of access to public procurement contracts is, on average, significantly lower 
in the three non-EU member countries of the EEA (Iceland, Liechtenstein, and Norway) than among 
EU-27 members. 

36  The  ranking  of  Member  States  based  on  ‘odds  ratios’,  as  reported  in  Chapter  2.7,  is  considered  more  robust  it 
controls for a set of additional explanatory variables.  

 SMEs' access to public procurement markets and aggregation of demand in the EU 

31 

 
 
 
 
 
 
                                                             
Exhibit 2-8: SMEs’ share of above-threshold contracts won, by aggregate value of contracts and 
Member State, average total for 2009-2011 (percent) 

Note: Figures for individual Member States, especially for this disaggregation by value of contract, should be 
treated with caution as they are less reliable than the aggregate estimates at EU-level due to the much smaller 
sample sizes. 
Margin of error: ±1,1-8,3 percent, median MoE: ±3,3 percent 

Although it might have been anticipated, the analysis did not identify a general trend of SMEs being 
more dominant in smaller countries: for example, CAEs in Germany or France, two large countries, 
award a relatively high share of above-threshold public procurement contracts to SMEs, whereas 
smaller countries such as Estonia or Slovakia, Sweden or Portugal tend to award less to SMEs. 

Results also show important differences between countries concerning the success of individual SME 
size classes. The combined market share of micro and small enterprises, the two size class categories 
most commonly facing barriers to accessing public contracts, seems to be exceptionally high in Greece 
(47 percent), Latvia (39 percent), and Bulgaria (34 percent) and to a certain extent in Germany (30 
percent). On the other hand, the relatively large market share of SMEs in Luxembourg, and partly in 
Hungary, Cyprus and Romania, seems to originate predominantly from the success of medium-sized 
companies. At least in Luxembourg and Cyprus these companies may be large enough to cover the 
relatively small national service area or to meet the relatively small orders for supplies.  

 SMEs' access to public procurement markets and aggregation of demand in the EU 

32 

 
 
 
 
 
 
Exhibit 2-9: SMEs’ share of the total value of contracts awarded, by Member State (2009-2011) 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

33 

 
 
 
 
 
Exhibit 2-10: Change of SMEs’ share of public 
contracts above the EU thresholds (percent) 

A crude comparison between the two three-year 
periods (estimates for three years were averaged 
to minimise sampling bias) 2006-2008 versus 
2009-2011 shows improved access of SMEs only 
in a minority of countries, including the Czech 
Republic, Latvia, Romania, Germany. On the 
other hand, SMEs appear to have lost some 
ground in Member States such as Sweden, the 
Netherlands, Estonia and Malta. These results 
should, however, be treated with extreme caution 
considering the small sample sizes, the impact of 
the upgraded manual verification process, and 
possible variations in the type of procurement 
undertaken, as well as the presence of very high-
value contracts, which may distort the results. 

As a form of “reality check” of the estimates, the 
figures were compared to more robust data from 
countries in which data on SMEs’ access to public 
contracts was accessible. Certain countries require economic operators in the tendering phase or when 
the contract has been awarded to them to disclose whether they are SMEs or not.37 Others will compare 
the list of successful enterprises with employment and turnover data in their own national company 
databases. The results, summarised in Exhibit 2-11, show indeed some divergence of this study’s 
country-level estimates from Member States’ own, assumedly more reliable, statistics. Whereas the gap 
is reasonably narrow in the case of France (although French figures include below-threshold 
procurement as well), the study seems to have underestimated SMEs’ shares for Slovenia and 
overestimated it for Hungary. The estimates are also lower than national figures for Lithuania and 
Slovakia, but part of this might be explained by the fact that the statistics reported by these countries 
include below-threshold procurement. 

Exhibit 2-11: Comparison of national data on the share of public contracts awarded to SMEs and 
estimates from the current study (percent) 

Country 

Legal regime  
(EU-
thresholds) 

By number of contracts 
Finland (2)  Above+below 
Above+below 
France (3) 
Above+below 
Hungary 
Above 
Below 
Above+below 
Above+below 

Lithuania 
Slovakia 
(4) 
Slovenia 
(5) 

UK 

Above+below 
Above 
Below 
Above+below 

National data 

Study estimates (1) 

2009 

2010 

2011  Average 

2009 

2010 

2011  Average 

64 
62 
74 
65 
79 
73 

77 

71 
67 
72 
n.a. 

71 
60 
79 
69 
84 
76 

80 

72 
70 
73 
n.a. 

64 
61 
81 
63 
85 
78 

- 

74 
72 
74 
n.a. 

2009-
2011 

67 
61 
78 
66 
83 
76 

79 

72 
70 
73 
n.a. 

59 
60 
- 
73 
- 
63 

58 

- 
62 
- 
50 

57 
57 
- 
76 
- 
51 

60 

- 
61 
- 
58 

2009-
2011 

56 
59 
- 
74 
- 
55 

58 

- 
57 
- 
55 
(continued) 

52 
60 
- 
73 
- 
54 

58 

- 
59 
- 
57 

37 Or, in the case of Hungary, have required such information until 2010. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

34 

 
 
 
 
                                                             
 
Country 

Legal regime  
(EU-
thresholds) 

By aggregate value 
Finland 
France 
Hungary 

Above+below 
Above+below 
Above+below 
Above 
Below 
Above+below 
Above+below 

Lithuania 
Slovakia 
(4) 
Slovenia 
(5) 

National data 

Study estimates (1) 

2009 

2010 

2011  Average 

2009 

2010 

2011  Average 

n.a. 
28 
39 
31 
73 
51 
47 

n.a. 
27 
48 
38 
77 
62 
46 

n.a. 
28 
42 
31 
80 
52 
- 

2009-
2011 

n.a. 
28 
43 
33 
77 
55 
47 

23 
31 
- 
61 
- 
25 
34 

34 
34 
- 
39 
- 
34 
14 

30 
29 
- 
49 
- 
31 
47 

2009-
2011 

29 
31 
- 
51 
- 
30 
25 

Above+below 
Above 
Below 
Above+below 

54 
54 
54 
7 

45 
35 
63 
7 

56 
54 
61 
10 

52 
48 
60 
8 

- 
39 
- 
16 

- 
33 
- 
38 

- 
37 
- 
21 

UK (6) 
Notes: (1) Annual estimates are less reliable due to small sample sizes. (2) Figures only for Hansel Oy, the central 
procurement unit of the Finnish government. (3) Data for France contracting covers only government 
procurement; utilities are excluded (4) Slovak data classifies companies into size classes based on number of 
employees only. Coverage is only partial. (5) Slovenian below-threshold procurement data only covers relatively 
high-value contracts (above certain national thresholds). (6) UK supplies data on ‘direct spend’ by central 
government bodies, which may include non-public procurement spending.  
Source: Hansel Oy (FI), Observatoire Economique de l’Achat Publique (FR), Közbeszerzések Tanácsa (HU),  
Viešųjų Pirkimų Tarnyba (LT), Úrad pre Verejné Obstarávanie (SK), Ministrtvo za Finance (SI), Cabinet Office 
(UK). 

- 
36 
- 
26 

2.2.3

  Comparison with the overall economic significance of 
SMEs 

In order to put the estimates presented above into context, the SMEs’ share in winning public contracts 
(by aggregate value) was compared to their overall share in the economy. As a proxy, the breakdown of 
combined gross value added (GVA) by company size class on the basis of employment was chosen, 
calculated for non-agricultural and non-financial business sectors (NACE Rev.2 categories B to N, with 
the exemption of K). The comparison shows that the share of SMEs in winning public contracts above 
the EU thresholds is disproportionately lower than their overall economic significance.  

Exhibit 2-12: Difference between the share 
of SMEs in public procurement (average 
2009-2011) and their role in the economy 
(EU-27)* 

In terms of the aggregate value of contracts secured, 
the 29 percent share of European SMEs in the 2009-
2011 period is 29 percentage points lower than it 
would have been (58 percent) if the share of public 
procurement they won would have equalled their 
share of the total gross value added produced in the 
business economy (excluding agriculture and 
financial intermediation). This gap is apparent across 
all three size classes of SMEs, but most notable in 
relation to micro- and small businesses. Micro-
enterprises are estimated to account for only some 4 
percent of public contracts in terms of value, whilst 
accounting for 21 percent of combined GVA in the 
real economy. For small enterprises, the difference is 9 percent to 18 percent. 

*Calculated on the combined gross value added in 
main economic sectors 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

35 

 
 
 
 
 
Exhibit 2-13: Difference between the share 
of SMEs in public procurement and their 
role in the economy by Member State 
(average 2009-2011) 

An analysis of data by country should be only made 
with great caution, given the low reliability of 
estimates at this level. However, if we look at how the 
gap between participation in public procurement, 
only calculating with the value of contracts directly 
awarded to SMEs and groupings of companies led by 
SMEs, and in the real economy, there are very 
marked differences between Member States. Between 
2009 and 2011, SMEs in Greece and Latvia seem to 
have had a better access to public procurement above 
the EU-thresholds than their significance in the wider 
economy would have suggested. SMEs in Hungary, 
Luxembourg, Germany, Bulgaria, and Romania also 
do not seem to be significantly disadvantaged. This 
might signal, apart from specific contextual factors, 
policies and practices that favour SMEs’ 
participation.  

On the other hand, SMEs in Spain, Italy, Portugal and 
Estonia seem to be losing out disproportionately in 
public procurement, compared to what their weight 
in the economy could warrant. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

36 

 
 
 
 
 
 
2.3 SMEs in below-threshold procurement 
Whereas contract award notices published on TED provided an excellent basis for the estimation of 
SMEs’ share, only minimal information is available on how SMEs fare in below-threshold procurement. 
Data on the amount of below-threshold public contracts (above certain national thresholds) awarded to 
SMEs has been obtained only from Hungary and Slovenia. Other Member States do not have this 
information available. This was either confirmed by national experts contacted or through extensive 
web research. Lacking appropriate input data, only very basic estimates can be made at the EU level, 
these being bound to remain unreliable. 

To produce estimates on the share of below-threshold procurement awarded to SMEs, three 
independent methods have been used in this section: 

1.  Extrapolation of above- and below-threshold procurement data from merely two Member 

States, Hungary and Slovenia, to the EU level, by using this study’s earlier estimates on above-
threshold procurement at country level, the apparent difference in SMEs access in the two 
countries mentioned, and estimates on the total volume of below-threshold public procurement 
in the Member States. 

2.  Calculating SMEs’ share for a sample of contract award notices published on TED which covers 
single awards with values under the EU-thresholds. Although these public procurements were 
considered above-threshold at the time the contract notices were published, the ultimate value 
of the individual awards is below the thresholds (mostly because the contract was broken down 
into several lots) and were considered here as proxies for below-threshold procurement. 

3.  Results of an online survey among tenderers where the 1.375 respondents were asked to provide 
some information on the latest public procurement contract below the thresholds they were 
involved in – not necessarily as lead contractor. 

The aim was to confront the different estimates and establish whether they are similar enough to at 
least broadly dimension SMEs’ share in below-threshold procurement. Note that the calculations refer 
to contracts awarded directly to SMEs, i.e. as single contractors or leaders of joint bids. The two 
calculations are also compared to findings from the online survey among companies that asked 
participants about details of their latest below-threshold procurement contract (although the sample is 
admittedly not representative of the underlying population of companies taking part in the execution of 
public contracts below the EU-thresholds). 

1. Extrapolation 

Data obtained from official sources confirm the rather evident hypothesis that SMEs are more 
successful in below- than in above-threshold procurement. In Hungary, SMEs’ share by the aggregate 
value of contracts won in below-threshold procurement for which data were collected38 procedures 
exceeded that of above-threshold procurements by 43 percentage points (77 percent versus 33 
percent39); in Slovenia, by 12 percentage points (60 percent versus 48 percent).  

Exhibit 2-14: National data available on the share of public contracts awarded to SMEs 

Country 

Hungary 

Slovenia 

Legal regime  
(EU-
thresholds) 

By number of contracts 

By aggregate value 

2009 

2010 

2011  Average 

2009 

2010 

2011  Average 

Above 
Below 
Above 
Below 

65 
79 
67 
72 

69 
84 
70 
73 

63 
85 
72 
74 

2009-
2011 

66 
83 
70 
73 

31 
73 
54 
54 

38 
77 
35 
63 

31 
80 
54 
61 

2009-
2011 

33 
77 
48 
60 

38 See the national minimum thresholds applied in the table overleaf. 
39 The figures do not add up exactly to due to rounding error. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

37 

 
 
 
                                                             
Source: Közbeszerzések Tanácsa (HU), Ministrtvo za Finance (SI) 

The above figures can be expressed in terms of ‘odds ratios’: this is the odds for an SME to be awarded x 
euro worth of contract below the thresholds (q/(1-q)), divided by the corresponding odds for above-
threshold procurement (p/(1-p)); where p and q are simply the observed share of the procurement 
volume above and below thresholds secured directly by SMEs – reported from Hungary and Slovenia. 
In the case of Hungary the odds ratio is 0,77/(1-0,77)  0,33/(1-0,33) = 6,61. For Slovenia, the odds 
ratio is 1,62. The geometric mean of these figures is 3,27, which has been taken to roughly estimate for 
the remaining 25 EU Member States to what extent the odds of SMEs securing public contracts in 
below-threshold procurement is larger than that in above-threshold procurement– the latter having 
been estimated from the sample of contract award notices published on TED, presented in Chapter 2.2.  

Exhibit 2-15: National thresholds underlying official statistics for below-threshold procurement, 
2011 

Hungary 

Slovenia 

Services 

‘Classic’ public procurement contracts 
Supplies 
Works 
8 million 
15 million 
HUF 
HUF 
(ca. 30.000 
(ca. 55.000 
euros) 
euros) 
40.000 
80.000 
euros 
euros 

8 million 
HUF 
(ca. 30.000 
euros) 
40.000 
euros 

Works 
100 million 
HUF 
(ca.373.000 
euros) 
160.000 
euros 

Utilities procurement 
Supplies 
50 million 
HUF 
(ca.187.000 
euros) 
80.000 
euros 

Services 
50 million 
HUF 
(ca.187.000 
euros) 
80.000 
euros 

SMEs’ share in below-threshold procurement was simply calculated backwards from this odds ratio and 
the estimates for above-threshold procurement. Subsequently, this estimated share of below-threshold 
procurement secured by SMEs was applied to the estimated volume of below-threshold procurement by 
country. Figures on the overall volume of below-threshold procurement were sourced from the 
Commission’s Annual Public Procurement Implementation Review 2012 for 15 Member States.40 For 
the rest, below-threshold procurement volumes were extrapolated from the total expenditure by general 
government and utilities on works, goods and services, as estimated by the DG MARKT in its statistical 
publication ‘Public procurement indicators 2011, by applying the above-mentioned 15 Member States’ 
average ratio of below-threshold procurement versus total expenditure.41 This crude method yields an 
estimate of 58 percent for SMEs’ share in below-threshold procurement. 

Exhibit 2-16: Estimation of SMEs’ share of contract value awarded in below-threshold public 
procurement (extrapolation method) 

Country 

Austria  
Belgium  
Bulgaria  
Cyprus  
Czech Republic  
Germany  

SMEs’ share (study estimates) 
Below-
threshold 

SME odds 

ratio (1) 

Above-
threshold 
(%) 

(%) 

Above-
threshold 
procurement 
(bn euros) 

Below-
threshold 
procurement 
(bn euros) 
(2) 

p 

30 
37 
52 
47 
35 
48 

q 

58 
66 
78 
74 
64 
75 

q/(1-q) 
p/(1-p) 
3,27 
3,27 
3,27 
3,27 
3,27 
3,27 

A 

5,5 
10,9 
2,8 
0,9 
9,5 
33,8 

B 

12,8 
10,6 
1,1 
0,4 
12,7 
98,2 

Below-
thresh. proc. 
awarded to 
SMEs  
(bn euros) 

q/100*B 

 7,5  
 7,0  
 0,8  
 0,3  
 8,1  
 74,0  

40 European Commission (2012): Annual Public Procurement Implementation Review 2012. 
http://ec.europa.eu/internal_market/publicprocurement/docs/implementation/20121011-staff-working-
document_en.pdf 
41 European Commission (2011): Public Procurement Indicators 2011.  
http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/public-procurement-
indicators-2011_en.pdf 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

38 

 
 
 
 
 
 
 
 
                                                             
Country 

SMEs’ share (study estimates) 
Below-
threshold 

SME odds 

ratio (1) 

Above-
threshold 
(%) 

(%) 

Above-
threshold 
procurement 
(bn euros) 

3,27 
Denmark  
3,27 
Estonia  
3,27 
Greece  
3,27 
Spain  
3,27 
Finland  
3,27 
France  
6,61 
Hungary  
3,27 
Ireland  
3,27 
Italy  
3,27 
Lithuania  
3,27 
Luxembourg  
3,27 
Latvia  
3,27 
Malta  
3,27 
Netherlands  
3,27 
Poland  
3,27 
Portugal  
3,27 
Romania  
3,27 
Sweden  
1,62 
Slovenia  
3,27 
Slovakia  
3,27 
United Kingdom  
Total EU 27  
3.42 
Notes:  (1)  Geometric  average  of  HU  and  SI  value  for  all  other  Member  States.  (2)  Figures  in  italics  are 
extrapolations (3) Official national statistics used for Hungary and Slovenia instead of study estimates 

11,8 
2,6 
4,7 
25,1 
8,1 
80,7 
5,1 
3,5 
45,9 
1,7 
0,6 
3,6 
0,3 
9,7 
28,6 
3,7 
10,4 
15,4 
1,9 
4,0 
94,7 
425,5 

65 
51 
92 
47 
57 
60 
77 (3) 
53 
45 
59 
81 
90 
54 
48 
53 
43 
72 
44 
60 (3) 
52 
54 
58 

36 
24 
78 
21 
29 
31 
33 (3) 
25 
20 
30 
57 
74 
26 
22 
25 
19 
44 
19 
48 (3) 
25 
26 
29 

Below-
threshold 
procurement 
(bn euros) 
(2) 
6,2 
0,5 
2,9 
29,7 
6,8 
14,3 
1,4 
9,3 
43,7 
1,2 
1,2 
0,7 
0,1 
35,6 
48,5 
4,8 
3,5 
12,4 
0,9 
0,9 
60,1 
420,4 

Below-
thresh. proc. 
awarded to 
SMEs  
(bn euros) 
 4,0  
 0,2  
 2,7  
 13,9  
 3,9  
 8,5  
 1,1  
 4,9  
 19,7  
 0,7  
 1,0  
 0,6  
 0,1  
 17,0  
 25,6  
 2,1  
 2,5  
 5,4  
 0,5  
 0,5  
 32,5  
 245,2  

2. TED-subsample 

As explained earlier, the database of contract award notices published on TED contains numerous 
single awards (i.e. lots) with values very substantially lower than the thresholds set up in the Directives 
(and updated in subsequent regulation). After filtering the analysed sample of CANs according to a 
simplified set of value thresholds, as presented in the exhibit below, almost 68 percent of all single 
awards remained in the database as having contract values below the thresholds. Whereas these ‘low-
value’ contracts are surely different from genuine below-threshold procurement, it was attempted to use 
them as proxies.  

Exhibit 2-17: Value thresholds applied to contract award notices to proxy below-threshold 
procurement (based on EU-thresholds in effect as of 1 January 2012) 

‘Classic’ public procurement contracts 
(18/2004/EC) 
Supplies 
 200.000 

Services 
200.000 

Works 
5 million 

Works 
5 million 

Threshold used 
(euros) 

Utilities procurement  
(17/2004/EC) 
Supplies 

400.000 

Services 
400.000 

The statistical analysis shows that among these relatively ‘low-value’ single awards, SMEs were able to 
secure directly (as single contract or leader of a group of companies) 59 percent in terms of total value. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

39 

 
 
 
 
 
 
 
Exhibit 2-18: SMEs’ share of ‘low-value’ contracts published on TED won, by aggregate value of 
contracts and Member State, average total for 2009-2011 (percent) 

The two approaches yield very similar results - 58 percent and 59 percent, respectively. The resulting 
figure of 58-59 percent could be regarded as the best available estimate to date for SMEs’ participation 
in below-threshold procurement. However, it should be noted that both calculation methods took as the 
point of departure the previous estimate for the full above-threshold sample, which could (and probably 
is) already biased.  

3. Survey results 

The online survey among tenderers (presented in more detail in Chapter 2.5.2.) produced a very similar 
result. From the latest below-threshold contracts in which companies in the sample participated, 61 
percent in terms of total value was awarded to an SME in terms of value (73 percent of the contracts). It 
must be borne in mind, however, that the sample was not representative of all European companies 
participating in below-threshold procurement. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

40 

 
 
 
 
 
 
 
2.4 SME participation and success rate 
Results of an online survey among identified tenderers in above-threshold procurement and additional 
randomly selected European companies show, as expected, that larger companies generally submit 
more tenders – both above and below the EU-thresholds. The figures overleaf confirm that the 
proportion of companies submitting no or only 1 to 4 tenders in the last closed financial years gradually 
decreases when looking at larger company size classes; whilst the proportion of those submitting 20 to 
49, or 50 and more tenders annually increases. However, the difference between micro- and small 
enterprises is relatively small; the gap between small and medium, and medium and large companies is 
considerably larger. The limitations of the online survey do not allow for an analysis of factors 
explaining a higher or lower prevalence of companies to participate in public procurement - e.g. 
country, sector, level of experience, internal capacities, participation in wider business networks etc. It 
may be assumed – based on only limited survey data - that the main explanatory factor is the sector in 
which the company or business unit is active: if this sector is generally dependent upon public sector 
clients, the number of tenders submitted by the company is higher, as competing for public contracts is 
the main focus of their business strategy. 

Interestingly, the success rate of companies does not seem to differ by enterprise size class. Around half 
of tenderers in each size class reported a success rate of above 25 percent and around one fifth-one 
fourth of tenderers were successful more than 50 percent of the time. Extreme values (i.e. no success or 
a success rate of above 75 percent) are more prevalent among micro and small enterprises, but this is to 
a large extent only a sample size effect: they submitted much less tenders in the first place. 

Exhibit 2-19: Number of tenders submitted in the last financial year, by company size 
class (percent) 

Above thresholds 

Below thresholds 

Number of responses = 1.320 

Number of responses = 1.305 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

41 

 
 
 
 
 
 
 
Exhibit 2-20: Proportion of successful tenders in the last financial year, by company 
size class (percent) 

Above thresholds 

Below thresholds 

Number of responses = 909 

Number of responses = 1.133 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

42 

 
 
 
 
 
 
 
 
2.5 Additional channels for SMEs’ participation 
The discussions in previous sections were based on estimates on the number and value of public 
contracts directly awarded to SMEs, or to groupings of companies led by an SME. However, SMEs may 
also take part in the delivery of public contracts through other channels: 

1.  as member (but not leader) of a consortium or other joint bid arrangement 

2.  as a subcontractor 

3.  as a generic supplier not named as subcontractor 

This study has tried to estimate the relative weight of SMEs in the first two of the above channels – both 
in above- and below-threshold procurement. For this purpose, respondents to the online company 
survey were asked to report how the value of the last public contract they took part in (i.e. they were not 
necessarily the lead contractor to which the contract was awarded) was split up among companies 
participating in its delivery, distinguishing between SME and non-SME participants. The possible 
setups for delivering the contract included – apart from delivery by a single company – consortia or 
other forms of joint bidding, and subcontracting arrangements. The reported values under these setups 
were translated into aggregate estimates concerning the two indirect channels for SME participation in 
public procurement. 

 Procurement channels above thresholds 

2.5.1
Of the most recent contracts above thresholds in the sample, more than half (54 percent) were service 
contracts, 37 percent were supply contracts and only 9 percent of the contracts concerned public works 
(see Exhibit 2-21). 28 percent were contracts under some framework agreement while 72 percent were 
single contracts. 

The value of the above-threshold contracts in the sample, as in the TED database, ranged on a wide 
scale: 50 percent of the contracts were below 225.000 euros while the highest 1 percent of the contracts 
was worth 37 million euros or more. The highest reported contract was 350 million euros. The average 
value of the contracts included in the sample was ca. 824.000 euros. The value of public works contracts 
were, on average, higher than supply or service contracts. The average value of a public work contract 
was around 2 million euros. An average service contract was worth 723.000 euros and a supply contract 
668.000 euros. These values are broadly similar to the average values of all single awards (contracts 
awarded for a specific lot) found in the TED database. For 2011, the average values, per award, for all 
above-threshold contracts were at around 3 million euros for public works, 450.000 euros for supplies 
and 1 million euros for services.  

Exhibit 2-21: Distribution of above-
threshold contracts in the sample by type 
(percent) 

Exhibit 2-22: Mean and median values of 
above-threshold contracts in the sample by 
type of contract (in thousand euros) 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

43 

 
 
 
 
 
 
Exhibit 2-23: Proportion of different 
delivery arrangements by size class of 
respondent, above thresholds (percent) 

Most of the surveyed organisations, 72 percent 
(643 respondents), reported that they performed 
the contracted work above EU threshold on their 
own (see Exhibit 2-28). 20 percent of the 
companies (180) performed the work involving 
some form of subcontracting: 173 of respondents 
were the lead contractors and 7 were 
subcontractors to another company in their last 
above-threshold procurement contract. The 
proportion of joint bids/consortium 
arrangements in the sample is low: only 8 percent 
of the respondents (71) performed their most 
recent public contract above the threshold in such 
an arrangement – either as leader or as 
participant.42 Exhibit 2-23 also suggests that the 
larger the company, the higher is the probability 
that they have done the work on their own, but 
also the inclusion of subcontractors - while the 
significance of joint bids decreases.  

Extracting the size class of the company being awarded the most recent contract the respondents 
reported about, the survey gave SMEs a 65 percent share (571 contracts). For comparison, the statistical 
analysis of CANs suggested that SMEs are awarded only 56 percent of contracts in the EU-27. Factoring 
in the fact that large companies typically secure more contracts (their proportion amongst individual 
companies winning contracts should therefore be lower than the proportion of contracts awarded to 
large enterprises), the sample in this regard seems to be representative. In terms of total value of the 
contracts awarded however, SMEs could secure only a 23 percent share as direct contractors according 
to the survey, whereas the statistical analysis estimated a 29 percent share for 2009-2011. This is 
probably the result of the high standard deviation of contract values and the relatively small sample 
size, although the difference between survey results and the statistical analysis is not wide. 

Exhibit 2-24: Split of above-threshold contracts by size class of company, survey sample 
versus TED-based estimates (percent) 

By number 

By value 

Looking at the three main channels separately, the analysis of survey results suggest that SMEs do 
indeed benefit from public procurement above the EU-thresholds through channels other than only 
being awarded a contract directly.  

  From among the 635 companies that performed the work on their own, without involving other 
companies, 413 (65 percent) were SMEs, being awarded 49 percent of public contracts in terms 
of value (these contracts tended to be of lower value).  

  From the altogether 66 contracts that were awarded to a consortium or similar grouping of 
companies, 52 (79 percent) were led by an SME. On average, the lead company in such an 
arrangement was responsible for only 68 percent of the work (42 percent if the lead was an  

42 Note that contracts performed under a consortium arrangement may also involve additional subcontractors. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

44 

 
 
 
 
 
 
                                                             
 
SME, and 73 percent if it was a large 
enterprise). From the remaining, 30 
percent was done by other SMEs and only 
2 percent by large enterprises. Overall, 
whilst SMEs were awarded only 17 
percent of such contracts in terms of total 
value, their overall participation in their 
performance – including roles as partners 
or subcontractors – was 20 percentage 
points higher than that, approximately 37 
percent. 

  As concerning the 177 contracts that were 

implemented by companies using 
subcontractors, 106 (60 percent) were led 
by SMEs. Here, the main contractor was 
undertaking on average 56 percent of the 
work (68 percent if the main contractor 
was an SME and 55 percent otherwise). 
SME subcontractors accounted to 28 
percent of the remaining work, large 
enterprises only to 16 percent. In total, 
SMEs secured about 34 percent of the 
work in this group of above-threshold 
contracts, although they initially won 
only 10 percent of them in terms of value 
as lead contractors. 

Exhibit 2-25: Part of contract allocated to 
SMEs under different delivery 
arrangements, above thresholds (percent) 

Single contractor 

Joint bids 

Subcontracting 

Total 

Summing up all the three channels, the survey 
analysis shows that SMEs are much more 
involved in public procurement above the EU-
thresholds than their share is among companies 
that were directly awarded such contracts. It is 
estimated on the basis of the survey that SMEs’ 
share in the actual performance of above-
threshold contracts is 16 percentage points higher 
than the share they directly secure in terms of total value of contracts (39 percent versus 23 percent in 
the survey). If we use the 29 percent estimate from the statistical analysis rather than the survey’s result 
for gauging the volume of contracts directly awarded to SMEs, we may set the total participation of 
SMEs at ca. 45 percent for the EU-27. 

 Procurement channels below thresholds 

2.5.2
Following questions on above-threshold procurement, respondents to the survey were also asked to 
provide some information on the latest public procurement contract below the thresholds they were 
involved in – not necessarily as lead contractor.  

Similarly to what was reported by respondents for above-threshold procurement, more than half (58 
percent) of recent below-threshold contracts were service contracts. Around one third (30 percent) were 
supply contracts and the remaining 12 percent of the contracts were for public works (see Exhibit 2-26). 
Evidently, this follows from the fact that the two sections of the survey were filled in by the same 
companies from the same industries.43 

43 
 The small difference is explained by a number of companies not having reported data for one of the procurement 
types - usually for above-threshold procurement. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

45 

 
 
 
                                                             
 
 
 
 
The average value of the contracts was 151.000 euros44, with public works contracts being the largest, 
with an average value of 708.000 euros, followed by supply (74.000) and service contracts (70.000). 
Median contract values were considerably lower, with only 52.000 for the full sample. Note that the 
contracts about which the companies were responding were typically not ‘low-value contracts’, i.e. they 
were mostly above the national thresholds, thus subject to national public procurement legislation. 

Exhibit 2-26: Distribution of below-
threshold contracts in the sample by type 
(percent) 

Exhibit 2-27: Mean and median values of 
below-threshold contracts in the sample by 
type of contract (in thousand euros) 

Exhibit 2-28: Proportion of different 
delivery arrangements by size class of 
respondent, below thresholds (percent) 

As in above-threshold procurement, the large 
majority of the companies surveyed (79 percent, 
879 respondents) performed their latest below-
threshold procurement contract as a sole 
contractor (see Exhibit 2-28). Around one sixth of 
the respondents (17 percent, 189 respondents) 
worked on contracts involving subcontracting. 
Most of these contracts were led by the 
respondent’s company. Joint bids/consortium 
arrangements in the sample accounted for 4 
percent (50 respondents). As in the answers on 
arrangements in recent above-threshold 
procurement, we can again observe that the 
proportion of joint bids decreases by size.  

Considering that the question was answered by 
the same companies than the section on above-
threshold procurement, these similarities 
between the relative significance of different 
arrangements were expected and should not be 
seen as evidence that the role of different channels is genuinely similar in above- and below-threshold 
procurement. 

44 A minority of responses were excluded  from this calculation and from the analysis  of channels, as the contract 
values indicated were too high for below-threshold procurement. Furthermore, these contracts would have bad an 
overly large influence on the results, bringing in significant bias.. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

46 

 
 
 
 
 
 
                                                             
 
Almost three quarters, 73 percent of the below-
threshold contracts reported about in the 
questionnaire were awarded to SMEs. This is 
more or less comparable with the simple average 
of Hungarian and Slovenian official data on 
SMEs’ proportion among the winners, i.e. 78 
percent (by the number of contracts). 

Exhibit 2-29: Split of below-threshold 
contracts by size class of company, survey 
sample 

In terms of total value of the contracts awarded, 
the analysis of survey results indicate a share of 
61 percent for SMEs – well similar to the estimates presented in Chapter 2.3, i.e. of 58-59 percent. The 
breakdown of the headline figure to the three main channels confirms that when taking account of the 
indirect participation of SMEs as partners under joint bids and through subcontracting, SMEs enjoy a 
greater access to public procurement below the EU-thresholds as well, in line with the findings in the 
previous subchapter, although this additional gain is significantly less than in above-threshold 
procurement. 

Exhibit 2-30: Part of contract allocated to 
SMEs under different delivery 
arrangements, below thresholds (percent) 

Single contractor 

Joint bids 

Subcontracting 

 

73 percent of the companies that 
performed their latest below-threshold 
public procurement contract on their 
own, without involving other companies 
were SMEs, and the aggregate value of 
contracts awarded to them made up 67 
percent of the total sample.  

  81 percent of the contracts awarded to a 
consortium of companies were led by an 
SME. The lead company took, on average, 
54 percent of the budget (41 percent if the 
lead was an SME and 79 percent if it was 
a large enterprise). 41 percent of the 
remaining work was performed by other 
SMEs – consortium partners or 
additional subcontractors - and 4 percent 
by large enterprises. The contracts 
awarded directly to consortia led by an 
SMEs accounted for 66 percent of the 
total value of contracts under this 
channel, but ultimately SMEs took 68 
percent of the budget, when correcting 
for the share of work that consortium 
partners or subcontractors did. 

 

Total 

70 percent of the sample’s below-
threshold contracts implemented by 
companies using subcontractors were led 
by an SME. The main contractor was 
responsible, on average, for 51 percent of 
the work (56 percent if the main 
contractor was an SME, and 46 percent if 
not). Subcontractors classified as SMEs 
accounted to 43 percent of the remaining 
work, whereas large enterprises only to 5 
percent. The value of contracts under this channel awarded directly to an SME amounted to 
only 52 percent of the total in terms of aggregate value, but SMEs ultimately could claim about 
72 percent of the total budget. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

47 

 
 
 
 
 
 
 
 
The combination of findings for the three main channels above indicates that the budget of below-
threshold contracts allocated ultimately to SMEs is 8 percentage points higher than the share they can 
secure directly (69 percent versus 61 percent), although this additional share for SMEs is much lower 
than in procurement above the EU-thresholds. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

48 

 
 
 
 
 
2.6 Factors influencing SMEs’ share in winning public 

contracts 

Apart from differences between countries in the extent to which SMEs are able to secure public 
contracts, there are a number of common factors that can influence their chances in public 
procurement. Academic literature and European policy papers list several actions that can help SMEs to 
reach a level playing field, starting from the use of lots to framework agreements with several suppliers. 
Below we provide an analysis of how a set of selected factors impact on SMEs’ success in winning above-
threshold public contracts, based on information extracted from contract award notices in the TED 
database. The following factors have been reviewed:  

  The overall contract value for a single award (lot) 

  The type of contract (or, in a more refined breakdown, the sector of the goods or services 

procured) 

  The type of procurer 

  The publication of prior information 

  The tender procedure chosen 

  The selection criteria used (notably: the use of the ‘most economically advantageous tender’ 

criteria vs. lowest price) 

In the analysis, first a descriptive analysis is provided of the patterns of SME participation in public 
tenders, broken down by the above categories. Notably, the analysis reveals differences between SMEs’ 
accesses to public contracts under various settings. Second, a regression analysis is presented which 
brings all the factors together and estimates the impact of each of the factors on SMEs’ probability of 
winning public contracts above the EU-thresholds. More specifically, this logit (logistic regression) 
model calculates how the above factors, on average, influence the odds that a specific public contract 
will be won by an SME. The descriptive analysis covers only Member States of the EU-27, whilst the 
regression model includes data from EEA countries.  

 Contract value 

2.6.1
The value of a public contract has a major, apparently one of the greatest, influence on the extent to 
which SMEs can access above-threshold procurement contracts.45 This is widely seen among 
stakeholders as the most important barrier, and according to the estimations this is arguably the 
greatest obstacle. According to the estimates in this study, the overall proportion of SMEs winning 
relative low-value contracts (i.e. single awards under contracts published by Member States in the TED 
database), contracts with a value of below 1 million euros, was in a rather narrow range of 55 percent -
62 percent. (See Exhibit 2-31and Exhibit 2-32 overleaf) 

The weight of micro-enterprises among the winners starts to decrease when the contract value exceeds 
100.000 euros. Small enterprises’ proportion among the companies being awarded above-threshold 
contracts is the greatest among contracts valued 30.000 – 300.000 euros, after which their share starts 
to decrease. Medium-sized enterprises seem to gradually increase their share up to a value band of 1 - 5 
million euros, and only losing ground when contract values start to exceed 5 million euros. In this 
highest value category, SMEs were only awarded 21 percent of contracts (17 percent in terms of value). 

45 Note that the value of many single contracts in the TED database is far below the EU thresholds: either because 
they are parts, lots, of larger contracts, because the estimated value was originally above the thresholds, or because 
they have been only voluntarily published on TED 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

49 

 
 
 
                                                             
Exhibit 2-31: Proportion of SMEs amongst 
successful bidders, by contract value (percent) 

Exhibit 2-32: Share of SMEs in the total value 
of contracts awarded, by contract value 
(percent) 

Margin of error: ±0,5-5,3 percent, median MoE: ±2,7 
percent 

Margin of error: ±0,5-6,7 percent, median MoE: 
±2,8 percent 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

50 

 
 
 
 
 
Exhibit 2-33: Trends in the estimated median 
value of CANs (thousand euros) 

Differences in the typical contract sizes might 
have an impact on SMEs’ access across years and 
in different countries. Between 2009 and 2011, the 
estimated median values of all CANs published for 
procurement in the EU Member States were 
trending slightly downwards, in direct contrast to 
the upward trend seen from 2005-2008. It must 
be noted though that the differences between the 
annual median values is not very large and 
differences may be due to normal fluctuations on 
the public procurement market.46 

The estimated median values of public 
procurement contracts show a differentiated 
picture across individual Member States. 
Denmark and Italy have the highest median value 
of contracts. These have median values of above 
800.000 euros. Generally, estimated median 
values of public procurement contracts tend to be 
lower for newer Member States. 9 out of the 10 
countries with the lowest estimated median contract values (below 320.000 euros) have joined the EU 
most recently. The only notable exception is France. 

The estimated median values of the estimated aggregate value of a public tender (Exhibit 2-34, Exhibit 
2-35) do not offer explanations about eventual barriers to SMEs as they tender for single contracts (i.e. 
individual awards/lots). The estimated median aggregate CAN value of 330.000 euros is much higher 
than the estimated median value for single awards of 50.000 euros. Estimated differences across 
Member States are more wide-ranging for single awards. Estimated differences range from 
approximately 460.000 euros in Denmark to 4.000 euros in Lithuania. The ‘typical’ contract seems to 
be, if purely from a financial perspective, accessible for SMEs, considering the thresholds above which 
SMEs find it difficult is approximately 300.000 euros. 

46  For  instance,  the  database  contains  for  certain  years  very  large  numbers  of  CANs  covering  very  low  value 
contracts such as supplies of pharmaceuticals or training services. In some cases these notices relate to single lots 
or groups of lots one large public procurement procedure. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

51 

 
 
 
                                                             
 
Exhibit 2-34: Estimated median aggregate 
value of CANs, by Member State, 2011 
(thousand euros) 47

Exhibit 2-35: Estimated median value of 
single awards, by Member State, 2011 
(thousand euros)

Exhibit 2-36: Relationship between the median 
value of single contracts and proportion of 
contracts won by SMEs 

The scatter diagram (Exhibit 2-36) suggests there 
is some marginal correlation between the median 
value of single awards (lots) and the proportion of 
these contracts won by SMEs in the EU. On 
average, the higher the median value of a single 
award (lot), the lower the success rate of SMEs. 
Some outliers, e.g. Poland and Lithuania with 
public supply contracts that often contain a 
massive number of lots (for instance, medicines, 
normally supplied by large enterprises) bias the 
diagram slightly. Another outlier is Luxembourg, 
having high median contract values but high SME 
shares as well. 

Note: R2 measures the goodness-of-fit of the trend line 
to the data 

47 Calculated for all CANs published on TED 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

52 

 
 
 
 
 
 
                                                             
 
Exhibit 2-37: Comparison of the number of 
CANs published and the number of single 
awards (lots) (percent) 

Exhibit 2-38: Distribution of CANs by the 
number of lots they contain, by Member State 
(2009-2012) (percent) 

 Breaking tenders down into lots is one of the 
most important tools to help SMEs access public 
contracts. This mitigates the above problem with 
large contract sizes, which would require technical 
capacities and financial resources that SMEs do 
not possess. However, by breaking down contracts 
into different professional or geographical tasks 
will alleviate this. 

 The overall proportion of notices being broken 
down into lots has remained consistent since 
2009. There was a slight increase from 2009-2010 
(27 percent to 29 percent of contracts being split 
into lots); however since then, the proportion has 
remained stable. On average, 17 percent of CANs 
contained between 2 and 4 single awards, while 7 
percent comprised between 5 and 9 awards. 3 
percent of CANs were split into 10-19 single 
awards, with the remaining 2 percent being split 
into 20-50+ awards. 71 percent of CANs published 
were single-contract tenders. 

Considerable differences exist in the propensity of 
countries to use lots. In Latvia, Cyprus, France 
and Slovenia, more than 2 in 5 tenders above the 
EU threshold were broken down into lots in the 
2009-2012 period. On the other end, one can find 
authorities from Austria, Lithuania, Malta, Czech 
Republic and Germany, who rarely use the 
opportunity of lowering the entry barrier to SMEs 
through lots. 

The simple comparison of this league table with 
the proportion of SMEs in above-threshold 
procurement in these countries does not reveal an 
apparent link between the two. The logistic 
regression (presented later in this section) does 
show there is a connection between the number of 
lots and SMEs odds of winning above threshold 
contracts. Contracts broken down into more lots 
are more likely to be won by SMEs, even when 
accounting for the resulting lower contract sizes. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

53 

 
 
 
 
 
 
 
  The type of contract 

2.6.2
SMEs account for a considerably lower proportion of above-threshold supplies contracts than public 
works contracts, 48 percent and 69 percent, respectively (average across the three years, 2009-2011). 
The share in contract value secured by SMEs ranges from 25-26 percent in supplies and works to 34 
percent in services. Although works contracts tend to be larger than service and supplies contracts, 
SMEs still have a reasonable chance of accessing these contracts: public works often include many 
smaller tasks and are often broken down into separate lots that are more suitable for SMEs. 
Nevertheless, this category also contains some of the largest contracts which SMEs normally cannot 
access. The difference between the number of contracts secured and the value of contracts is particularly 
evident for micro and small enterprises. 

Exhibit 2-39: Share of successful bidders, 
by company size and by nature of contract 
(percent) 

Exhibit 2-40: Share of the total value of 
contracts awarded, by company size and 
by nature of contract (percent) 

Margin of error: ±1,2-3,3 percent, median MoE: 
±2,0 percent 

Margin of error: ±1,1-3,7 percent, median MoE: 
±2,0 percent 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

54 

 
 
 
 
 
 
 
  The sector of the goods or services 

2.6.3
The three main types of public contracts can be broken further down enable a more detailed analysis of 
SMEs’ access to public procurement by the nature of the goods or services they supply. The main sector 
code indicating the type of good or service on the contract award notice, categorised according to the 
Common Procurement Vocabulary (CPV), are used to form seven product or service groups: 

  Commodities and food, including agricultural products, fuels and construction materials (two-

digit CPV codes 03, 09, 14, 15, 24, 41, 44) 

  Machinery and equipment, grouping together a range of manufacturing sectors (CPV 16, 30, 31, 

32, 34, 35, 38, 42, 43) 

  Medical products, containing primarily pharmaceuticals (CPV 33) 

  Other manufacturing, including the remaining light and heavy industries such as textiles, 

rubber and plastic products or toys (CPV 18, 19, 22, 37, 39, 48) 

  Construction (CPV 45) 

  Business services, combining traditional ‘business services’ (law, marketing, consulting etc.) 

with real estate, engineering, IT and research services (CPV 70, 71, 72, 73, 79) 

  Other services, grouping together all other services (CPV 50, 51, 55, 60, 63, 64, 65, 75, 76, 77, 

80, 85, 90, 92, 98) 

The first four of the above sectors can be equated with supplies contracts; construction with public 
works; and the two service sectors with service contacts.  

In terms of aggregate value of contracts awarded, the analysis shows that SMEs play only a marginal 
role in the supply of commodities (16 percent), but on the other hand, they accounted to more than half 
(57 percent) of the contract volume in the ‘other manufacturing’ sectors. Their share seems to be at a 
similar level, somewhere between 25 percent and 32 percent, in the other five sectors.48 

48  The  estimate  for  medical  products  is  strongly  biased  by  one  very  large  UK  contract  from  2010,  apparently 
awarded to a medium-sized enterprise. Discarding this contract, SMEs’ share for 2010 would have been 30% and 
the three-year average 28%. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

55 

 
 
 
                                                             
Exhibit 2-41: Proportion of SMEs amongst 
successful bidders, by sector (percent) 

Exhibit 2-42: Share of SMEs in the total value 
of contracts awarded, by sector (percent) 

Margin of error: ±1,3-5,9 percent, median MoE: ±3,2 
percent 

Margin of error: ±1,3-6,1 percent, median MoE: 
±3,3 percent 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

56 

 
 
 
 
 
 
 
 
  The type of the procurer 

2.6.4
The proportion of above-threshold public procurement contracts awarded to SMEs in the EU-27 is 
relatively high for tenders launched by regional and local authorities and agencies (62 percent). SMEs 
do also have the most to benefit from local procurement in terms of contract value (37 percent). SMEs 
are also estimated to account for a relatively large proportion of contracts awarded by national (central) 
government and its agencies (59 percent), but as this category includes a number of high-value contract 
to which they do not have access, SMEs’ share in terms of value is considerably lower (21 percent). SME 
access to public contracts appears to be particularly low among utilities, especially in terms of value (15 
percent).  

Exhibit 2-43: Successful bidders by company 
size and by type of awarding body (percent) 

Exhibit 2-44: Share of the total value of 
contracts awarded, by company size and by type 
of awarding body (percent) 

Margin of error: ±1,2-5,6 percent, median MoE: ±2,5 
percent 

Margin of error: ±1,3-6,0 percent, median MoE: ±2,6 
percent 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

57 

 
 
 
 
 
 
 
 
  The publication of prior information 

2.6.5
Prior Information Notices or, for utilities, Periodic Indicative Notices (PINs) are voluntary publications 
defined under Article 35(1) of Directive 2004/18/EC and article 41(1) of Directive 2004/17/EC that 
inform potential bidders about the key characteristics of upcoming tenders. They allow CAEs to shorten 
the time limits later in the tender procedure. The publication of PINs is advocated by the European 
Code of Conduct 49 as a tool that can help SMEs participating in public procurement by allowing them 
sufficient time to organise their team and to prepare their bid.  

According to the analysis of above-threshold procurement contract award notices, whether a PIN was 
published or not prior to the procedure does not seem to have an impact on the overall success of SMEs 
in securing public contracts above the EU-thresholds. Between 2010 and 2011, SMEs won 55 percent of 
all contracts under both scenarios, corresponding to 29-30 percent of total public procurement volume. 
Interestingly, certain differences emerged between individual SME categories. Small companies seem to 
have been somewhat more successful in public procurement above the EU-thresholds if a PIN was 
published beforehand (24 percent versus 20 percent when no PIN was published); but their gain was 
counterbalanced by the loss of micro- and medium-sized enterprises, whose proportion was 2 
percentage points lower in tenders for which PINs were published. This result could however be merely 
an effect of sampling bias, although the difference between publication and non-publication of PINs is 
significant in one case, for small enterprises in 2011, with non-overlapping 95 percent confidence 
intervals (and close to be significant at 5 percent for micro-enterprises in 2011). 

Exhibit 2-45: Proportion of SMEs amongst 
successful bidders, by publication of PINs 
(percent) 

Exhibit 2-46: Share of SMEs in the total 
value of contracts awarded, by publication 
of PINs (percent) 

Note: Data for 2009 were not available 
Margin  of  error:  ±1,0-3,9  percent,  median  MoE: 
±2,0 percent 

Margin of error: ±1,1-4,0 percent, median MoE: 
±2,0 percent 

49 Available at: 
http://ec.europa.eu/internal_market/publicprocurement/docs/sme_code_of_best_practices_en.pdf  

 SMEs' access to public procurement markets and aggregation of demand in the EU 

58 

 
 
 
 
 
 
 
 
                                                             
  The tender procedure 

2.6.6
The proportion of SMEs amongst successful bidders was broadly consistent amongst open, restricted 
and negotiated tender procedures in the EU. Under these procedures, the proportion of enterprises 
winning bids was also relatively steady across all the three years. Micro enterprises won between 15-20 
percent, small enterprises 21-22 percent and medium-sized enterprises 17-18 percent. Please note in the 
analysis, all sub-types of restricted tender procedures and all sub-types of negotiated tender procedures 
were grouped together. Competitive dialogue was excluded from this analysis due to insufficient sample 
size. 

On the other hand, SMEs’ shares of the total value of above-threshold contracts awarded are less 
consistent across the different types of procedures, with SMEs representing a much smaller share of the 
value of bids under negotiated procedures (which tend to be larger). SMEs account for 34 percent of 
contracted tendered through open procedure and 29 percent tendered through restricted procedures, 
but only for 19 percent under negotiated procedures, in terms of value. SMEs’ share under open tender 
bids has remained consistent over this 3 year period, whereas the other two large procedure types 
fluctuated more strongly. 

Exhibit 2-47: Proportion of SMEs amongst 
successful bidders, by type of procedure 
(percent) 

Exhibit 2-48: Share of SMEs in the total 
value of contracts awarded, by type of 
procedure (percent) 

Margin of error: ±1,1-5,5 percent, median MoE: 
±3,5 percent 

Margin of error: ±1,1-5,5 percent, median MoE: 

±3,7 percent 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

59 

 
 
 
 
 
 
 
 
 
  The selection criteria 

2.6.7
Estimates suggest that there is no difference between SMEs’ rate of success irrespectively of whether the 
‘most economically advantageous’ (MEAT) criterion or the ‘lowest bid’ criterion is applied in the 
evaluation of tenders: SMEs have won 54-56 percent of tenders in both cases. Conversely, SMEs’ share 
of contracts in terms of value under the MEAT criterion (29 percent) is somewhat lower than under 
‘lowest bid’ (34 percent).  

This result may, as such, not be supportive of the arguments often voiced by SME organisations and the 
Commission to use MEAT criteria more often, as MEAT would help quality-conscious and flexible SMEs 
become more successful in public procurement, and would maximise value for money for the procurer. 
However, this conclusion is likely to be premature. A possible explanation for the apparent 
disadvantage of SMEs under the MEAT criterion may be that procurers tend to use the MEAT criteria 
for high-value contracts more often. Therefore, purely on accounts of larger contract values, SMEs have 
a correspondingly lower chance of winning these tenders. However, as we will see from the results of the 
compound analysis of influencing factors, the MEAT criteria also has a ceteris paribus negative effect 
on SMEs’ chances of winning contracts. Explanations for this phenomenon might revolve around the 
better access of SME traders to tenders aiming at the purchase of simple, unsophisticated supplies or 
simple services. 

Exhibit 2-49: Proportion of SMEs amongst 
successful  bidders,  by  criteria  applied 
(percent) 

Exhibit 2-50: Share of SMEs in the total 
value of contracts awarded, by criteria 
applied (percent) 

Margin of error: ±1,3-2,0 percent, median MoE: 
±1,5 percent 

Margin of error: ±1,3-2,1 percent, median MoE: 
±1,6 percent 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

60 

 
 
 
 
 
 
 
2.7 Compound analysis of the factors 
To assess the ceteris paribus effects
way, also controlling for contextual variables, a logistic regression analysis (logit) was conducted. This 
approach allows an interpretation of how specific factors influence the odds ratio for SMEs winning a 
specific contract.  

 of the different factors on SMEs’ participation in a systematic 

50

The analysis was based on the same three-year sample of contract award notices than the one used for 
the descriptive statistics above: i.e. 28.609 randomly selected CANs published on TED by EU Member 
States and EEA countries, for which the contract value was given and the size class of the winner had 
been identified. This sample was complemented by a ‘booster’ sample of 1.392 records from the year 
2011, focusing on framework agreements and centralized purchasing. The total starting sample thus 
contained 30.102 records, not all of were complete and used in the model estimations.  

Several alternative models were designed and tested, five of which are presented in this chapter. 
Although the analysis departs from a very simple model using only contract value as predictor of SMEs’ 
success, the aim was not to find the most efficient model (predicting well whether a specific contract 
would be won by an SME or not, whilst using only a limited number of predictor variables). With the 
exception of the first simplistic model all alternative models include a relatively large number of 
contextual and policy-related predictors to demonstrate in which direction they influence SMEs’ odds of 
winning. 

The outcome variable was a binary (dichotomous) variable in all models examined; taking the value of 1 if a 
specific contract had been won by SMEs and 0 if not. Explanatory variables were grouped into three categories: 

1. Country dummy variables (a specific country dummy variable takes the value of 1 if the given contract was 
awarded by a CAE in that country) to control for the aggregate impact of many important but unobservable 
country-level variables such as: different procurement rules and policies; varied procurement practices of CAEs; 
the overall strength of the SME sector.  

2. ‘Contextual’ explanatory variables: 
 

 

 

Dummies for the sector of the good or service provided, on the basis of the main CPV code: to control for 
differences in the sector context (these correspond to the six broad sectors presented in the descriptive 
analysis: commodities and food; machinery and equipment; medical products; other manufactured 
products; construction; business services; other services) 
Dummies for the type of procurer: distinguishing between national government and agencies; regional 
governments and agencies; utilities; and, other bodies obliged to apply public procurement rules 
The contract value: as the distribution values were highly skewed to the right, strongly biasing the 
analysis, the natural logarithm of the contract value was taken. To cater for specificities in the relationship 
between contract value and SMEs’ odds, a spline was added at the logarithm value 11 (corresponding to 
ca. 60.000 euros) and the interaction between values below this spline and the dummy for medical 
products, to filter out from the main coefficient the positive slope for medical supplies for low-value 
contracts. 

3. Key policy variables (which can be set or influenced by the CAE) were: 
 
 
 
 

Dummies for the main type of procedure chosen (open, restricted, negotiated) 
Dummy for cross-border procurement 
Dummy for centralized purchasing 
Dummy for framework agreements 

The individual models included all or only a selection of the above variables, and added certain additional 
interaction variables. The reporting of the impact each of the explanatory variables is based on ‘odds ratios’, 
which shows the odds of the chance of an SME winning public contracts if the explanatory variable is increased 
by one unit (in case of dummy variables; if the contract falls into the category indicated by the dummy) versus 

50 i.e. looking at the impact of one individual factor, all other things being equal 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

61 

 
 
 
 
 
  
 
 
                                                             
their odds otherwise, all other things held constant. If the odds ratio for a given predictor variable is above 1, this 
means that SMEs are more likely to win contracts for which this specific factor takes on a higher value. If the 
odds ratio is below 1, SMEs will be less likely to win contracts for which this factor takes a higher value. 

The report on the econometric analysis also indicates whether the estimated odds ratios for each of the predictors 
are significant at 5%, 1% and 0,1% levels (Wald test). 

The simplest of the models (Model 1) only contains the contract value, i.e. for a single award, as 
explanatory variable. The more complex models introduce country dummies (Model 2) and varying sets 
of key policy variables and additional ‘contextual’ variables (Models 3-5). 

Certain modifications to the value predictor were necessary from the outset. Charting whether the 
contract had been won by an SME (1 if yes and 0 if not) versus the logarithm of the contract value 
showed that this relationship is far from simple and one-directional. Exhibit 2-51 presents the actual 
data (hollow dots) together with a calculated empirical probability of an SME winning contracts at a 
given contract value, using locally weighted scatterplot smoothing (‘lowess’), one for the total sample 
and two curves breaking down contracts to medical supplies and others. For medical supplies, chances 
for SMEs are apparently modest for very low-value contracts51, then increasing slightly up to 
logarithmic value of about 10-11 (ca. 22.000-60.000 euros), to decrease above that point. For all other 
products and services, the slope remains negative at all contract values: moderately so below the 
logarithmic value of 11, but falling sharply above this threshold.  

Exhibit  2-51:  Empirical  probabilities  of  SMEs’ 
winning contracts as a function of ln(value) 

Exhibit  2-52:  Predicted  probabilities 
Model 1 

from 

To take these specificities into account, all models have therefore included a spline (a break in the 
regression curve) at the logarithmic value of 11, a dummy for medical products and an interaction term 
between the dummy and the contact value below the spline. The two dashed lines in Exhibit 2-52 
present the predicted probabilities coming from Model 1 (with the spline at 11), distinguishing medical 
supplies from other goods and services. They evidently fit the data much better than a hypothetical 
baseline logistic regression without using a spline and separating medical supplies. 

Impact of contract value 

Running the models confirm that the chances of SMEs winning public contracts start to decrease, 
relatively rapidly, above ca. 60.000 euros: this is the most significant predictor in all models. On the 

51  This  is  explained  primarily  by  contracts  covering  the  supply  of  pharmaceuticals  and  other  medical  products  – 
usually  won  by  large  enterprises  -  which  were  broken  down  to  a  very  large  number  of  single  lots  (especially  in 
Poland and Lithuania). 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

62 

 
 
 
 
 
 
 
 
                                                             
other hand, for contracts with lower values, and excluding medical supplies, the contract price does not 
seem to matter (the corresponding odds ratio barely differs significantly from 1 even in the simplest 
Model 1, and gets insignificant under all subsequent models). For medical supplies, the calculations 
confirm that the gradual increase in SMEs’ chances for lower-value contracts seen on the graph is 
significant. 

Impact of the country 

As already seen in Chapter 2.2.2, the country where the procurement takes place is a decisive factor in 
explaining SMEs’ access - a residual effect of important unobserved factors at Member State level, such 
as differences in law, institutional setting, market size, economic context, CAE practices etc. Taking the 
country with the lowest odds ratio (Sweden) as baseline, i.e. omitting this dummy from the model, we 
can see that the other country dummies are highly significant, except for a few countries with similarly 
low odds ratios (Austria, the Netherlands, Portugal or Spain). SMEs seem to be the most successful - on 
a ceteris paribus base - in accessing above-threshold contracts in Greece, Cyprus, Bulgaria, Malta, 
Estonia, Hungary and Latvia. 

Impact of ‘contextual’ variables 

As for the ‘contextual’ control variables, the sector (CPV code) of the good or service procured has a 
significant and very strong effect on the probability of SMEs winning contracts. SMEs rarely win 
contracts concerning medical products (mostly pharmaceuticals), commodities and food, and to a lesser 
extent in machinery and equipment and other services, even if their value is the same. They are however 
rather successful in supplying construction and business services, as well as manufactured goods other 
than machinery and pharmaceuticals. The Wald test of these variables confirms their strong 
significance versus the baseline category (construction), with the exception of other manufactured 
goods, which has a similar odds ratio than construction.  

The type of the procurer has generally only marginal impacts on the SMEs’ chances of winning 
contracts, with one notable exception: if the procurement is conducted by regional/local agencies and 
local authorities, this increase the probability for SMEs of winning contracts, holding all other factors 
(including the value of the contract) constant.  

Impact of ‘policy’ variables 

Concerning the explanatory factors that can be influenced by policy and CAEs, the analysis produced 
the following findings: 

  The specific tender procedure chosen, as already seen in the descriptive statistics, seems to have 
some impact on the opportunities of SMEs in public procurement above the EU-thresholds. The 
regression analysis indicates that, in comparison to open procedures (used as baseline) both 
restricted and negotiated procedures diminish the chances to SMEs, although the latter 
predictor does not have a significant influence on the outcome in the full model (Model 5).  

  The use of the MEAT criterion in the evaluation is not a significant explanatory variable in the 

models. 

  The publication of prior information notices does not influence SMEs’ chances either. 

  SMEs’ success in direct cross-border procurement does not seem to differ significantly from 
domestic procurement (it should be emphasized though that the size of the particular sub-
sample of cross-border contracts was small).  

  Centralized purchasing has a considerable negative effect on SME access (on a ceteris paribus 
basis), while framework agreements does not seem to have a significant influence on the 
outcome. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

63 

 
 
 
Exhibit 2-53: Key results of the regression analysis (estimated odds ratios)  

Notes: Detailed regression outputs from the five models can be found in the Annex.  

 SMEs' access to public procurement markets and aggregation of demand in the EU 

64 

 
 
 
 
 
 
 
 
  Introduction 

2.8 SMEs and cross-border procurement 
2.8.1
Cross-border procurement takes place when a public contract in a Member State is partly or fully 
performed by economic operators from abroad. The nature of involvement of foreign companies may 
vary, thus defining different channels for cross-border procurement. In (i) direct cross-border 
procurement, the contractor, single contractor or the leader of a joint bid, is registered in a different 
country than the country of the CAE. In (ii) indirect cross-border procurement, the economic operator 
with whom the contract was concluded is domestic, but a substantial part of the contract is performed 
by foreign firms. This may happen, for instance, through bidding through local subsidiaries, including 
foreign consortium partners or subcontractors, or delivering foreign supplies through local traders. 52 

The subsequent analysis looks at direct cross-border procurement only, where the single contractor or a 
leader of a joint bid is located abroad. The section will present key figures on the extent and patterns of 
direct cross-border procurement above the EU-thresholds and the share of SMEs winning such 
contracts. 

  Prevalence of direct cross-border procurement 

2.8.2
Between 2009 and 2011, a total of 16.317 awards were given to economic operators located in a foreign 
country in the EU-27, corresponding to 1,26 percent of all contracts. The annual figures show a slightly 
increasing trend, from 1,21 percent in 2009 to 1,33 percent in 2011. The aggregate value of these 
contracts is estimated at 40 billion EUR, around 3,4 percent of all above-threshold procurement. 

Exhibit 2-54: Direct cross-border procurement above the EU thresholds (2009-2011) 

2009 

2010 

2011 

Total 

Total contracts awarded (single awards) 
- domestic (and indirect cross-border) contracts* 
- direct cross-border contracts* 
Direct cross-border procurement as percent of 
all contracts 

Number of contracts 
391.784 
387.057 
4.727 

437.787 
432.422 
5.365 

469.443 
463.218 
6.225 

1.299.014 
1.282.697 
16.317 

1,21% 

1,23% 

1,33% 

1,26% 

Aggregate value of contracts (billion euros)* 
414,3  
402,4  
11,9 
2,87%  

Total contracts awarded 
- domestic (and indirect cross-border) contracts* 
- direct cross-border contracts* 
Direct cross-border procurement as percent of 
aggregate procurement value  
*  These  figures  are  partly  based  on  statistical  imputation  as  the  value  of  the  contract  was  not  indicated  in  all 
notices 

1.181,4  
1.141,8  
39,6 
3,35%  

377,5  
363,0  
14,5 
3,84%  

389,6  
376,4  
13,2 
3,39%  

Foreign companies’ participation in public procurement is more prevalent in smaller countries that may 
not have the domestic industrial base or specialized service providers necessary to meet certain public 
needs. The legal and institutional framework (e.g. the ease of acknowledging certificates issued by 
foreign authorities), on-the-ground practices (e.g. track record requirements, publication of information 
and acceptance of documents in other languages), political priorities and traditions of public bodies in 
interacting with foreign companies may explain the extent to which cross-border purchases occur 
directly, through awarding contracts to foreign companies, or rather through various forms of indirect 
cross-border procurement. 

52 This approach is consistent with the definitions set out in Ramboll (2011): Cross-border procurement above EU 
–thresholds. http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/cross-border-
procurement_en.pdf  

 SMEs' access to public procurement markets and aggregation of demand in the EU 

65 

 
 
 
 
 
                                                             
Statistical analysis of contract award notices show that the level of direct cross-border procurement is 
the highest in a set of small and open economies: Malta, Luxembourg, Ireland, Cyprus and Estonia 
(with more than 6 percent of above-threshold contracts awarded to foreign bidders). On the other end 
of the scale, Italy, Poland, Bulgaria, France and Spain show the smallest proportion of contracts 
awarded directly to foreign economic operators (at or below 1 percent).  

The picture is similar in terms of total value of direct cross-border procurement: Malta is in the lead 
with 53 percent of above-threshold public procurement spent on contracts that were awarded to 
companies from outside the country between 2009 and 2011. The figure is exceeding 15 percent in 
Greece, Cyprus and Latvia, but below 2 percent in the Netherlands, the United Kingdom, France and 
Spain. 

Exhibit 2-55: Share of public contracts 
awarded to companies located abroad, by 
number of contracts (percent) 

Exhibit 2-56: Share of public contracts 
awarded to companies located abroad, by 
aggregate value of contracts (percent)

 SMEs' access to public procurement markets and aggregation of demand in the EU 

66 

 
 
 
 
 
 
 
Considerable differences are also detectable between the significance of cross-border contracts for 
companies from individual Member States. Between 2009 and 2011, German companies have secured 
the most above-thresholds contracts in other Member States, a total of 2.709, followed by British 
companies (2.496). German economic operators were also leading in terms of aggregate value of cross-
border contracts, amounting to 4,9 billion euros, followed by Italian companies (3,6 billion euros). 

In relative terms however, i.e. looking at the proportion of contracts that were won in another Member 
State, direct cross-border procurement is a more important source of revenue for companies from 
Luxembourg, Austria, Netherlands, Belgium and Estonia. The share of cross-border procurement in 
terms of the aggregate public contract value awarded is the highest in Ireland, Malta, Austria, 
Luxembourg and Cyprus, all small countries with competitive manufacturers, service providers or 
construction companies. For economic operators from most of the large Member States, the domestic 
market is the overwhelming source of their public procurement revenue above the EU-thresholds 
(above 95 percent except for German companies), not accounting for indirect forms of cross-border 
procurement. 

Exhibit 2-57: Share of public contracts 
secured abroad, by number of contracts 
(percent) 

Exhibit 2-58: Share of public contracts 
secured abroad, by aggregate value of 
contracts (percent) 

  SMEs in direct cross-border procurement 

2.8.3
The statistical analysis does not reveal a significant difference between the proportions of SMEs among 
companies winning domestic or direct cross-border contracts. SMEs have won 56 percent of domestic 
public contracts above the EU-thresholds between 2009 and 2011, and 54 percent of cross-border 
contracts. In terms of value, SMEs’ share is somewhat lower in cross-border procurement: 22 percent 
only vs. 29 percent in domestic procurement. Around half of the difference is explained by the lower 
share of medium-sized enterprises. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

67 

 
 
 
 
 
 
Exhibit 2-59: Successful bidders by 
company size and by cross-border nature 
of contract (percent) 

Exhibit 2-60: Share of the total value of 
contracts awarded, by company size and by 
cross-border nature of contract 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

68 

 
 
 
 
 
 
 
  Introduction 

2.9 Review of facilitating measures in CIP countries 
2.9.1
This subsection looks at a selection of countries that were not members of the EU in the period covered 
by the quantitative analysis (2009-2011) but which collaborate with the EU in coordinating their SME 
policies and in activities aimed at boosting entrepreneurship and innovation under the framework of 
the Competitiveness and Innovation Programme (CIP). It gives a qualitative review of the situation in 
these CIP member countries with regard to the access of SMEs to public procurement markets, 
primarily at key legislative and non-legislative measures in place to facilitate SMEs’ successful 
participation in public procurement. The following countries involved in the analysis are Albania (AL), 
Croatia (HR), the Former Yugoslav Republic of Macedonia (MK), Israel (IL), Liechtenstein (LI), and 
Serbia (SR).  

Facilitating SMEs’ access to public procurement is on the agenda of policymakers in many of the CIP 
countries concerned. The barriers to successful participation are similar to what small businesses within 
the EU face, large volumes and broad capabilities required, restricted access to certain contracts, 
disproportionately high technical and financial qualification levels etc. (see Exhibit 2-61 for a list of key 
barriers), as are most of the legislative and non-legislative measures undertaken to level the playing 
field. 

Exhibit 2-61: Typical barriers to SMEs’ access to public procurement 

Almost all CIP countries are candidates or potential candidates for EU membership, or members of the 
European Economic Area (Israel is the notable exception, while Croatia has since joined the EU, as of 1 
July 2013). As such, much of their national legislation is oriented towards the EU acquis. 
Correspondingly, the laws governing public procurement of these countries are to a large extent aligned 
with the European Public Procurement Directives, with clauses that may have positive or negative 
effects on SMEs’ access to public contracts mostly mirroring those included in the Directives. 

The laws and by-laws of the CIP countries define an institutional setup that is similar to EU Member 
States’ systems in almost all cases. Some of the concrete arrangements and solutions might have an 
indirect impact on how SMEs fare in public procurement, for instance the independence and 
transparency of the body responsible for reviews, as well the speed and effectiveness of its procedures 
and the administrative costs involved.  

It is assumed that maybe the most important institutional factor shaping the opportunities for small 
business to secure public contracts is the degree of centralisation of public procurement in the given 
country, and the level of aggregation of demand associated with it. According to the theory, countries 
that have highly decentralised government structures with many tasks and responsibilities delegated to 
the lower levels of government are likely to have smaller public contracts (and probably a higher 
proportion of contracts below the EU-thresholds). These should be more accessible to, local, SMEs, as 
the required technical and financial capacities, as well as interest from larger enterprises are smaller. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

69 

 
 
 
 
On the other hand, SMEs in countries with strong centralised purchasing bodies and a higher 
prevalence of centralized public procurement and large multi-annual framework agreements are likely 
to have more limited access to public procurement. 

The analysis of above-threshold procurement contract award notices shows only a very weak negative 
relationship between the extent of centralized purchasing in EU Member States (measured as percent of 
all procurement above thresholds) and SMEs’ estimated proportion in above-threshold procurement (in 
terms of number of contracts awarded, 2011 data), with a correlation coefficient of -0,27 and an R2 for 
the linear regression between the two of only 0,07. However, the two individual causal links of the 
theory are better supported by data. More centralized purchasing does lead to a higher average value of 
public contracts above the thresholds (correlation coefficient of 0,61, with R2 of 0,37), and higher 
average contract values do seem to have a negative effect on SMEs’ proportion in winning these 
(correlation coefficient of -0,42, R2 of 0,18).  

  SMEs’ access to public procurement in CIP countries 
2.9.2
The proportion of SMEs among economic operators winning public contracts is not known for the CIP 
countries reviewed, as none of the countries collect such information. The opinion of local stakeholders 
interviewed was mixed, with some thinking that the level of SME access is below its potential and a 
policy concern, whereas others did not see SMEs to be particularly disadvantaged. Correspondingly, the 
extent to which SME access to public contracts has been put on the policy agenda varies across 
countries: the extent to which the situation and needs of small business are referred to in national 
public procurement legislation might also give an indication. SMEs are specifically mentioned in the 
public procurement law of some CIP countries. In Albania, for instance, the law sets out that 
qualification requirements must be drawn up in a manner that encourages the participation of Small 
and Medium-sized Enterprises. In Serbia, the law obliges the central procurement body to define its 
procedures so that they are accommodating to Small and Medium-sized Enterprises. On the other hand, 
the law does not make any direct reference to SMEs in Croatia and the Former Yugoslav Republic of 
Macedonia. 

However, despite apparent differences in the significance assigned to smaller economic operators’ 
problems in public procurement, the set of concrete measures introduced is rather similar across the 
CIP countries and in line with the practice of EU Member States. This is a logical consequence of the 
similarity of the problems and barriers SMEs face, and of the fact that the legal framework of most CIP 
countries was to a large extent shaped by the EU Public Procurement Directives. The remainder of this 
section presents the key measures in place in the CIP countries, structured around eight topics 
responding to the key barriers to SME access outlined above (as presented in Exhibit 2-62).  

The topics are in line with the themes of the European Code of Best Practices.53 The review of the 
legislative framework of the CIP countries, key websites and stakeholder interviews aimed primarily at 
identifying what kind of measures are in place and, if legislation allows their use, to what extent they 
have been taken up by CAEs or tenderers. In addition, it was also investigated whether SME quotas, set-
aside contracts or any explicit positive discrimination in the evaluation of bids in favour of SMEs exist. 

The individual country fiches providing more detail on context and the measures in place are presented 
in the Annex. 

53 European Commission (2008): European code of best practices facilitating access by SMEs to public 
procurement contracts. Available at: 
http://ec.europa.eu/internal_market/publicprocurement/docs/sme_code_of_best_practices_en.pdf  

 SMEs' access to public procurement markets and aggregation of demand in the EU 

70 

 
 
 
                                                             
Exhibit 2-62: Barriers and key countermeasures to facilitate SMEs’ access to public procurement 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

71 

 
 
 
 
SME quotas  
Legislative arrangements introducing an explicit positive discrimination of small business in public 
procurement procedures, quotas, set-aside contracts, extra scores in tender evaluation, were not 
identified in CIP countries, except for one case. In Serbia, procurers may require tenderers to deliver a 
certain proportion of contracts above a threshold of ca. 394.000 euros for supply and service contracts 
and ca. 525.000 euros for works with the involvement of small enterprises or self-employed persons. If 
the tenderer itself is not a small business as of the definitions set out in national legislation on 
accounting and auditing, it must include subcontractors in its offer that satisfy this condition. 

A. Overcoming obstacles related to the size of 
contracts 

Legislation allows the subdivision of 
contracts into separate lots in the CIP 
countries, but it is generally not a mandatory 
requirement or a default option by law. 
Partial exceptions however do exist: in 
Macedonia, the use of lots is mandatory if a 
special (technical) requirements for a given 
subtask (under works or services contracts), if it is separable from the remainder and it would not allow 
companies to participate that could otherwise perform other parts of the contract. In Croatia for 
instance certain central purchasing bodies or other CAEs, may have policies to break down contracts by 
default, if applicable and reasonable. It is understood from national reports and stakeholder feedback 
that lots are frequently applied in several of the CIP countries (confirmed for Macedonia and Israel). In 
Croatia, larger supply contracts are often broken down into lots, but they are less prevalent in service 
and works contracts. 

The number of lots tenders may bid for, or win, cannot be limited under the law on public procurement 
in at least Croatia, the FYROM, Liechtenstein and Serbia. 

The duration of framework agreements is limited, unless the application of a longer timeframe is 
specifically justified by the nature of the contract, to four years (as in the EU Directives) in Croatia and 
Liechtenstein, and to only three years in Macedonia and Serbia. In both Croatia and Serbia, the 
duration is limited to two years if the agreement is concluded with a single economic operator.  

Framework agreements are generally not renewed in Croatia, while this would be permitted by law. In 
Macedonia, public procurement legislation does not allow renewal. 

B. Avoiding disproportionate technical or 
financial requirements 

CAEs in CIP countries are generally obliged 
to set technical qualification levels 
proportionate to the contract, although this 
legal obligation is usually phrased in more 
general terms and not specifically with 
reference to SMEs. Legislation in Croatia, 
FYROM, Israel, Liechtenstein and Serbia 
requires procurers to define the technical qualification criteria in a way that ensures the equal access of 
all candidates and does not introduce unjustified obstacles to competition. In Albania, as an exception, 
the law also mentions that technical qualification criteria need to allow the participation of SMEs. 

Financial qualification levels are limited in some CIP countries. In Croatia, the minimum annual 
turnover required from tenderers is limited at twice the estimated contract value as a default. This 
upper limit can be exceeded only in exceptional cases. A similar arrangement is in place in Israel. In 
other countries, such as FYROM, Liechtenstein or Serbia, specific rules on limiting financial 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

72 

 
 
 
qualification levels have not been included in public procurement legislation; procurers may however be 
required to set the levels proportionate and directly connected to the subject matter of the contract. 

Tender securities (bid bonds) from participants can be, and are in practice, requested from tenderers in 
most CIP countries. This is frequently done, for instance, in Croatia, whilst public procurement law in 
Albania goes further and obliges CAEs to require tender securities. The tender security may be withheld 
if the tenderer withdraws its bid, does not sign the contract or fails to provide the financial guarantee 
asked for in the contract. Legislation however requires tender securities to be set proportionate to the 
contract size. In Croatia, its value is limited to a maximum of 5 percent of the estimated contract value 
(although this can be exceeded in exceptional and duly justified cases).  

In all of the CIP countries, legislation permits economic operators to rely on the capacities of other 
entities. The concrete form of collaboration (such as consortium, joint venture, a special purpose 
vehicle, or simply subcontracting arrangements) is generally not constrained, and tenderers are not 
required to establish a new legal entity for the execution of the contract, unless justified by the nature of 
the contract.  

C. Emphasis on quality and allowing for 
flexibility 

None of the countries reviewed have 
established in their public procurement 
legislation a preference for the ‘most 
economically advantageous offer’ (MEAT) 
selection criterion vis-à-vis the lowest bid 
criterion. The two criteria are on an equal 
footing, although the level of uptake of the MEAT criterion varies considerably across CIP countries. 
Data from Croatia show that the MEAT criterion has been used in only 0.45 percent of public contracts 
published in 2012, due to the significant administrative burden on CAEs it involved. In the FYROM, it 
was more frequently used, in 19 percent of all tenders in 2012, while it is also relatively widely used 
Serbia according to expert opinion. However, to consider certain minimum quality requirements even 
under the lowest bid criterion, abnormally low bids may be rejected in several countries, including at 
least FYROM and Liechtenstein. 

The use of flexible technical specifications in form of performance or functional requirements, instead 
of technical standards, is allowed in public procurement legislation in Albania, Croatia, the FYROM, 
Liechtenstein and Serbia, but it is reported that they are not frequently applied in practice, nor are 
particular measures in place encouraging their uptake by CAEs. Similarly, the uptake of full life-cycle 
costing is to date at negligible levels in CIP countries, according to expert feedback. 

D. Providing more and better information 

The level of SME access to information on 
opportunities, legal context and procedures, 
and on other relevant aspects of public 
procurement markets is relatively good in CIP 
countries, following recent years’ legislative 
changes and especially the setting up of 
centralised web portals. 

All of the CIP countries reviewed have a 
centralised e-procurement platform where CAEs can publish contract notices as well as tender 
documentation. These portals are usually managed by the public procurement office (PPO). Tender 
documentation can be downloaded free of charge in most countries (Albania, FYROM, Serbia), 
however, documentation usually has to be requested directly from the CAEs in Liechtenstein (even site 
visits are sometimes mandatory). The use of the platform is either already mandatory for CAEs 
(Albania; Liechtenstein; Serbia; Croatia and Israel above certain thresholds) or will be in the near future 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

73 

 
 
 
(FYROM). In addition to publishing contract notices on the central platform and official bulletin, CAEs 
may be encouraged, as e.g. in Croatia or Serbia, to advertise tender opportunities via other channels, 
e.g. their own website or newspapers. More and more CIP countries (e.g. FYROM, Liechtenstein; 
Serbia) require that large-value contracts are also published in the Official Journal of the EU (the TED 
portal). 

Central public procurement portals often also offer additional information or services, e.g. registration 
and alerting services; various search tools; lists of CAEs; contract awards or lists of contractors; 
’blacklists’ of tenderers who withdrew their tender or failed to sign their contract (e.g. in the FYROM); 
downloadable forms and electronic support tools. In some countries, such as in Albania, the central 
portal also allows the electronic submission and evaluation of tenders and electronic communication 
throughout the procurement process. Companies registered on the portal can participate in e-auctions. 
In Macedonia, while registration is not free-of-charge, the fee is modest and is calculated on the basis of 
the size of the enterprise, small enterprises pay less. 

A broad range of brochures, manuals and guidance is available in the CIP countries, explaining 
procurement law and procedures and helping companies to operate the e-procurement system and to 
submit a tender. Furthermore, PPOs often have helpdesks providing ad-hoc assistance to economic 
operators (for instance Albania, Croatia, and FYROM). The helpdesk if the public procurement office in 
the FYROM, for instance, assists both CAEs and tenderers with clarifying legal requirements, 
procedural requirements and other practical issues involved with public procurement. 

The public procurement offices of the CIP countries, or other relevant authorities, generally offer some 
kind of training to CAEs. The training and certification of officials working in public procurement is a 
legal obligation in many of the countries concerned (see FYROM). PPOs may also, albeit less often, train 
economic operators, either by letting them participate together with public officials in generic training 
courses, or by offering specific modules targeted at tenderers. PPOs are not the only actors who organise 
trainings. Especially in CIP countries on the Western Balkans with a quickly developing public 
procurement system and significant legislative changes, chambers of commerce, private consultancies 
and even universities may also offer courses (for instance, in Croatia and FYROM).  

E. Providing sufficient time to complete bids 

Statutory time limits established for the 
submission of tenders, set out in public 
procurement legislation, are normally a 
compromise between the needs of CAEs who 
would ask for shorter deadlines to speed up 
the procedure, and tenderers who would 
require more time to put together consortia, and complete their bid and supporting documentation. In 
CIP countries that have oriented their national legislation towards the EU’S Public Procurement 
Directives (i.e. except Israel), these statutory time limits for high-value contracts (i.e. contracts above 
thresholds similar to the EU thresholds) are generally in line with those set out in the Directives. 
Legislation defines a set of shorter time limits for procedures above or below given national thresholds. 
Time limits may be shortened slightly if the contract notice and all tender documentation have been 
published electronically on the central procurement portal (Croatia, FYROM). 

Whereas SMEs would often benefit from time limits above the minimum thresholds, leaving them 
enough time to team up with other economic actors and write their bid, expert feedback suggests that 
deadlines are very rarely set over the mandatory minimum. 

The publication of prior information notices (or periodic indicative notices for utilities, PINs) is not 
mandatory in CIP countries, although they are indirectly encouraged by legislation in all of the 
countries, as they would allow the CAE to apply shorter deadlines. However, PINs are very rarely 
published in most of the CIP countries (this is the case in at least Croatia, the FYROM, Liechtenstein, 
and Serbia). An alternative to PINs are buyer profiles - procurement plans of tenderers that describe all 
planned purchases over the year, estimations on the launch date of the tender, estimated cost, the 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

74 

 
 
 
envisaged type of procedure etc. The publication of buyer profiles is common for instance in Croatia. 
They are published on the contract authorities’ websites and perhaps also on the central procurement 
website (as e.g. in Croatia and Serbia). 

F. A better dialogue between procurers and 
tenderers 

The possibility for a dialogue with the CAEs 
during the tendering procedure is regulated in 
public procurement legislation of several CIP 
countries, Croatia, FYROM, Serbia, among 
others. Communication between procurer and 
tenderer is often done through electronic 
means (written procedure, with questions and responses published on the national public procurement 
portal). In Macedonia, a pre-launch technical dialogue on tender specifications is made possible by law 
for contracts above certain value thresholds. Before publishing the contract notice, the CAE must 
publish the draft technical specifications, with economic operators having 3 days to review these and 
suggesting amendments if deemed necessary.  

Post-award debriefing of participants is required by law and common practice across CIP countries. 
CAEs have to notify bidders within a tight timeframe of the decision taken. The note in most countries 
needs to mention who was awarded the contract, information on the award procedure, the relative 
advantages of the chosen bid, and why the tender of the unsuccessful bidder was not selected. In Serbia, 
CAEs may even hold separate meetings explaining the outcomes to unsuccessful tenderers. 

G. Alleviating the administrative burden 

Companies participating in public 
procurement procedures across Europe 
traditionally face a substantive administrative 
burden, but CIP countries, as most EU 
Member States, have introduced several 
measures recently aimed at reducing these. 
The approaches and the portfolio of measures 
in place in the respective countries show 
however considerable differences. 

Allowing the submission of certain documents only in later stages of the procedure, if the tenderer has 
been shortlisted or selected, is a tenderer-friendly solution allowed in many of the CIP countries, 
although this option is not included in the public procurement legislation in Liechtenstein. Pre-selection 
questionnaires and tender short lists (i.e. under restricted tenders) also decrease the administrative 
burden on companies which are ultimately not shortlisted. While restricted procedures are a possibility 
in the CIP countries, as they are in the EU Public Procurement Directives, the level of their use is 
negligible in the countries for which information was available (Albania, Croatia, FYROM), with the 
exception of Serbia (where 17 percent of the procedures were restricted in 2012). A possible explanation 
offered by experts interviewed is that restricted procedures would prolong the procurement process as 
well as raising the suspicion of corruption. 

Legislation in Albania, Croatia, FYROM and Serbia allows self-certification to a certain extent by 
tenderers (e.g. declaration of oath for his/her suitability to carry out the professional activity required), 
but CAEs do not necessarily take advantage of this possibility. For high-value procurement, self-
certification is not permitted in the FYROM and Serbia. 

A simple photocopy of documents, instead of originals or certified copies, is sufficient at the tendering 
stage in (at least) Croatian, Macedonian and Serbian procurement procedures, with only the selected 
bidder being required to present the originals. However, it is reported that this option is not applied by 
many CAEs who still request original documents or certified copies. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

75 

 
 
 
Legislation inter alia in some CIP countries (albeit not in Liechtenstein) also permits CAEs to accept 
certificates and other documentary evidence already submitted by the bidder to the same authority in 
another procedure, although this possibility is not yet widely used by procurers. In Macedonia, 
companies registered on the country’s e-procurement platform only need to submit documentary 
evidence once and resubmit upon expiration only. A similar central register is in place in Serbia since 
September 2013. Tenderers do not have to supply the documents already uploaded to, and accepted by, 
the central registry. 

’One-stop shops’ where tenderers can obtain all customary certifications (listing in company registry, 
proof of tax and social security payment etc.) also help reduce the administrative burden. An initiative 
to set up such a system has been launched for instance in Macedonia. 

Establishing electronic links with official databases allowing CAEs to verify the status of tenderers 
themselves and to download certificates directly from the competent authorities is advocated as a good 
practice reducing the administrative burden. At present, CIP countries do not seem to have such 
systems in place. In Serbia, however, the law states that tenderers are not obliged to supply evidence 
that is available at the websites of public authorities. CAEs must accept offers that do merely contain a 
link to the company documentation stored on these websites. 

The use of electronic tools (notably e-submission) is on the rise in CIP countries, supported by 
corresponding national strategies. These tools are considered to reduce administrative costs, although 
concerns have also been voiced that learning how to use them might be challenging for some of the 
smallest enterprises. The current prevalence of e-submission solutions varies across the countries 
reviewed: tenders cannot yet be submitted electronically in Croatia (e-submission will be introduced in 
2014-2015) or Liechtenstein, while it is relatively widespread in Macedonia. 

The review of CIP practices did not identify countries where electronic tools for qualification and 
supporting evidence such as e-certificates, national passports, Virtual Company Dossiers would already 
be widely used.  

H. Overcoming liquidity problems 

Arrangements ensuring that contractors and 
subcontractors are paid as due and on time by 
the procurer or the lead contractor are 
particularly important for SMEs that have 
limited funds to weather a strain on their 
liquidity. Corresponding measures have been 
introduced into the public procurement 
systems of some of the CIP countries. 

Serbian public procurement law sets out strict deadlines for payment, as a general rule, 45 days for 
payments between public sector bodies and their contractors, and 60 days for business-to-business 
transactions. Advance and interim payments are, although generally not mandatory, commonly 
performed in most of the CIP countries (e.g. Croatia, FYROM and Liechtenstein). In Croatia, interim 
payments are the rule in works and supplies contracts, although infrequent in services contracts. Also, 
CAEs are obliged by law to pay advance payment of 10 percent under works contracts and service 
contracts that include public works. In Macedonia, procurers can give advance payments of up to 20 
percent of the total value of the contract, although this is not mandatory. 

Direct payment to subcontractors is allowed by law in Croatia as well as in Serbia (but not done in the 
FYROM and Liechtenstein). Subcontractors need to be presented in the tender and accepted invoices 
upon delivery to be forwarded to the CAE for payment. 

The overview table under Exhibit 2-63 summarises the main measures identified in the CIP countries 
reviewed. Due to gaps in the availability of information, it is not an exhaustive analysis of all activities 
undertaken in the respective countries to facilitate SMEs’ access. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

76 

 
 
 
Exhibit 2-63: Overview of identified measures in CIP countries facilitating SMEs’ access 

 = measure in place;  = measure in place but not frequently applied; - = measure not in place; blanks = no 
information 

AL 

HR 

MK 

IL 

- 

- 

- 

- 

- 

- 

 

 

 

 

 

 

 

 

 
 

- 
 
- 

SME quotas, reserved contracts, positive 
discrimination 
A. Overcoming obstacles related to the size of contracts 
Obligation to breaking down tenders into 
separate lots 
Restricting bidders from competing for all lots 
Limiting the duration of framework agreements 
Limiting renewal of framework agreements 
B. Avoiding disproportionate technical or financial requirements 
 
Rules on setting proportionate qualification levels 
 
Limitations on financial qualification levels 
Reducing amount of financial guarantees/bid 
bonds 
Possibilities for joint bids, reliance on others’ 
capacities 
C. Emphasis on quality and allowing for flexibility 
Preference for using the ‘most economically 
advantageous offer’ selection criterion 
Using performance or functional requirements 
Full life-cycle costing 
D. Providing more and better information 
More information on public procurement 
opportunities 
Free access to contract notices and tender 
documentation 
Availability of documentation in other relevant 
languages 
Guidelines and other support material for 
tenderers 
Helpdesks 
Training opportunities for tenderers 
E. Providing sufficient time to complete bids 
More time to submit tenders (above statutory 
deadlines) 
Publishing prior information notices or buyer’s 
profiles 
F. A better dialogue between procurers and tenderers 
Q&A on the tender procedure 
Dialogue with the procurer on requirements and 
specifications 
Post-award debriefing 
G. Alleviating the administrative burden 
Submission of documents once shortlisted or 
selected 
Allowing self-certification 
No need for official translations 
Pre-selection questionnaires and tender short 
lists 
Not requesting documents submitted in the past 
Retrieving documents directly from authorities 
Electronic submission of tenders and use of 
electronic tools 
H. Overcoming liquidity problems 

 
 

 
 

 
- 

 

 

 

 

 

 

 

 

 

 

 

 

- 

- 

- /  

 /  

- 

- / 

- 
 
 

 
- 

- 

- 

 

 
 

LI 

- 

- 

- 
 
- 

 
- 

SR 

 

- 

- 
 

 
- 

 

 

 

 

- 

 

 

() 

 

 

 

- 

 

 

 

 

 
 

 

 

 

 

 

 

 

 

- 
- 

 /  
- 

 

- 

 

 

- 

 

 

- 

 
 

 

 

- /  

 

 

 

 /  

 

 

 

 

 

 /  
- 

- 

 

- 

- 

- 
- 

- 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

77 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tight payment deadlines and sanctions for late 
payments 
Allowing advance and interim payments 
Protecting the interests of subcontractors in 
contracts 
Direct payment to subcontractors 

 

- 

 

 

- 

- 

- 

 

- 

- 

 

- 

 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

78 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trends and 
patterns in 
market 
aggregation 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

79 

 
 
 
 
3 Trends and patterns in 
market aggregation 

3.1 Introduction to market aggregation 
Aggregation techniques are used to improve cost-savings (market power and economy of scale) and 
efficiency of procurement (process improvement). They are used in a variety of forms and 
configurations across public or private spheres, sectors and industries.  

For example, the pooling of customer demand in car rental companies is an aggregation technique; 
cloud computing represents a business model where an operator aggregates demand from multiple and 
dispersed customers; and various forms of purchasing consortiums, cooperatives, alliances and joint 
group purchasing have been around for decades. 

The basic notion is that purchasers can aggregate demand within (or beyond) its own organization and 
more effectively go to markets and achieve cost-savings. This may hold true in principle, but demand 
aggregation is a difficult process to implement successfully and especially realization of the achieved 
cost savings. The functioning of such arrangements presents several coordination, organizational 
and implementation challenges including:  

  Establishing a degree of strategic alignment between the actors so that they share common 

purchasing objectives and postures.  

  Developing structures and systems to ensure information sharing and cross-functional 

collaboration.  

 

Identifying the categories of purchasing that may be suited for centralization and aggregation.  

  Finally, developing skills and professionalism, as well as more intangible aspects such as 

culture. This could impact whether or not there is success. 

All of these dimensions are relevant in the public sector.  

Regulatory aspects may also impact the degree of demand aggregation. Private sector entities may be 
restricted by anti-trust policies. Public sector agencies on the other hand may have larger degrees of 
(legal) freedom to organize the aggregation of their demand. The pre-market phases of public 
procurement are rarely regulated explicitly in legally binding procurement regulations or other external 
legal frameworks. In practice, the ability is much more restricted by non-legal barriers to coordination 
and organization. 

The market approach of public sector procurement is more tightly regulated and may impact the ability 
to aggregate demand. Generally, public regulations are perceived as more restrictive than (large) 
corporate purchasing policies.54 This may limit some types of pre-market related activities, i.e. the 
ability to attend suppliers' workshops and information meetings, and may constrain the ability to 
establish certain market approaches and contractual structures.  

Public regulations do however also facilitate the go-to-market strategy with aggregated demand through 
specific tools and approaches.  

In the EU, the most notable aggregation instrument is the framework agreement. The concept of a 
framework agreement is that it establishes the contractual terms which will apply to subsequent orders 
made for the goods, services or works for a period of time. Establishing a framework involves an initial 

54 Public procurement in Europe: Cost and effectiveness. Strand/Ramada/Canton 2011 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

80 

 
 
 
                                                             
call for tenders against set terms and conditions, the appointment of one or more suppliers, and then 
the placing of periodic orders or call-offs.  

The mechanism is used in many countries. For example, in the U.S. there are several tools that allow for 
standing contracts and subsequent calls for service or orders. This includes the federal Government-
Wide Acquisition Contracts (GWAC), Indefinate Supply Contracts or Multiple Award Schedules. In 
Canada there are "Supply Arrangements", in Australia there are" Panel Arrangements". The term 
"Umbrella Contract" is used in other jurisdictions. 

EProcurement tools may also facilitate the aggregation of demand. Some of these tools apply mostly 
to the demand identification and aggregation stage. In its simplest form this could be electronic means 
of collecting demand information. Often these tools are integrated with the go-to-market and may offer 
online catalogues, scheduled purchasing of specific items, and links to established contracts with 
suppliers. Various eTools have been developed supporting the different steps in the procurement value-
chain, from identification of demand to contractual payment. The eTools may also extend into the post-
award phase and provide support for contract and supplier management. 

To help structure the issues in this paper, we view demand aggregation from the perspective of a 
conceptual and simplified, procurement value-chain. Demand aggregation largely pertains to the 
pre-award phase, but may also involve specific go-to-market techniques or tools. 

In the pre-award phase, the important issues pertain to how demand information is mobilized, 
categorized and prepared for the market. The strategic and implementation issues for governments 
pertain to how this is organized effectively. This is certainly a question for the functioning of dedicated 
entities for centralized purchasing, but may also be the case for framework agreements. The 
development of category management defining sourcing strategies for each defined sourcing group will 
influence on the CAEs' ambition to aggregate their demand and the use of eTools. It is of great 
importance that the chosen sourcing strategy support and is aligned with the public entities' overall 
strategic goals.  

As an example, framework agreements will by design aggregate demand over time. In principle this is a 
go-to-market tool. A framework agreement could involve only one purchaser, but may also be across 
government entities or mobilize demand from different business units within an entity. As such, there 
are important pre-market aggregation elements for framework agreements. It may also reflect the 
development of the supplier market (mergers and demergers) i.e. combination of services and goods or 
broaden the scope of goods within the framework agreement.  

Similarly, eProcurement tools are commonly used to help aggregate demand and integrate this with a 
go-to-market offering. 

Exhibit 3-1: Conceptual overview of procurement value chain and demand aggregation 

Source: Team Analysis 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

81 

Mobilize demand informationCategorization and preparationGo-to-marketPost-contract managementLegal frameworkEntity policiesValuechainAggregation tools and organizationCentralized purchasing/ entitiesFramework agreementseToolseToolsCentralized organization of frameworksAll techniquesRegulatory 
 
 
 
3.2 Overall on demand aggregation in European 

public procurement 

The European Union is the world's largest integrated public procurement area. It also offers 
procurement statistics at a central level (EU), based upon individual contract awards in each member 
state. This system collects information among other on the use of framework agreements and whether 
there is a centralized purchase arrangement behind the contract award.  

This greatly facilitates statistical descriptions and quantitative analysis of market aggregation. The data 
(TED-database) includes contract award volumes, frequencies, types of contracts, number of bids, 
government entities and business sectors and much more. The information collected on each contract 
award is indeed quite detailed and special parts will be presented in our report. 

Less is known about the pre-award stages of each contract award, including whether or not it actually 
represents an aggregation of demand. What does the centralized purchasing actually represent? How 
much of this is from centralized purchasing bodies? How many purchasers do they aggregate demand 
from? What level of government and what are the characteristics of these entities? Similarly to 
framework agreements the EU databases cannot tell us what kind of demand aggregation preceded the 
establishment of an agreement.  

Our analysis of these issues will largely draw upon other sources of information, including surveys and 
interviews developed for this study. This includes other important characteristics of each centralized 
procurement and framework agreement, such as how many suppliers that are appointed or how the 
awards of the calls under the arrangement are organized.  

First however, we turn to the big picture of demand aggregation that goes to the European marketplace. 

Centralized purchasing is a term that describes the fact that the TED database collects information 
on whether "a contract award is on behalf of other contracting authorities or entities". The exact 
meaning of this is hard to establish without actually surveying the imputers of data and identifying 
patterns and structures among the CAEs. We will return to those issues in chapter 3.3 . For now, it is 
sufficient to say that this will include a very wide range of centralized purchasing activities including the 
use of centralized procurement bodies, collaborations between entities, and also the use of service 
providers/entities that manages the purchasing process. For the latter there may not necessarily be an 
"aggregation" of demand, as there could be only real purchaser behind the contract award. 

Centralized purchasing constitutes about 20 percent of total value of contract awards in recent years. 
There has been remarkable growth in value terms. By number of contract awards we find that the 
concept is much less frequently used and only constitut about 5 percent of awards in the last few years. 

Exhibit 3-2: Centralized purchasing as share of 
total contract awards in the EU (number) 

Exhibit 3-3: Centralized purchasing as share of 
total contract awards in the EU (value) 

Source: The TED database; Team Analysis 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

82 

2% 2% 5% 5% 5% 5% 4% 20062007200820092010201120123% 4% 8% 16% 21% 19% 10% 2006200720082009201020112012 
 
 
 
 
Framework agreements are clearly defined in the EU directives and as such, there is more clarity 
about what this entails. We will, in chapter 0, review the underlying features of these agreements 
including assessments of whether they actually constitute demand aggregation. As framework 
agreements aggregate demand over time, and it is possible to appoint only one purchaser, framework 
agreements have the ability to reduce process costs without actually aggregating demand. There may be 
some incentive to use frameworks in this manner which may or may not be the intention of the 
directives. 

Framework agreements constitute nearly 1 in 4 of all contract awards with regards to value. In terms of 
numbers they represent about 1 in 6 of all contract awards. The use of such agreements has also 
increased. Note that some of the observed increases are due to more countries transposing the 
directives into national legislation. That would still represent a real increase at the EU level, but may not 
reflect increased uptake within countries. 

Exhibit 3-4: Framework agreements as share of 
total contract awards in the EU (number) 

Exhibit 3-5: Framework agreements as share of 
total contract awards in the EU (value) 

Source: The TED database; Team Analysis 

We also note the combined use of centralized purchasing and framework agreements. More than half of 
all centralized purchasing arrangements are through framework agreements. About 1,3 percent of all 
purchases are carried out through a combination of framework agreement and centralized purchasing. 
This combination is in general used for high value contracts. In terms of value, the combined use of 
framework agreements and centralized purchasing constitute about 1 in 10 of all contract awards.  

Exhibit 3-6: Combined use of centralized 
purchasing and framework agreements as 
share of total (number) 

Exhibit 3-7: Combined use of centralized 
purchasing and framework agreements as 
share of total (value) 

Source: The TED database; Team Analysis  

 SMEs' access to public procurement markets and aggregation of demand in the EU 

83 

8% 9% 10% 14% 15% 16% 15% 200620072008200920102011201214% 14% 14% 19% 23% 23% 12% 20062007200820092010201120121,3% 1,5% 1,6% 1,3% 20062007200820092010201120126% 12% 10% 2006200720082009201020112012 
 
 
  
 
 
 
 
 
3.3 Centralized purchasing 
3.3.1

 The concept of procurement "on behalf" in the EU 
directives 

Centralized purchasing is a basic procurement concept widely used across public and private sectors. In 
many segments of private industry, the ability to lowering purchasing costs and standardizing inputs to 
the supply chain is the key competitive advantage.  

The directives define Central Purchasing Bodies (CBPs)55 as entities that:  

I. 

II. 

III. 

Acquires goods or services intended for one or more contracting authorities or entities;  

Awards public contracts for works, goods or services intended for one or more 
contracting authorities or entities; or, 

Concludes framework agreements for works, goods or services intended for one or more 
contracting authorities or entities.  

The operative element of this definition is of acting “on behalf “of other entities. This is also the 
wording used in the standard form on which awarding authorities report the contracts. This definition 
allows for a range of degrees of centralization, from the smallest (i.e. on behalf of one entity) to acting 
on behalf of several. There is no specific requirement for degree of institutionalization or organization. 
As such, authorities acting “on behalf” could range from loosely organized ad-hoc collaborations, to 
institutionalized permanent structures.  

There are many variations of this basic concept of centralized purchasing among European public 
authorities today. Centralized purchasing varies widely in terms of organization, degree of centralization 
and focus. Some, and important in terms of their overall purchasing volumes, are institutionalized and 
permanent centralized bodies. Most however, are much more loosely organized entities and ad-hoc 
collaborations.  

It is important to note that when analyzing Centralized procurement, we rely entirely on the self-
reported “on-behalf” classification in the reporting forms to the TED database (See below). In order to 
better understand what’s behind this classification, we have performed free text analysis of information 
in the database, conducted large scale surveys across Europe, and performed hundreds of semi-
structured interviews. The findings are reported in the following chapters.  

In the following sections, we will review who the centralized purchasing bodies are and patterns in their 
purchasing, organization and management. 

Exhibit 3-8: Facsimile of EU standard form for recording of "on behalf" of other contracting bodies 

55  Article  1(10)  and  11(2)  of  Directive  2004/18/EC  of  the  European  Parliament  and  of  the  Council  on  the 
coordination  of  procedures  for  the  award  of  public  works  contracts,  public  supply  contracts  and  public  service 
contracts. http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2004:134:0114:0240:EN:PDF  

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  Characteristics of centralized purchasing 

3.3.2
As we have seen, centralized purchasing constitutes nearly 20 percent of total value of contracts 
awarded in Europe over the last few years. There are considerable differences between countries. To 
understand the importance of centralized purchasing within each country it is helpful to compare the 
values of contracts awarded with the overall values in the country as they are reported to the EU in the 
contracts award database.  

Exhibit 3-9: Share of number of CANs using 
centralized purchasing by country 2010-12 
(percent of total procurements per nation) 

Exhibit 3-10: Value of CANs using centralized 
purchasing by country 2010-11 (percent of total 
procurements per nation) 

Source: The TED database, Team Analysis 

Centralized purchasing in Europe is in many ways a story about UK, where more than 55 percent of 
contracts awarded in value during 2010-11 are through centralized purchasing arrangements and CPBs. 
As we shall see in chapter 3.3.2, the largest individual CPB are also found in UK. They have accounted 
for between 50 and 60 percent of all centralized purchasing value in Europe since 2009. No other single 
country has such a high degree of centralized purchasing value. We find that the three Scandinavian 
countries are high on the list, which is consistent with the findings from 2006-2009 in a previous 
study56. However, UK has since then emerged as the dominant player in the area. In Austria, Italy, 
Slovakia, and the Czech Republic the values lie in the range of 15-20 percent. In Germany and Belgium 
the value is about 10 percent, nearly twice the level of France. 

Exhibit 3-9 only shows the average share of number in the period 2010 - 2012. If we look closer on the 
changes of use of centralized procurement in terms of numbers across Europe in the time period 
between 2009- 2012, we can see that overall in Europe there has been a decline in the growth of share of 
centralized contracts in terms on number by around 1 percent point. However, Ireland, Cyprus, and UK 
have all had high growth in the use of centralized procurements. In these countries the use of 
centralized contract has grown with between 5 - 8 percent points. In terms of value, we can see an even 

56 Public procurement in Europe: Cost and effectiveness. Strand/Ramada/Canton 2011 

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85 

12 9 13 9 5 4 6 7 8 3 5 8 8 3 4 5 3 5 3 4 3 9 8 2 2 1 1 2 ---UKDKSENOIEAllISATITSICZDELVBESKFRFINLHULUEELTELCYESPLROBGPTLIMT55 34 27,0 25,3 21 20 18,8 18 15,1 15,0 14 10 9,7 10 7,1 6 6 4,1 4 3,4 3 2,9 3 3 2 2,3 1,5 1 0,9 --UKDKSENOIEAllISATITSICZDELVBESKFRFINLHULUEELTELCYESPLROBGPTLIMT 
 
 
 
 
 
 
                                                             
bigger change. The use of centralized contracts in Ireland, Czech Republic, Italy, and Sweden has grown 
with between around 15 – 20 percent points. Overall in Europe, the share of centralized contracts in 
terms of value has grown with around 3 percent points. This is most likely because the growth of fewer, 
but larger contracts in terms of value. 

In absolute value, UK has centralized purchases of about 9 times the value of the next country on the 
list, Italy, for the period 2009-201157. France is third on the list, at about the same level as Italy in 
absolute terms. 

The average value of 20 percent is influenced by UK numbers and does not represent the realities in 
most of Europe's other countries. In half of the countries, the value is less than 7 percent of total value 
of contracts awarded. 

While 50 percent of all contracts awarded in terms of value in UK are through centralized 
procurements, only 12 percent are awarded in terms of number. The centralized contracts have in 
average higher value than the average procurement. Hence, the big difference between the share of 
centralized contracts in terms of value or numbers, only five countries have a higher share of centralized 
contracts in terms of number than in terms of value.  

We also note that in most countries the value of centralized purchasing contracts is much higher than 
the average contract. We will review this in more detail in the next section, but for now we note that 
there are relatively few contracts awarded compared to the total value of contracts. 

In Exhibit 3-11 and 3-12 we have shown the development from 2009 to 2012 for numbers and 2009 to 
2011 for value by nation. The main trend shows that most nations have a relative growth in number of 
purchases through CPBs as well as value. 

Exhibit 3-11: Change in use of centralized 
purchasing by country 2009-2012 

Exhibit 3-12: Change in total value of 
centralized purchasing by country 2009-2011 

Source: The TED database, Team Analysis 

57 In absolute value, UK has purchased for 125 billion euros in the period 2009-2011, while Italy has purchased for 
13 billion euros. 

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AllATBEBGCYCZDEDKEEESFIFRUKELHUIEISITLILTLULVMTNLNOPLPTROSESISK0%5%10%15%20%0%5%10%15%20%Number in 2012Number in 2009= Equal shareIncreased shareDecreasedshareAllATBEBGCYCZDEDKEEESFIFRGRHUIEISITLILTLULVMTNLNOPLPTROSESISK0%10%20%30%40%0%10%20%30%40%Value in 2011Value in 2009= Equal shareIncreased shareDecreasedshare 
 
 
 
 
 
 
 
                                                             
Most common at national levels 
Centralized purchasing is more common at 
national levels. Relative to the overall value of 
centralized procurement, we find that at 
national levels (National agency and Central 
government), Central government has a share of 
centralized purchasing of above 30 percent 
while National agencies has nearly 40 percent.  

When calculating the share of centralized 
purchasing by type of CPB, we find that national 
agencies manage some very large joint contracts 
compared to the other contracts by national 
agencies. This is possibly due to the fact that 
many CPBs are defined as national agencies. 
They procure on behalf of multiple agencies 
within the broader government and as such the 
value of these contracts is huge. This is very 
much UK model which also impacts these 
findings. Contracts awarded by national 
agencies, for themselves, are much smaller. 

Regional governments have a value as a 
multiplier of number of contract awards of 
about three, indicating that the CPBs award 
larger contracts. This multiple is higher than for 
a typical central government award. 

At regional agencies on the other hand, we find 
that the multiple is less than one. This could 
indicate that at regional levels, the CPBs are not 
necessarily defined legally as entities in the 
same way as at national levels. Indeed, when 
looking at the detailed underlying data we find 
that most large value centralized purchasing 
contracts at regional levels are done by entities 
that refer to themselves as the regional authority 
and not as specialized procurement agencies as 
is found at national levels. For example, in Italy 
and France, Citta di Torino and Ville de Paris 
respectively is near the top of the list of 
centralized purchasers in their countries.  

Exhibit 3-13: Centralized purchasing as share of 
total value of procurement by type of CPB 

Exhibit 3-14 Average number of contract awards 
per type of CPB  

Source: The TED database, Team Analysis 

We shall come back in more detail to such organizational models in chapter 3.3.6. 

A few large entities dominate, but many ad-hoc consortia 
We find about 6.000 individual centralized purchasing entities that have been active in Europe during 
2009-2012. On an annualized basis there are between 2.500-3.000 unique entities.58 

The prevalence of “one-timers” is quite significant. Nearly 4.000 of the entities that have recorded their 
purchases as "on behalf of", appear only once over the indicated time period. This also applies to very 

58 The estimates are based on text analysis of organizational names from the TED database. Automated and manual 
corrections applied to the original data including checks of addresses, emails, phone numbers, and contact persons. 
Some caution advised as systematic analysis of unstructured data has methodological challenges. 

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39%32%24%20%16%National agencyCentralgovernmentRegionalgovernmentPublic bodyRegional agency14 2 3 1 1 National agencyCentralgovernmentRegionalgovernmentPublic bodyRegionalagency 
 
 
 
                                                             
 
 
large contracts. For example, 4 of the 20 largest contracts are by entities that appear only once. Many of 
these one-timers appear to be consortia formed of various entities for a specific project.  

However, a few entities dominate. For example, we find that the 20 most active entities account for 40 
percent of all value. Those entities are defined by us as having at least 3 contracts awarded annually and 
ranked by total value over the period 2009-2012. The value of the contracts taper off for the entities 
following these few entities.  

Another indication that centralized purchases is a world dominated by few entities is found by 
categorizing them according to whether they have a certain annual frequency of contracts awarded. We 
find that there are only about 50 CPBs across Europe that award more than 15 contracts a 
year. These account for about 28 percent of all value. For those in the range 5-15 there is about 200 
entities. Most have very little (annualized) activity and for those with (on average) more than one 
contract a year, but not more than 5, there are about 800 entities. These account for 36 percent of the 
total value. The one-timers mentioned above are many in number, but constitute only about 22 percent 
of the total value. 

Next, we turn to a more detailed picture of who the largest entities are. 

Exhibit 3-15: Measures of activity, number of entities and values (annualized estimate) 

Source: The TED database; Team Analysis  

Top ten list of largest CPBs based on value 
Coming closer to the traditional idea of a centralized purchasing agency we look more closely at the top-
ten list of CPBs in Europe. We have defined them as agencies that have at least three annual contracts 
awarded on behalf of others annually during 2009-2012. They are ranked by value of the contracts 
awarded. The criterion of having at least three annual contracts implies that 9 entities are excluded 
from the list. Amongst those excluded, five have only one purchase on behalf of others throughout the 
period. 

A few findings stand out and are worth mentioning in more detail. They relate to local governments (in 
UK), as well as national procurement agencies.  

The actual values of these contracts will depend on the implementation of the agreements across the UK 
government entities. The individual values of the contracts are very large, but as most are framework 
agreements, the value provided here is an estimate by the authority at the time of the contract award. 

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Contracts per entityNumber of entitiesValue (as share of total joint purchasing volume)50200800170028 %14 %36 %22 %15+5-151-5One time 
 
 
 
 
Exhibit 3-16: Largest CPBs in Europe 2009-2012 (more than three contracts annually on average) 

Source: The TED; Team Analysis  

1.  Government Procurement Services (formerly Buying Solutions) constitutes 18 percent of 
all centralized purchasing volume in Europe. In UK alone, the agency awards about 12 percent 
of all government contracts above the EU threshold level. The agency puts in place agreements 
which other government agencies (unrestricted list) can utilize. Three in four are framework 
agreements, mostly related to services, but also supply of products (such as vehicles and 
telecom equipment).  

2.  Purchasing Organizations of Local Governments in UK include Eastern Shires and 
Yorkshire Purchasing organizations. These generally provide purchasing services to local 
governments. They have awarded contracts across a range of areas, and also operate stocked 
warehouses of supplies.  

3.  Local governments in UK include Derbyshire and Kent County Council. These local 

governments have established purchasing organizations that provide purchasing services to the 
government. They have contracts across a range of areas.  

4.  Kammarkollegiet of Sweden is possibly the longest running centralized purchasing entity 

in Europe. Although it may not have been called centralized purchasing at the time, the 
organization can trace its direct history (and functions) to royal decrees from 1539. Today it 
purchases supplies for the central government. It also awards contracts for large businesses and 
IT consulting services. Nearly eighty percent are framework agreements. It comprises about 12 
percent of total value of contracts awarded by government authorities in Sweden. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

89 

ItalyU.K.U.K.U.K.AustriaU.K.U.K.U.K.U.K.U.K.U.K.DenmarkCzeck Rep.DenmarkSwedenU.K.U.K.U.K.U.K.U.K.5844325423941148471771430442180,8 %0,4 %0,4 %0,4 %8,5 %0,4 %0,5 %0,5 %0,5 %0,5 %0,6 %8,5 %6,7 %9,2 %12 %0,8 %0,9 %2,1 %2,3 %12 %0,6 %0,6 %0,6 %0,6 %0,7 %0,7 %0,7 %0,7 %0,8 %0,8 %0,8 %1,0 %1,1 %1,1 %1,1 %1,3 %1,3 %3 %4 %18 %ESTAV CentroHome Group LimitedEast Riding of Yorkshire CouncilSellafield LtdBundesbeschaffung GmbHMinistry of Justice ProcurementNHS Commercial Medicines UnitScottish ProcurementLondon Universities Purchasing ConsortiumNorth Yorkshire County CouncilNHS Wales Shared Services Partnership -…Amgros I/SCEPRO, a.s.SKIKammarkollegietKent County CouncilYorkshire Purchasing OrganisationDerbyshire County CouncilEastern Shires Purchasing OrganisationGovernment Procurement ServiceEntityAnnual contractsValueNationalEurope**Share of Joint Purchasing volume in EuropeUKUKUKUKUKUKUKUKUKUKUKUKUKUK 
 
 
 
5.  SKI of Denmark procures on behalf of central and local authorities in Denmark. It serves 

about 30.000 government entities and has about 850 suppliers. Over the last few years it has 
procured annually about 9 percent of the value of Danish contracts awarded according to EU 
regulations. It appears more focused on supplies than its UK and Swedish counterparts. There 
is also another central procurement agency in Denmark (Statsinnkjøp) but it does not come 
near to the same volumes. A third, Amgros I/S offers purchasing agreements for medical 
supplies to all pharmacies and hospitals across Denmark. It awards contracts equal to about 8,5 
percent of all contracts awarded by Danish authorities.  

6.  Cepro A.s. Czech Republic was established by the privatized, formerly state-owned 

company Benzia in 1994.The company engages in transportation, distribution, and storage of 
oil products. Its services include wholesale and retail sale of oil products to customers through 
product pipelines, railway tanks, automobile tanks and trucks. Its contracts awarded are 
entirely fuel contracts.  

7.  NHS Whales Shared Services. This is an entity that provides among other services 

procurement services to health agencies across Wales. The contracts awarded over the last four 
years are nearly all for construction of health facilities and are framework agreements. Note 
that there are several NHS purchasing organizations across UK. Together they account for an 
amount which would put them near the top of the list if seen as one entity. 

8.  London Universities Purchasing Consortium. This entity comprises a large group of HE 
institutions in the capitol area. Its largest contract over the last few years is for journals and 
periodicals. It has also established large contracts in office supplies and facilities management. 

9.  Scottish Procurement is both a policy body (Directorate) and an agency that establishes 

framework agreements on behalf of all government entities in Scotland. Its largest contracts are 
for IT-services, other business services and quite a few temporary staff contracts. It also offers 
some supplies i.e. telecom and electricity. 

10. NHS Commercial Medicine. This is a centralized (Health Ministry) level agency. It procures 
almost entirely medical supplies for secondary care in UK. About 50 percent are framework 
agreements. 

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Top list of largest CPBs across all Member States 2009-201259 

  Federal Procurement Agency (FPA) (Austria). The Federal Government of Austria 

founded the Federal Procurement Agency (FPA, "Bundesbeschaffung GmbH") in 2001 by the 
Federal Procurement Agency Act ("BBGmbH-Gesetz") to provide central procurement services 
to federal agencies, in particular to negotiate framework contracts and make them available to 
the agencies. It's primary tasks are to bundle requirements to obtain better prices and terms 
from suppliers and to standardise public purchasing to reduce processing costs and legal risks. 
The FPA is a non-profit organisation providing free services to their mandatory clients. Federal 
institutions are obliged to order from these contracts, unless they are able to obtain the same 
product at better conditions. Other public sector organisations like universities, communities, 
states, state-owned organisations or health organisations may take advantage of FPAs' contracts 
and services for a modest fee. The agency had 74 contracts in the time period between 2009 and 
2012, with a total value of 1.034.416.635 euros. 

  SPF P-O-CMS - centrale de marchés pour services fédéraux (Belgium). The FPS 

Personnel and Organisation (FPS P&O) is a Federal Public Service of Belgium. It is a so-called 
horizontal Federal Public Service because it is not responsible for a specific policy field, but 
provides services to the other Federal Public Services. CMS (Central Markets for Federal 
Services) is a service of the FPS P&O that provides central procurement services at the federal 
level. The CMS is responsible for procurement procedures for supplies and services that are 
related to large amounts and that are repetitive, and when there is an economy of scale related 
to the consolidation of buyers. From 2009 to 2012 they had 20 contracts with a total value of 
163.285.136 euros. 

  ČEPRO (Czech Republic). ČEPRO, a. s., a joint-stock company, was formed as a result of 
privatization of the former state enterprise Benzina. The Company was established on 16 
December 1993 pursuant to Section 172 of the Commercial Code and on 1 January 1994 it was 
recorded in the Commercial Register. Since 1 January 2006 the sole shareholder of the 
Company has been the Ministry of Finance of the Czech Republic. The principal activities of 
ČEPRO, a. s. are primarily as follows: storage, transport and sale of crude oil products; 
provision of related transport, storage and other specialized services to third parties; 
preservation of the supply reserves of the Administration of State Supply Reserves (ASSR); 
operation of the EuroOil petrol station network. During the time period from 2009 to 2012 
ČEPRO had 20 contracts with a total value of 1.636.210.504 euros. 

  Statens og Kommunernes Indkøbs Service A/S (Denmark). Statens og Kommunernes 
Indkøbs Service A/S (or SKI for short or in English: National Procurement Ltd. Denmark) 
establishes framework contracts between the public sector in Denmark and private sector 
companies. SKI is a not-for-profit and self-financing public company owned by the Danish state 
and the interest group and member authority of Danish municipalities Local Government 
Denmark. It is SKI’s aim to promote effective public purchasing in Denmark. From 2009 to 
2012 they had 50 contracts with a total value of 1.714.813.127 euros.  

  Riigi Kinnisvara Aktsiaselts (Estonia). The Republic of Estonia established the company 
with the business name Riigi Kinnisvara Aktsiaselts (State Real Estate Ltd, hereinafter RKAS) 
according to the order no. 461 of the Government of the Republic of 28 June 2001, with the 
objective to guarantee the saving and effective provision of the real estate service to the 
executors of state authority. RKAS is the preferred partner and competence centre for the 
government and state authorities for the fulfilment of the state functions and providing the 
public service in development, management and maintenance of the required real estate. 
During the time period from 2009 to 2012 the company had 24 contracts with a total value of 
51.387.295 euros.  

59 The list does not include examples from all the EU/EEA Member States due to challenges with converting data 
from the TED database.  

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  Stara Logistiikka Hankinta (Helsingin kaupungin rakentamispalvelu) (Finland). 
Stara is a constructor that constructs and manages Helsinki’s streets, parks and public utility 
services, repairs buildings as well as produces logistics services and technical expert services 
mainly for the needs of the City of Helsinki. Stara started operations at the beginning of 2009, 
known as the Helsinki City Building Service. From the start of 2010 it has been called Stara. 
Stara Logistics establishes framework agreements related to the acquisition of materials and 
services such as: vehicles (passenger cars, vans and trucks), general equipment for vehicles and 
machinery, (diesel, gasoline, tires, grader blades), transport, machinery and crane services, 
building materials (lumber, building boards, paint, ready-mix concrete), traffic and road 
marking. From 2009 to 2012 Stara Logistiikka Hankinta had 31 contracts with a total value of 
105.452.868 euros. 

  APIJ (Agence publique pour l'immobilier de la Justice) (France). This French agency 
is a specialized public institution under the Ministry of Justice, who is entrusted with the design 
and management of major real estate projects in different departments of the Ministry. The 
agency had 6 contracts in the time period between 2009 and 2012, with a total value of 
1.385.555.767 euros.60 

  Magyar Nemzeti Vagyonkezel (The Hungarian National Asset Management Inc.) 
(Hungary). The Hungarian National Asset Management Inc. (HNAM) plays a leading role in 
the state co-ordination system of state-owned assets and property managers. HNAM exercises 
the proprietary rights of state-owned companies, provides location for the organisations 
exercising public responsibilities, and manages the real estates and movable assets, nationally-
known monuments as well as the ornaments, antiques possessed due to inheritance, which are 
under its control. HNAM also provides services (management, procurement) to help the 
operation of the budgetary organisations during performance of state tasks regarding the use of 
the state assets. Magyar Nemzeti Vagyonkezel had 2 contracts in the time period from 2009 to 
2012 with a total value of 131.862.200 euros. 

  Reykjavik Procurement Office (Iceland). During the time period between 2009 and 2012 

they had 6 contracts with a total value of 15.133.995 euros. 

  National Procurement Service (NPS) (Ireland). The National Procurement Service 

(NPS) is located in the Office of Public Works and has been tasked with centralizing Irish public 
sector procurement arrangements for common goods and services (e.g. office equipment, 
furniture, vehicles, fuel, electricity). The NPS is an operational procurement unit, which 
collaborates closely with the National Public Procurement Policy Unit in the Department of 
Finance, which is responsible for procurement policy. During the time period between 2009 
and 2012 they had 6 contracts with a total value of 235.188.722 euros.  

  ESTAV-centro (Ente per i Servizi Tecnico-amministrativi di Area Vasta) (Italy). 
ESTAV-centro is a Tuscany Regional Agency in charge of centralised procurement, logistics, 
health technology and ICT support for Central Tuscany Public Health Entities. During the time 
period from 2009 to 2012 ESTAV-centro had 173 contracts with a total value of 897.392.172 
euros. 

  Vilniaus miesto savivaldybė —s administracija (Vilnius city municipality-
administration) (Lithuania). Vilnius district municipality is one of the largest 
municipalities in Lithuania. Within the administration there is a Department of Public 
Procurement. The department participates in the preparation of procurement plans for goods 
and services; carries out the orders of the Director of Administration in organizing public 
procurement; analyses contracts and other related documents and projects for approval to the 
Director of Administration; prepares public notices provided in accordance with the reports and 

60 Etablt public Palais justice de Paris had the largest total value of contracts during the time period in France. Due 
to only one large contract we did not look any closer on this organization. 

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92 

 
 
 
                                                             
information about on-going and committed purchases; provides advice on the organization of 
the procurement; and organizes and carries out procurement. Between 2009 and 2012 they had 
8 contracts with a total value of 42.705.214 euros.  

  SIDEN union (Luxembourg). The purpose of SIDEN union is to remove and remediate 

wastewater from its member municipals. The trade mission is not limited to the operation and 
maintenance of drainage and water pollution control equipment. From 2009 to 2012 SIDEN 
union had 12 contracts with a total value of 41.005.901 euros. 

  Ministerie van Algemene Zaken, Dienst Publiek en Communicatie (Netherland). 

Minister of General Affairs, Public Service and Communication supports the national 
government with improving communication with the public and with professionals. The service 
provides public information from the national government through Rijksoverheid.nl, 
accompanies mass media campaigns, does the central media buying, and supports the national 
government in further professionalizing the communication function, for example, learning and 
research. They had 12 contracts in the time period between 2009 and 2012, with a total value of 
214.271.963 euros. 

  Statens vegvesen region Øst (Norwegian Public Roads Administration region East) 
(Norway) is part of the Norwegian government agency responsible for the construction and 
maintenance of highways and county roads and supervision of vehicles and road users. The 
agency consists of a Roads Directive, five Regional branches, where Norwegian Public Roads 
Administration Eastern Region is one of the five, and 20 Road divisions. Major development 
projects are organized into separate units directly under the Regional Roads. Due to large 
infrastructure projects the Norwegian Public Roads Administration Eastern Region had 25 
contracts between 2009 and 2012, with a total value of 328.580.407 euros. The Agency had 
contracts for a total of 910.075.870 euros during the same time period. 

  Tauron Polska Energia S.A, (Poland) previously called Energetyka Poludnie S.A, was 

established on 6th December 2006 and is one of the largest companies within the energy sector 
in Poland. TAURON Polska Energia S.A. is the mother company in TAURON Polska Energia 
S.A. Capital Group. The TAURON Group is one of the largest business entities in Poland with 
the equity exceeding PLN 16,5 billion. During the time period from 2009 to 2012 the group had 
8 contracts with a total value of 144.167.410 euros.61 

  AdP Group/ Águas de Portugal Serviços Ambientais (Portugal). In partnership with 
the Municipalities, AdP Group comprises a set of companies witch, in total, provide services to 
more than 80 percent of the population in Portugal. They operate in the environmental sector 
with objectives in the water supply, wastewater sanitation and treatment and recovery of waste. 
During the time period from 2009 to 2012 AdP Group had 2 contracts with a total value of 
33.536.618 euros.62 

  Ministry of Culture of the Slovak Republic (Slovak Republic) is the central body of 

state administration of the Slovak Republic for national language, preservation of monumental 
funds, national heritage and library science, art, copyright and copyright laws, extension service 
and folk artistic production, support of cultural innovation for ethnic minorities, presentation of 
the Slovak culture and arts abroad, relations with churches and religious societies, media and 
audio visual. The ministry also provides purchasing services to different sectors of the country 
with in the areas the ministry is in charge of. This spans across a range of areas, from furniture 
to construction work, to cultural buildings. In the time period from 2009 to 2012, the Ministry 
of Culture had six contracts with a total value of 217.313.003 euros. 

61 Poland has one organization with a higher total contract value, but this organization has only one contract listed 
in the TED database. 
62 In general, there were few companies listed in Portugal and the listed companies had small total contracts value 
in the time period. 

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  AJN /Public procurement Directorate (Slovenia). The directorate works within the 

framework of the Directorate for public procurement Act: Department for Public Procurement 
System, Department for Public Procurement Procedures and Department for Electronic 
Procurement, Interpretation and Analyses. The Directorates main tasks are e.g. standardisation 
of typical public procurement goods, services and works, including preparation of samples of 
tender documentation and establishment of a database with information on market analysis for 
typical public procurement goods, services and works. AJN had 47 contracts in the time period 
from 2009 to 2012 with a total value of 104.880.681 euros. 

  Generalitat de Cataluña, Departamento de Economía y Finanzas, Comisión 

Central de Suministros (Spain). Government of Catalonia, department of economics and 
finance, Central Committee of Supply. During the time period between 2009 and 2012 they had 
17 contracts with a total value of 728.665.990 euros. 

  Kammarkollegiet of Sweden (Sweden) is possibly the longest running CPB in Europe. 

Although it may not have been called centralized purchasing at the time, the organization can 
trace its direct history (and functions) to royal decrees from 1539. Today it purchases supplies 
for central government. It also awards contracts for large businesses and IT consulting services. 
Nearly eighty percent are framework agreements. It comprises about 12 percent of total value of 
contracts awarded by government authorities in Sweden. During the time period between 2009 
and 2012 Kammarkollegiet had 20 contracts with a total value of 1765.320.473 euros. 

Source: The TED database; Team Analysis  

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94 

 
 
 
 
 
 
Top ten largest centralized purchasing contracts (value) 2009-2012 
When looking closer at the top-ten list of 
centralized purchasing contracts in Europe in 
terms of value of awarded contracts, we find 
that nine out of ten of these contracts are 
located in UK. We also find that the values of 
these contracts are very large. One explanation 
for this is that most of the contracts are 
framework agreements. Six of the top-ten 
centralized purchasing contracts are framework 
agreements. The value provided here is an 
estimate by the authority at the time of contract 
award. 

The largest contract during 2009 – 2012 was 
established in 2010 by the Contracting 
Authority Government Procurement 
Services, UK (formerly Buying Solutions). 
The contract established a pan- Government 
collaborative postal services framework 
agreement for use by or on behalf of UK 
public sector bodies. The Postal Services 
framework provides public sector bodies with 
easy access to all their postal requirements 
through 14 lots covering a full range of postal 
services. The reported total value in TED was 
6.994.311.168 euros. 

The "top-ten" list of the largest centralized 
procurement contracts in value between 2009– 
2012 is further described in the annex chapter 
2.1.24. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

95 

9/10Located in the UK6/10Combination of centralized purchasing and framework agreements 
 
 
 
 
 
 
 
 
  Centralized procurement below the EU threshold level 
3.3.3
Are centralized purchasing instruments also used for smaller contracts, below the EU threshold values? 
Centralized purchasing can conceivably also take place for contracts that are not regulated by the EU 
and are below threshold values. Threshold levels determine whether a contract falls under the scope of 
the directives (see: definitions and abbreviations, EU threshold level (below)).  

Less is known of these contracts as they do not require publication of a contract award notice in the 
TED database. Country practices vary regarding requirements in national databases. We have found 
earlier63 that a substantial portion of award notices published in the journal are actually below threshold 
levels. Now we estimate the use of centralized purchasing or similar instruments for below threshold. 
For that purpose, CAEs have been surveyed. The findings are presented below. 

About 55 percent of CPBs report having implemented centralized purchasing contracts for below 
threshold value contracts. For about half of these, the value of those contracts over the last year 
constitutes less than 25 percent of all centralized purchasing contracts. About 28 percent of entities 
report that the total value of below threshold agreements is higher than the value of EU regulated 
contracts. 

Exhibit 3-17: Value of centralized purchasing 
contracts below EU threshold in percent of total 
centralized purchasing agreements 

Exhibit 3-18: Percentage of CPBs that conduct 
contracts below EU threshold value  

Value of contracts in 
percent of total 
agreements 

Percent of CPBs  

Source: Proprietary survey with 450 respondents, Team Analysis 

There are country variations. All countries in the sample have centralized purchases contracts recorded 
that are below threshold value. The largest share of contracts below threshold is found in Italy and UK, 
where 86 percent and 71 percent respectively of the respondents reported that they also use centralized 
purchasing arrangements below threshold. 

63 The study "Public procurement in Europe: Cost and effectiveness", prepared for the European 
Commission in 2011, analyzed the threshold levels with data of contracts below threshold level 
optionally published in the TED database. 

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96 

11 %17 %24 %49 %More than 75 percent (75-100%)Between 50 and 75 percent(50-75%)Between 25 and 50 percent(25-50%)Less than 25 percet (0-25%)86 %71 %67 %67 %64 %63 %55 %53 %50 %50 %50 %50 %47 %47 %45 %45 %43 %40 %40 %38 %33 %29 %n.a.ITUKLIESIEDKAllNOATCYFRPGDKSEDEFIEECZNLSISKPTOther 
 
 
  
 
 
 
 
                                                             
 
Overall, authorities find little difference between performing procurement under the EU procurement 
directives or under national regulation. However, a small majority of respondents regard below 
threshold procurement as less time-consuming.  

As illustrated below, as much as 50 percent and 44 percent (respectively) of CPBs with service contracts 
and supply contracts on behalf of others have signed contracts below threshold level. This is more than 
8 times as many entities with goods contracts on behalf of others. It is likely to think that this is due to 
the higher average value of goods contracts.  

Exhibit 3-19: Number of contracts below 
threshold among types of contracts (percent) 

Exhibit 3-20: Type of contract as share of total 
value (mean value) 

Source: Proprietary survey with 450 respondents, Team Analysis 

3.3.4

  Estimated total value of centralized purchasing below 
threshold value 

Exhibit 3-21 Value of centralized purchasing 
below threshold value (median value of 
contracts below threshold, in billion euros) 

When estimating the value of centralized 
purchasing below threshold, the respondents 
reported that they have contracts on behalf of 
others for below threshold value and the 
approximate value of the contracts below 
threshold in percent of total agreements. We then 
found that the median value of below threshold in 
percent of the entities total procurement is 37,5 
percent64. We then aggregate the percentage of 
below threshold to the total value of centralized 
purchase as reported in the TED database.  

The total value of below threshold value was in 
2011, 23 billion euros. This is close to 4 billion 
euros lower than in 2010.  

Source: Proprietary survey with 450 
respondents, Team Analysis 

64  The  average  value  of  centralized  purchasing  below  threshold  in  percent  of  total  agreements  is  35,7  percent  see 
Exhibit 2-16. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

97 

50% 44% 6% ServiceSupplyWork36% 12% 52% ServiceSupplyWork3 4 9 19 27 23  - 5 10 15 20 25 30200620072008200920102011 
 
 
 
 
 
 
 
 
 
 
                                                             
 
 
  How and what do they procure? 

3.3.5
Centralized purchasing is executed more through framework agreements than the average in the EU. In 
fact, for two out of three countries, centralized purchasing is more likely conducted through framework 
agreements than the EU average. In countries with strong centralized bodies, such as Sweden and 
Denmark, the share of framework agreements is above 80 percent.  

Exhibit 3-22: Use of framework agreements by CPBs (percent of total value of centralized 
procurement) 

Source: The TED database; Team Analysis  

The share of CPBs' use of framework agreements in EU has increased from about 40 percent in previous 
years to 50 percent.  

Contract values are also on average higher, both measured as median and mean values. The typical 
centralized purchasing contract (median) is about twice the level of the typical contract awarded overall 
in Europe. It is also higher than those offered as framework agreements. The values have declined over 
the last four years (see Exhibit 3-23). 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

98 

0 %0 %0 %4 %4 %4 %6 %9 %13 %14 %15 %20 %23 %26 %32 %40 %40 %41 %45 %50 %52 %55 %55 %57 %67 %84 %85 %85 %86 %CYISPTGRHULUPLBESILTITFINLDEFREERONOLVAllESSKBGUKATCZIESEDKOverall use of framework agreements in EU23%CPBs use of framework agreements in EU50%EL 
 
 
 
Exhibit 3-23: Median value of centralized 
purchasing agreements 2009-2012 (in 
thousand euros) 

Exhibit 3-24: Value of contracts by country 
(median, in million euros, 2009-2012) 

Source: The TED database; Team Analysis  

The median value of a CPB contract is estimated to 0,6 million euros. The median values varies a lot, 
but as indicated earlier, UK and Nordic countries with their frequent use of CPBs have more than twice 
as high median. The data for LU states that there are awarded few but large contracts in the period 
2009 – 2012 from the CPBs.  

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99 

01002003004005006007002009201020112012FrameworksAll procurementsCentralized purchasing3,4 2,3 1,7 1,3 1,1 1,0 0,8 0,8 0,7 0,7 0,7 0,7 0,6 0,5 0,5 0,5 0,5 0,4 0,4 0,4 0,4 0,4 0,4 0,4 0,3 0,3 0,3 0,3 0,2 0,1 LUDKUKNOITSKSENLISROBEIEAllFIESCZHULIDEFRPLSIATLVPTCYEEBGELLTMT 
 
 
 
 
 
 
Exhibit 3-25: Number of bids for centralized 
purchasing agreements by year (mean and 
median) 

Exhibit 3-26: Number of bids for centralized 
purchasing agreements by country (mean and 
median, 2009-2012) 

Source: The TED database; Team Analysis  

One of the aims in public procurement legislation is to ensure the principle of competition. The number 
of bids submitted per launched proposal is an indicator of the competition. The median for the number 
of proposals received per year from 2009 to 2012 is stable with 5 bids per proposal launched as 
centralized purchasing (measured by mean, the value is 11,4 per proposal). Especially UK, Denmark, 
Ireland and Spain attracted large numbers of bids with a mean of between 20 and 13. These are mainly 
large proposals regarding services framework agreements and some supplies contracts attracting huge 
number of bids.  

There seems to be limited competitions in several countries. Exhibit 3-26 visualizes that CPBs in 17 
nations receives below 5 bids measured as both mean and median. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

100 

0123456789101112132009201020112012Number of bids11 5 11 8 5 7 7 6 4 5 5 5 5 7 4 3 4 4 4 3 4 3 3 4 2 3 3 2 2 2 -19,8 15,8 14,4 13,1 11,4 10,8 10,5 10,1 10,1 7,6 6,4 6,4 6,3 4,8 4,7 4,7 4,5 4,4 4,3 4,3 4,2 4,2 4,0 3,8 3,7 3,1 3,1 2,7 2,7 UKDKIEESAllSEPTFIFRNOLVNLDEISBGITLUATBEELCYROCZLISIEEHULTSKPLMT 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 3-27: Centralized purchasing agreements by contract type and country (2009-2012)  

Source: The TED database; team analysis 

As expected, centralized purchasing is used mostly for supplies contracts. This is in line with theory 
and literature regarding category management, see Exhibit 1-1. Supplies are an area where demand 
could be more predictable, easier to aggregate, and savings could be considerable, by going through 
large centralized contracts. The largest supplies contracts are in the area of standardized medical 
supplies, but there are also large contracts for petroleum products (standardized supplies). Together 
these two areas account for 50 percent of the value of awarded supplies contracts. Construction 
materials account for about 11 percent, office supplies for about 8 percent. The remaining categories are 
distributed across some 40 different CPV areas (2. level code). 

The share of supplies procured centrally reaches above 60 percent in Denmark, UK and the 
Netherlands. Supporters of centralized purchasing might be disappointed that the average share in the 
region is only about 25 percent, with most countries being below that average. 

Procurement of Service as centralized purchasing is perhaps a more modern (and public sector) 
phenomenon. The overall share reaches about 24 percent, but this is very much driven by the large 
services contracts in UK. In absolute numbers, services contracts awarded have the largest value. 
Supplies and work contracts are at about 60 and 40 percent of the total value respectively. 

Business services account for about 20 percent of service procurements. Many of these are large 
consultancy support framework contracts. There is no place where these are as prominent as in UK, 
with a possible exception for Sweden. IT-services contracts are about 16 percent. There is possibly some 
overlap between the two categories. Waste management and post/telecom are at about 10 percent each. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

101 

0%0%0%1%2%2%2%3%3%4%4%5%7%9%10%11%12%12%14%16%17%17%18%25%26%27%39%47%62%65%73%IcelandLichtensteinSlovakLuxembourgPolandBulgariaCyprusPortugalLithuaniaNorwaySpainHungaryMaltaEstoniaGreeceSloveniaGermanyFinlandSwedenItalyFranceBelgiumLatviaAllCzech Rep.AustriaRomaniaIrelandNetherlandsU.K.DenmarkSuppliesServicesWorksDKUKNLIEROATCZAllLVBEFRITSEFIDESIELEEMTHUESNOLTPTCYBGPLLUSKLIISUKSEDKROAllISNLLUITSIDEBGIEMTFIFRATESCYLVCZLTPTHUNOEEPLELBESKLIUKLVSEATAllNLITDELIBGIEFRCYHURODKNOLUFICZEELTESMTELSIPTSKPLISBE0%0%0%0%00%0%1%1%1%1%1%1%2%2%3%3%3%3%4%4%4%5%6%6%9%10%11%11%12%35%BEISPLSKPTSIELMTESLTEECZFILUNODKROHUCYFRIEBGLIDEITNLAllATSELVUK%0%0%0%0%1%1%1%1%2%2%3%3%3%4%5%6%7%8%9%9%10%12%14%16%21%23%24%25%28%34%59%LISKBEELPLEENOHUPTLTCZLVCYESATFRFIMTIEBGDESIITLUNLISAllRODKSEUK 
 
 
   
Works contracts are almost entirely recorded as construction work. These are less frequently procured 
as a centralized service, with an average of about 10 percent of total work contracts awarded. 

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102 

 
 
 
 
 
3.3.6

  Centralized purchasing is not always about market 
aggregation 

Results from our survey paints an interesting picture of the degree of aggregation actually involved in 
centralized purchasing. Only about 80 percent of the CPBs reports that the aggregated demand by 
purchasing on behalf of two or more CAEs. 

Exhibit 3-28: Centralized purchasing contracts 
grouped by number of CAEs (percent) 

Our analysis is based on a survey distributed to 
the CAEs who have reported to have "purchased 
on behalf of other CAEs" in the contract award 
notices published on the TED database.  

In centralized purchasing, entities purchase on 
behalf of others or bundle requests from the 
CAEs. Use of centralized purchasing often 
involves use of professional purchasers operating 
more detached from the actual users of the 
service/goods.  

Source: Proprietary survey with 450 
respondents; Team analysis 

About 20 percent of the reported "on behalf" 
purchasing is service provision and does not 
represent aggregation (of more than one actor). 
Most of these contracts are for service (65 percent), higher than the average share of services. About 22 
percent of the contracts with only one actor are framework agreements, which are comparable to the 
overall use of framework agreements, but represent a lower usage than the ones typically seen from 
CPBs. 

The relatively high share of non-aggregation could be related to the fact that authorities report in our 
survey that they choose centralized purchasing to save process costs and manage regulatory and 
category complexity, not only to aggregate demand. The fact that some public bodies out-source their 
procurement services as professional services could also be a factor.  

What support do centralized purchasing bodies provide 
This is a question of to what extent purchasing bodies provide managed offerings of standardized goods 
or whether they are service and support agencies for non-standard procurements.  

A typical understanding of centralized purchasing is that it is most useful when deliverables are 
standardized and require little user involvement. The typical example is supplies of commonly used 
inputs. As we have seen this may hold true for some supplies, in particular medical consumables and 
office supplies.  

Items which are more complex or non-standardized may need to be procured with more user 
involvement. In that regard it may be surprising to see that the largest categories centrally procured in 
Europe are large service contracts for consultancy and IT-services. These are contracted through 
framework agreements and it could therefore be that the actual design of the agreements leaves much of 
the specification of design to the individual user.  

Indeed, our survey of centralized purchasing bodies shows that close to 80 percent of the entities 
consider centralized purchasing most useful for standardized items, while 29 percent find centralized 
purchasing more useful for complicated areas where specification cannot be determined in advance. 

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103 

29 %16 %37 %18 %More than 10Between 6-10Between 2-5Only one 
 
 
 
 
Exhibit 3-29: Comparison by authorities: Use of centralized purchasing contracts 

Source: Proprietary survey with 450 respondents; Team analysis 

A related question is what service the centralized purchasing body provides. This is a more intangible 
issue than standard versus non-standard items, but we have nonetheless asked survey respondents to 
classify the service offering according to three categories. 

49 percent describe this as a managed offering, meaning they manage the process end-to-end. At the 
other end, 18 percent describe the CPB as providing basic administrative support. 

We have also asked entities how they classify themselves, as a professional purchasing organization or, 
on the other extreme, as ad-hoc collaboration. 30 percent describe themselves as professional 
purchasing organizations, while 37 percent describe themselves as being ad-hoc collaboration between 
entities.  

There is, perhaps not surprisingly a relationship between the two. Professional purchasing 
organizations offer more managed services, and provide more than the basic administrative support. 

Exhibit 3-30: Category management and support models 

Source: Proprietary survey with 450 respondents; Team analysis 

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6% 26% 4% 19% 28% 16% 51% 13% 0 %20 %40 %60 %80 %100 %Centralized purchasing is more useful forstandardized itemsCentralized purchasing is more useful for complicatedareasNot true234Very trueManagedFacilitationSupportProfessional purchasing organisationSupportAd-hoc collaberation between contract authorities9%6%3%15%11%7%13%16%20%Professionals manage joint purchasing end-to-endExhibit 3-29 Category management and support modelsType of organizationType of supportManaged servicesFacilitationSupportAd-hoc collaboration between contract authoritiesSupportProfessional purchasing organisation 
 
 
 
 
 
 
 
How central purchasing bodies are organized 
We have asked survey respondents to classify themselves according to the following typology of 
organization:  

Concept 1: National. This is where the CBP is providing services across different sectors of 
governments. Normally this happens within certain product categories. The model can apply to both 
central and local levels of government. The entities can be established as independent agencies or 
within ministries or departments. Examples of this include Hansel of Finland, SKI of Denmark, Consip 
in Italy, UGAP in France, KSzF of Hungary and GPS in UK. Countries may have several such entities 
covering different categories of products and services. In Europe, such entities account for about 8 
percent of the total awarded contract value. 

Concept 2: Sector. These are agencies established to serve the needs of particular sectors, often 
focusing on certain product areas. For example, in the health regions (21) in Italy, procurement is 
centralized in regional agencies such as So.Re.Sa of Campania, Estav of Toscana and AV Vicenzia of 
Veneto. In Norway, HINAS provides procurement services on behalf of the hospitals in all regions. 
Overall for Europe, such entities account for about 15 percent of the total awarded contract value. 

Concept 3: Agency level. These are centralized purchasers who act on behalf of their agencies. For 
example, the roads authority in Norway that procures construction work, and several directorates in 
other places. In Europe, such entities account for about 21 percent of the total awarded contract value. 

Concept 4: Multi-government entity. These are purchasing entities that serve multiple (local) 
governments across a range of areas. They differ from concept 1, the national entity, as they mostly 
serve local governments and are frequently organized and owned by multiple government entities. 
These entities account for about 56 percent of the total awarded contract value in Europe. 

Exhibit 3-31: Four models of strategic organization of centralized purchasing 

Source: Proprietary survey with 450 respondents; Team analysis 

Budget and financing models 
Asking survey respondents to describe the financing model of their centralized purchasing body, we find 
that more than two out of three entities are financed by regular government budgets. The reminding 32 
percent are financed by cost recovery, performance based on savings, profit, or other financing models. 
Only one percent of the entities is financed by fees and commissioned based on profit.  

The entities financed by cost recovery have the highest average value of contracts (close to 6 million 
euros). This financing model is followed by the majority who has the regular government budget model. 
These entities have an average contract value close to 5,5 million euros. The remaining models of 
financing have relatively low average contract value, with respectively 1,2 million, 800.000 and 570.000 
euros. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

105 

Sector 1Sector 2Purchasing entityAgencyAgencyConcept 1: NationalSectorPurchasing entityAgencyAgencyConcept 2: SectorSectorPurchasing entityAgencyAgencyBusiness unitB.UConcept 3: AgencyGovernment 1Purchasing entityGovernment 2Concept 4: MultiGov.ValueNumberValueNumberValueNumberValueNumber8%35152721145624 
 
 
 
Exhibit 3-32: Financing of the procurement 
activity (percent) 

Exhibit 3-33: Average value of contracts in 
different financing models (in millions euros) 

Source: Proprietary survey with 450 respondents; Team analysis 

It is important in the selection of financial model that the model supports the overall business goals of 
the public authority. Contradictory relations are observed when the budget owners aim for high quality 
and lower cost, while the centralized procurement body is financed by a percentage fee of the yearly 
turnover of the contract.  

Professionalism and sign of public procurement sophistication 
Initially, we introduced the Kraljic matrix as the most dominant theory of purchasing portfolio models. 
A study published in The Journal of Supply Chain Management (2005) concludes that; "It is possible 
that the introduction of the purchasing portfolio in companies drives purchasing sophistication. 
Adopting a portfolio approach could work as catalyst for change within the company".65 The same 
study also concludes that; "A portfolio project could put purchasing higher on the company's strategic 
agenda clarifying the problems and possibilities". The basis for this study was private companies.  

If we summarize the headlines from the survey 79 percent responded that CP is "most useful when 
deliverables are standardized and require little user involvement", 30 percent of the CPBs identify 
themselves as "professional procurement organisations and 20 percent of these deliver managed 
services and only 3 percent delivers support services. Also from the interviews we found that 45 percent 
of the respondents stated that the quality was improved by using CBs (see: Exhibit 4-40) and further 
comments from the respondents stated that CPBs have specialists (legal and procurement expertise) 
contributing to more transparency and compliance. 

All these findings indicate that the use of applicable procurement theory is valid in public sector 
procurement as well. The increased use of CPBs seems to contribute to professionalism by the use of 
portfolio models i.e. aggregation of demand for standardized products and services and increasing the 
competition by the leverage of buying power. The management decision of using CPBs (partly or total 
outsourcing of the procurement function) reflects also the management's focus on the value added by 
professional procurement. 

65 Gelderman & van Weele – Purchasing Portfolio Models: A Critique and Update – The Journal of Supply Chain 
Management: A Global Review oif Purchasing and Supply – (August 2005) 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

106 

68% 20 %7 %5 %1 %Regular government budgetCost recovery (fees andcommission)OtherPerformance based onsavingsProfit (fees andcommission)0,60,81,26,05,5Profit (fees andcommission)Performance based onsavingsOtherCost recovery (fees andcommission)Regular government budget 
 
 
 
 
 
 
 
 
  
 
                                                             
  Compound analysis of the factors 

3.3.7
To explore what drives the decision to choose for centralized purchasing with other CAEs and what the 
results66 of a centralized purchase are, we developed an econometric model to calculate the way in 
which variables influence each other and how strong this influence is. In the sections below we provide 
a general presentation of the model and the results. A detailed description of the methodology used and 
the results can be found in the Annex chapter 3.3. 

Methodology 
Firstly, we analyse what influences the choice to procure centralized. The potential drivers include:   

  Use of electronic auction; 

  Type of evaluation mechanism (MEAT or lowest price); 

  Type of CAE; 

  Sector of the CAE; 

  Type of contract; 

  Type of work. 

To identify the drivers of a choice for a centralized purchase, we test the impact of each of the drivers in 
isolation, correcting for any disturbance caused by any other potential driver.  

Secondly, we test whether the choice for a centralized purchase has an impact on the duration of the 
procedure and the number of offers received. We also investigate a relation between the choice for a 
centralized purchase and:  

  Cross-border winners; 

  The value of the contract; 

  The type of procedure chosen. 

In order to identify how the choice for a centralized purchase affects the above mentioned variables, we 
use the same approach as in the first step.  

Step 1 - Drivers of a centralized purchase 
Before discussing individual drivers, it’s interesting to reflect on the development of centralized 
purchasing over time. Corrected for all other variables, we see an autonomous increase in the use of a 
centralized purchase, only showing a slight decline in 2012. This increase over time implies some form 
of learning, legal or political effect that pushes procurement officers to engage more in the centralized 
purchasing. 

Exhibit 3-34: Development of a centralized purchase over time - year differences 

2012

2011

2010

2009

2008

2007

2006

-1,21% 

-0,51% 

0,19% 

0,62% 

0,50% 

0,36% 

0,07% 

66 In this section by results of centralized purchasing we mean the factors on which centralized purchasing has an 
impact. 

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107 

 
 
 
 
 
                                                             
We also examined if any geographic influence could be identified, for example as a cultural driver. 
Although the observations are relatively widely-spread and should therefore be interpreted cautiously, 
there is a general trend that the Scandinavian and other Northern European countries tend to engage 
more in centralized purchasing than South and South Eastern European countries. However, there are 
some notable exceptions such as Greece, Italy, Finland and Poland. 

The use of electronic auction and the type of evaluation mechanism 
The model shows an increased likelihood that a contract is (partly) procured for another 
authority/entity. This result is consistent for the data set with the use of an electronic auction. The 
criteria aimed at selecting the most economically advantageous tender (MEAT) makes it also more 
likely the contract is procured on behalf of another CAE. 

Exhibit 3-35: Techniques in procedure 

Criteria lowest price

-0,4 % 

Total

Criteria MEAT

0,5 % 

Electronic auction used

2,1 % 

The findings for the electronic auction support the hypothesis that more standardized products or 
services increase the possibility of aggregation. The electronic auction allows the awarding 
authority/entity to create a dynamic tender environment where interested suppliers can adjust their 
offer in reaction to the offers of their competitors. 

Type of CAE 
We find that most types of CAEs show a positive relation with use of centralized purchasing. These 
effects range from little (bodies governed by pubic law and other) to moderate (regional or local 
agency). CAEs that demonstrate a negative relation with use of centralized purchasing are utilities and 
governments for which no classification is specified.  

Exhibit 3-36: Type of CAE 

Not specified

-2,6 % 

Utilities

Other

-1,8 % 

Governed by public law

Regional or local authority

National/federal agency

National/federal authority

Regional or local agency

Total

1,6 % 

1,7 % 

1,7 % 

2,5 % 

3,5 % 

3,5 % 

It is interesting to reflect on the reasons behind the difference between utilities and other CAEs. Utilities 
are most likely of all CAEs to face competitive forces and as a result, it may be the competition law that 
forbids the cooperation between utilities and other CAEs and causes the negative effect. Another 
possibility is the unique position utilities have in the society. For example, in some countries they have a 
monopoly position. Even if they want to work together in their procurement activities, there are no 
other entities with a similar demand. In addition many utilities are privatised, and as such they are 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

108 

 
 
 
 
 
institutionally positioned further from the other authorities. This makes cooperation less likely and even 
contrary to their privatized status. 

Sector of the CAE 
There are only a few sectors where the CAEs are interested in combining the demand, notably Public 
order and safety, Housing and community amenities, and Health. On the other hand, a lot of sectors are 
showing a negative disposition towards engagement in the centralized purchasing. The sectors with the 
strongest aversion are Airport related services, Exploration and extraction of gas and coal, Water and 
Railway services. 

Exhibit 3-37: Sector of the CAE 

Exploration and extraction of coal and other solid fuels

-1,58% 

Airport-ralated activities

-1,76% 

Water

-1,50% 

Railway services

-1,49% 

Urban railway, tramway, trolleybus or bus services

Defence

Education

Production, transport and distribution of gas and heat

Social protection

Recreation, culture and religion

Electricity

Environment

Economic and financial affairs

Port-related activities

Exploration and extraction of gas and oil

Postal services

Other

Unavailable

General public/services

Health

Housing and community amenities

Public order and safety

-0,96% 

-0,86% 

-0,68% 

-0,64% 

-0,37% 

-0,34% 

-0,27% 

-0,21% 

0,06% 

0,24% 

0,24% 

0,24% 

0,28% 

0,31% 

0,49% 

0,73% 

0,79% 

1,12% 

-2%

-2%

-1%

-1%

0%

1%

1%

2%

The observed differences between the sectors are likely due to the competitive and legal environment. 
CAEs in the sectors with a negative attitude towards engagement in the centralized purchasing either do 
not have another authority to work together with (i.e. utilities and public transport) because they are a 
(local) monopolist, or are forbidden to do so by the competition law. On the other hand, sectors that 
have a positive disposition towards engagement in centralized purchasing are typically the ones where 
other authorities are present and not rivalling its position. 

Type of contract 
For the type of contracts we see small but significant effects. In supply contracts, CAEs are more 
inclined to engage in the centralized purchasing, while when service contracts are used, CAEs are 
disinclined to do so. For works, there is almost no effect. 

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109 

 
 
 
 
Exhibit 3-38: Type of contract 

Works contract

-0,01% 

Service contract

-0,78% 

Supply contract

0,82% 

These findings confirm the hypothesis that aggregation is easier for standardized products and services.  

Type of work 
The type of work in the contract has a significant influence on the choice to engage in a centralized 
purchasing or not. For purchase of commodities, most notably, an increase in the probability of 
cooperation among CAEs can be observed. Also manufacturing has a positive relation with the chance of 
a centralized purchase. Construction services are less likely to be procured centralized. The other types 
of activity show virtually no effect. 

Exhibit 3-39: Activity in contract 

Construction

Machinery

Other

Business

Manufacturing

Commodities

-0,6 % -0,4 % -0,2 % 0,0 % 0,2 % 0,4 % 0,6 % 0,8 % 1,0 %

These findings show as well that aggregation is less likely when the products or services are more 
unique, and therefore less standardized. Typically, firms working within the commodity or 
manufacturing sector offer products that are easier to standardize than services or works. Moreover, 
commodities are by definition standardized products.  

Step 2 - Results of centralized purchase 
The second step of the analysis is to test how large the effect of a centralized purchase on the results of 
the procurement is.  

In case of a centralized purchase, the average number of offers received is 0,8 higher compared to the 
situation when a CAE works on its own.  

Combination of the demand of two or more CAEs results in a longer duration of the procurement 
procedure (by 3,4 days). This increased duration is caused by the longer period of time it takes to 
evaluate the offers67. Meanwhile, firms have on average 0,4 days less to prepare an offer for centralized 
purchases.68 The increase in duration to conduct these procedures is only partly explained by the larger 
number of offers. Another explanation of this is the relative complexity of centralized procurement 
procedures. 

The chance that a foreign bid is selected to be a winner is lower in case of a centralized purchasing. 

67 It takes on average 4,1 day longer to evaluate the offers under a centralized purchasing procedure compared to an 
individual procurement procedure. 
68 Please note, due to rounding errors, the sum of the duration to award and the duration to submit an offer does 
not equal the duration for the entire procedure. 

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110 

 
 
 
 
 
                                                             
The results for value of the contracts confirm that a centralized purchasing is a form of aggregation, as 
on average the contracts are 6.120.289 euros larger than individual procurements. 

In terms of procedures used, there is a strong trend to use more the open procedure (+2,3 percent) in 
centralized purchasing. Also the competitive dialogue is more popular in centralized purchasing (+0,4 
percent). This goes mostly at the expense of awarding without publishing (-1,0 percent point) and 
negotiated with competition (-1,0 percent point), an indication of more transparency and predictability. 

Conclusions and implications 
We found support for the idea that centralized purchasing is a tool used by CAEs to aggregate demand. 
This is visible in larger contracts awarded by the CPBs compared to contracts individually awarded by 
CAEs. Consequently, we also found that competition for a centralized purchase, based on the number of 
offers, is fiercer, but this holds only for contracts awarded above threshold. 

There are four factors identified that drive the use of centralized purchasing techniques. The first one is 
the cultural environment, captured by country specific effects. Mostly Northern and North-Western 
European countries show an inclination towards using centralized purchasing techniques, while 
Southern Member States show limited use. There are however individual exceptions. 

The second factor is the effect of fiscal austerity. We see a tendency to conduct more centralized 
purchasing procurements from 2008 onwards. As from 2008, many (if not all) Member States saw 
reducing budgets, driving the search for opportunities to reduce the price of goods and services 
procured. One of those measures is higher aggregation of demand in the form of the centralized 
purchasing. 

The third factor is the level of standardization, or similarity, of the procured goods and services. The 
more similar (homogenous) the procured products are, the easier it is to aggregate it without too much 
loss of flexibility in meeting the demands of individual authorities or entities. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

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3.4 Framework agreements 
 The framework agreement 
3.4.1
The most commonly used aggregation technique is the framework agreement. The core concept of a 
framework agreement is one where the purchasing is conducted in two stages:  

- 

- 

In the first stage, all general terms of the contract are defined. Contracts may be signed with one 
or more potential suppliers.  

In the second stage, the actual orders are placed (calls) with the participants in the framework 
agreement, who may then tender or be awarded the delivery.  

In principle, the concept of a framework agreement allows for better management of demand 
heterogenity where buyers may have multiple preferences and/or where shifts over time can be 
expected. For example, an IT-departement may enter into contracts with multiple IT developers and 
related services. As needs arise for support to various projects and developments over time, the IT-
departement will have an established framework through which it can reach out to qualified suppliers 
and place orders for the specific assignments. The framework agreement concept also ensure rapid 
response from the selected supplier compared to an ordenary tendering process. 

Framework agreements may not represent an aggregation of the number of unique purchasing entities, 
but is better understood as an aggregation technique over time. In that sense, it may be a relevant 
question whether an agreement functions to aggregate demand or mostly to reduce process costs with 
procurements. If a framework agreement is established, search and process costs for a purchasing 
authority are lower. This may be an important motivation in itself. We will return to these issues in 
chapter 4.3.2. 

Exhibit 3-40: Facsimile of the definition of a "framework agreement" in Directive 18 art 1(5) 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

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  Who is implementing framework agreements? 

3.4.2
Overall, about 23 percent of contract awards 
in Europe is through framework agreements. 
The use of frameworks has increased in the 
past years and especially since 2009.  

Note that the concept of value in a 
framework agreement is notional only. The 
values are estimates provided at the stage of 
the procurement and may not represent the 
actual value procured for a number of 
reasons. The contracts are not binding with 
regard to the authority and only represent an 
opportunity to access the market.  

In Denmark and UK the framework 
agreements constitute more than 40 percent 
of procurements in terms of value. In 
another group consisting of seven countries, 
framework agreements are above the EU 
average.  

Exhibit 3-41: Value of contract awards using 
framework agreements as share of total 2009-2012 
(percent) 

Source: The TED database; Team Analysis 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

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46 45 36 36 36 36 30 29 24 23 21 17 17 16 13 12 11,1 11,0 10,6 10,4 9,4 7,2 6,9 5,9 4,9 3,3 2,7 0,2 0,1 0,1 -DKUKNOSEIEROLVATCZAllFRBEDEHUNLSKEEFIITSIISPLBGESLTELLIPTCYLUMT 
 
 
 
 
 
 
 
 
 
 
 
Over time there has been an increase in awarding such agreements, but it is far from a uniform picture. 
Norway, Latvia, the Czech Republic and Estonia show strong increases in the use of framework 
agreements (in terms of value). Overall in the region, there has been an increase in use of framework 
agreements in terms of value of about 3 percent points. The change in use of framework contract in 
terms of number in the time periode between 2009 – 2012 is only a bit smaller than the change in terms 
of value. Overall the use of framework agreements in terms of number has increased by 2 percent 
points. Estonia has the largest increase with 27 percent points.  

Exhibit 3-42: Change in use of frameworks 
by country 2009-2012 (percent) 

Exhibit 3-43: Change in total value of 
framework agreements by country 2009-2011 

Source: The TED database; Team Analysis 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

114 

27 16 15 13 10 10 9 6 4 4 4 4 3 3 3 3 2 2 0 (1)(1)(2)(2)(2)(6)(9)(11)(24)(31)EEATROPTIESIESLTITDEUKBGNOHUPLFIAllLUCZFRDKLVNLSKSEBEELCYISLIMT(100)AllATBEBGCYCZDEEEESFIFRUKELHUISITLILTLULVMTNLNOPLPTROSESISK0%10%20%30%40%50%0%10%20%30%40%50%= Equal shareIncreased shareDecreasedshareValue 2009Value 2011 
 
 
 
 
 
 
 
Exhibit 3-44: Value of framework agreements 
2009-2012 (median, in thousand euros) 

Exhibit 3-45: Value of CANs by country 
(median, in million euros, 2009-2012) 

Exhibit 3-46: Value of CANs as a multiple of 
number of contracts 

Source: The TED database; Team Analysis 

Frameworks usually have a higher value than the 
average contract. The average value of a 
framework agreements is overall in europe 
500.000 euros. The average value of framework 
agreements differs significantly across Europe. 

To analyse the value of frameworks relative to 
their average use we look at the value multiplier. 
This mulitiplier shows the value of framework 
contracts as a multiplier of the number of 
contracts. The EU-wide multiplier is 1,5. We do 
however find a number of countries with negative 
multipliers indicating that the agreements have 
lower notional value than the typical contract. 
Among the countries with higher than average 
propensity to use framework agreements this only 
includes Norway. In France and the Netherlands, 
the value of framework agreements is also lower 
than the average value. 

Source: The TED database; Team Analysis 

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01002003004005002009201020112012FrameworksAll procurements2,2 2,0 1,5 1,2 1,2 1,1 0,9 0,7 0,7 0,7 0,6 0,6 0,6 0,6 0,6 0,5 0,5 0,5 0,5 0,5 0,4 0,4 0,4 0,4 0,4 0,3 0,3 0,3 0,2 0,0 HUITUKLILVDKATSKESNOEESENLISFIDEBEROAllPLPTELLTCZIECYFRLUSIBGMT(14)(13)(9)(2)(2)(2)(2)(2)(1)(1)(1)(1)1,0 1,2 1,2 1,3 1,3 1,3 1,5 1,5 1,5 1,7 2,0 2,0 2,1 2,1 2,8 3,1 3,7 5,5 LUPTCYSIISBGGRSKNLEENOFRPLROFIDKBEESIESEAllDELTLIGBLVITCZATHUELUK 
 
 
 
 
 
 
 
 
 
 
 
Most popular at national levels and used with higher value there 
Frameworks are used across all levels of government, but there is a higher propensity for central 
governments to use them. This also includes national agencies.  

Both national government and national agencies have the highest share of framework agreements in 
terms of value (see Exhibit 3-47) with respectively 30 percent and 28 percent, while regional 
government and agencies have the lowest share with 16 percent. 

Exhibit 3-47: Value of contract awards using framework agreements 

Source: The TED database; Team Analysis 

The value of contracts as a multiplier of number of contracts in Exhibit 3-47 shows the value of 
framework agreements relative to their average use. It is positive for all government authorities. Again it 
is most significant at the central level. The multiplier is however much smaller than for centralized 
purchasing. Also, it is only in central governments that the multiplier is higher than the EU average 
(1,5).  

Compared to the other main aggregation technique, centralized purchasing, frameworks are more 
evenly distributed across government levels. The factor differential between regional and national levels 
is about 2, compared to about 2,5 for centralized purchasing.  

Few high value contracts dominate the market 
About 20.000 -25.000 framework contracts are awarded each year by about 6.300 unique CAEs. Over 
the four year period investigated, about 13.000 unique CAEs have issued frameworks. This compared to 
about 6.000 CAEs who are acting on behalf of others through centralized purchasing. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

116 

Frameworks are favored at national levelsAnd higher value multiples at national levels(Value of contract as multiple of number of contracts)(Value framework contract awards as share of total)30%28%24%22%16%16%Central governmentNational agencyPublic bodyUtilitiesRegional governmentRegional agency1,9 1,5 1,5 1,2 1,1 1,0  
 
 
  
 
Framework agreements are a more repetitive phenomenon however, and most of these CAEs appear to 
have issued more than one framework agreement. There are some very high frequency users including 
those with very high contract value agreements. 

The economic significance of the framework agreements is best understood by looking at the values and 
the distribution across the number of unique CAEs.  

Exhibit 3-48: Share of total value of framework agreements per interval of unique CAEs (percent) 

Source: The TED database; Team Analysis 

We find that an astonishingly low number of unique CAEs, close to ten annually, constitute nearly 20 
percent of the total value of framework agreements. Chances are that these agreements are in UK as 
nine out of the ten largest framework contracts by value are all located there. These contracts represent 
all sorts of deliverables, from temporary staff services, catering to construction work and supplies of 
electricity. 

Further, we find that the next 30 unique CAEs (in terms of largest share of total value) constitute 30 
percent of the total value of framework agreements. Following this, the next 300 CAEs (in terms of 
largest share of total value) constituting another 30 percent of the total value. Consequently, about 5 
percent of the CAEs (the intervals from 1-10, 11-40 and 41-340) share 80 percent of the total value of 
framework agreements in the EU. This is a more skewed distribution than for the average EU contract. 
The rest of the unique CAEs, about 95 percent, constitute only about 20 percent of the total value.  

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117 

Intervals of unique CAEs: 1-1011-4041-340341-6340100 20 50 30 20 30 20 Share of total value framework contracts awardedNumber of unique CAEs: 10303006000 
 
 
 
 
 
 
Framework agreements are mostly about supplies and commodities 
Contracts can be for works, supplies or services. Works have significantly lower use of frameworks than 
supplies and services where the use of frameworks is more common. Supplies and services show a 
nearly similar use of frameworks in terms of number of contracts. The distinction is also of importance 
with regards to threshold levels which determine whether or not a purchase falls under the scope of the 
directives. The threshold level for works is nearly 40 times more that for services and supplies.  

This picture changes a bit when the use of frameworks is viewed in terms of value. First of all, the share 
in terms of value is higher than the share in terms of volume. This is to be expected, as framework 
contracts have an above-average value of procurement due to multiple individual contracts being 
granted under the framework. More interesting to observe is that the difference between supply 
contracts and service contracts increases. This implies that there is a stronger presence of framework 
contracts in the larger supply procurements compared to services, where framework contract values are 
still above-average, but less significant than in supply contracts. 

Exhibit 3-49: Share of framework agreements 
by type of contract 

Exhibit 3-50: Value share of framework agreements by 
type of contract 

Source: The TED database; Team Analysis 

For works and supplies, there has been little change in the relative use of framework contracts in the 
past years. This concerns both the use of frameworks in terms of number of contracts as well as the 
value procured. The picture for services does show some fluctuation over the years. An increase in share 
of service contracts consisting of frameworks can be observed in the period 2009-2011. However, the 
trend was not continued in 2012, where a decline of share of framework contracts was observed. 

Interestingly, the development of the share of service framework contracts shows a different story in 
terms of value. Here we find a very strong increase between 2009 and 2010, reflecting a strong increase 
of presence of framework contracts amongst the higher value service contracts. The trend was not 
continued in 2011, despite an increased share in the number of framework contracts.  

The median value of framework contracts shows similarity to the EU threshold values. The median 
value for works is very large, while the median value for supplies and services are quite a bit smaller. 
This difference is also the result of these same threshold values: the TED database contains supply and 
service procurements with much lower values than works procurements.  

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118 

13%32%24%WorksSupplycontractServicecontract35%38%11%25%35%19%BusinessCommoditiesConstructMachineryManufacturingOther 
 
 
 
 
 
  Top 15 framework agreement contracts based on value 
3.4.3
Next, we will look at the top-fifteen list of framework agreement contracts in Europe in terms of value of 
awarded contract. We find that nine out of ten of these contracts are located in UK. In addition, eight 
out of the ten largest contracts in terms of value are a combination of framework agreements and 
centralized purchasing on behalf of a collaboration of government bodies. These contracts have a value 
of about three times the average framework agreement, or nearly 10 times the average contract.  

1.  Postal services, UK. Buying Solutions, as the 

contracting authority, established a pan 
Government collaborative postal services 
framework agreement for use by or on behalf of 
UK public sector bodies. The Postal Services 
framework provides public sector bodies with easy 
access to all their postal requirements through 14 
lots covering a full range of postal services. The 
framework was established in 2010, and has a 
value of 6.994.311.168 euros. (also described on 
page 95)  

2.  Computer-related services, UK. The desktop 
service includes provision of user access devices 
(for example, desktop PCs, laptops, plus other 
specialist user access devices) and related user 
services (for example, accessibility services, 
desktop software, and authentication services). 
The agreement was established by the 
Government Procurement Service in 2010, and 
has a value of 5.245.733.376 euros.  

3.  Construction work for buildings relating to 

health, UK. The ProCure21+ National 
Framework is a framework agreement with six 
Supply Chains (PSCPs) selected via an OJEU 
Tender process for capital investment construction 
schemes across England until 2016. The 
framework was established by the Department of 
Health in 2010 and has a value of 4.464.453.632 
euros.  

4.  Business services: law, marketing, 

consulting, recruitment, printing and 
security, UK. Buying Solutions as the 
Contracting Authority established a Pan Government collaborative framework agreement for the 
supply of non-permanent staff for use by UK public sector bodies. The framework was established 
by the Government Procurement Service in 2010, and has a value of 2.914.296.320 euros.  

5.  Supply services of personnel including temporary staff, UK. Eastern Shires Purchasing 
Organization (ESPO), on behalf of Pro 5, working in partnership with Efficiency Reform Group 
(previously Office of Government Commerce (OGC)), Department for Education and members of 
the Professional Services Collaborative Category Board (PSCCB) and the Local Government 
Professional Services Group (LGPSG), established a framework agreement with a number of 
suppliers for the provision of Managed Services for Temporary Agency Resources (MSTAR). 
Managed services include neutral vendor solutions, master vendor solutions and other hybrid 
solutions. The framework was established in 2011, and has a value of 2.304.466.176 euros.  

6.  Catering services, UK. Eastern Shires Purchasing Organization (ESPO), on behalf of the Pro5 
group of professional buying organizations, established a framework agreement for the provision 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

119 

9/10Located in the UK8/10Combination of centralized purchasing and framework agreements 
 
 
 
 
 
 
of catering services to the public sector. The framework covers four distinct sectors: education 
(school meals and higher education), social care (including community meals), staff and civic 
catering (e.g. for council offices) and visitor and venue catering (museums, galleries, county 
parks, etc.). The framework was established in 2011 and has a value of 2.304.466.176 euros.  

7.  Construction work, UK. The provision of construction capital works on both infrastructure 
and non-infrastructure projects for AMP5 and potentially beyond on a non-exclusive basis. The 
agreement was for a possible 10-year period and was issued in 2011 by Northumbrian Water Ltd 
and has a value of 1.728.349.568 euros. 

8.  Electricity and Heating programme (solar and nuclear energy), IT. The framework 

agreement was issued in 2011 by the purchasing consortium ASMEZ for selection of partners to 
support the implementation of the Programme ASPEA concerning the implementation of 
photovoltaic systems for local authorities (municipalities) in Italy. The contract has a value of 
1.590.000.000 euros. 

9.  Natural gas, UK. Framework agreement for delivery of flexible gas and the provision of 

associated services for municipalities in UK. The agreement was issued by West Mercia Supplies 
in 2011 and has a value of 1.497.902.976 euros. 

10.  Architectural, construction, engineering and inspection services, UK.  

Scottish Water was seeking to appoint a number of capital delivery partners (CDPs) to support it 
in the delivery of its future quality and standards capital investment program for the regulatory 
period 2010 to 2014. The framework agreement was issued in 2011 and has a value of 
1.440.291.328 euros. 

11. Computer-related services, IT. Framework agreement for applications with both web-based 

and client/server systems, business intelligence and management reporting package 
(Microstrategy, SAPBW / SEM, Business Objects, Oracle BI). The agreement was issued by 
Ferservizi SpA - Gruppo FS on behalf of The Society of the Ferrovie dello Stato Group in 2011. 
The contract has a value of 1.364.999.940 euros. 

12.  Railway vehicles, AT. Framework agreement for the delivery of electric trains with a seating 

capacity of about 100 to 350 seats, door heights of 600 mm and 800 mm, with or without 
maintenance, and individually identifiable features. The agreement was issued by ÖBB-
Personenverkehr AG in 2010 and has a value of 1.306.040.060 euros.  

13.  Software-related services, UK. Buying Solutions as the Contracting Authority was putting 
in place a Pan Government Collaborative framework agreement for software-related services for 
use by UK public sector bodies including but not limited to Central Government Departments 
and their Agencies. The agreement was issued in 2010 and has a value of 1.165.718.528 euros. 

14.  Repair and maintenance services, UK. Framework contract for Total facilities 

management including (but not limited to): Managed services, Health & safety management, 
Environmental management, and Energy management. The agreement was issued by the 
Ministry of Justice in 2011 and has a value of 1.152.233.088 euros. 

15.  Construction work, UK.  

The framework agreement was issued by Scape System Build Ltd in 2011 for construction work 
and ancillary services for the public sector. The contract has a value of 1.152.233.088 euros. 

Source: The TED database; Team Analysis 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

120 

 
 
 
 
  Framework agreements below EU threshold 

3.4.4
Next we turn to the framework agreement below threshold level. As discussed under centralized 
purchasing, framework agreements can also take place under the threshold level. Threshold levels 
determine whether a contract falls under the scope of the directives (see: definitions and abbreviations, 
EU threshold level (below)). The value of contract is a key factor in determining this, but there are also 
other factors involved, including the type of contract, government level and specific types of purchases.  

Contracts below threshold value do not require formal publishing in the TED database, leaving little 
formal data about these contracts. However, the data gathered from the surveys for this study finds that 
nearly 50 percent of all entities have issued framework contracts for below the EU threshold level 
during the last 12 months. The average number of contracts issued during this time is 21,5, with an 
average value of 121.718 euros.  

Exhibit 3-51: Average number and average value 
of contracts issued during the last 12 months 
below threshold (median and mean) 

Exhibit 3-52: Value of framework agreements 
below threshold value (average value of 
contracts below threshold, in billion euros) 

Source: Proprietary survey with 748 respondents; Team analysis 

More than half of the entities state that the value of contracts below threshold level is less than 25 
percent of the total value of all agreements. We find the largest share of entities having contracts below 
threshold value in Slovakia, Estonia, and Sweden, with respectively 80 percent, 73 percent, and 62 
percent. 

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121 

21,5Number of contractsissued belowthreshold121718Value of contractsissued belowthreshold101212202624 - 5 10 15 20 25 30200620072008200920102011 
 
 
 
 
 
Exhibit 3-53: Value of contracts below EU 
threshold in percent of total agreements 

Exhibit 3-54: Percentage of framework 
agreements below EU threshold value 

Value of contracts in percent 
of total agreements 

Percent of total amount   

Source: Proprietary survey with 748 respondents; Team analysis 

When estimating the value of framework agreements below threshold level we have done the same 
procedure as for centralized purchases. We here find that the median value of below threshold in 
percent of the entities total procurement is only 12,5 percent, while the average percentage is 33 
percent. The median value is relatively low, and the average value seems like a better estimate for the 
total value of below threshold level agreements.  

The total value of framework agreements below threshold value was in 2011 24 billion euros.  

 SMEs' access to public procurement markets and aggregation of demand in the EU 

122 

54 %22 %11 %13 %Less than 25 percent (0-25%)Between 25 and 50 percent(25-50%)Between 50 and 75 percent(50-75%)More than 75 percent (75%)n.a.20% 33% 38% 38% 39% 40% 40% 41% 43% 44% 47% 49% 50% 54% 55% 58% 62% 73% 80% OtherPLUKITCZESDELTNLNODKAllFRHUFIROSISEEESK 
 
 
  
 
 
 
 
 
 
 
 
 
 
  Compound analysis of the factors 

3.4.5
A similar model as used for the compound analysis of centralized purchasing is used for the analysis of 
drivers and results69 of framework agreements. Likewise, we provide the results in the section below, 
with a detailed description to be found in the Annex chapter 3.4.   

Model results – step 1 
Before discussing individual drivers, we reflect on the development of the use of framework agreements 
over time. We see a very strong tendency to use more framework agreements, also corrected for other 
variables. The impact of each year also has a tendency to grow over the years. 

Exhibit 3-55: Development of the use of a framework agreement – year differences 

5%

4%

3%

2%

1%

0%

-1%

-2%

-3%

-4%

-5%

2006 2007 2008 2009 2010 2011 2012
2006 

2008 

2007 

Before 2009, the year effects are negative, indicating that procurement officers are less likely to choose 
framework agreements. In 2009, there was a large change in attitude with regards to using a framework 
agreement. Especially in 2011, the officers were much more inclined to choose a framework agreement. 
In 2012, the year effect was somewhat less pronounced. Interesting in this regard is that the radical 
change occurs in 2009, which corresponds with the start of the credit crunch crisis. 

We also find very strong country effects, reflecting a different legal, political or cultural environment in 
the EU and EEA Member States that influence the decision of procurement officers to choose a 
framework agreement.  

69  In  this  section  by  results  of  framework  agreements  we  mean  the  factors  on  which  the  use  of  a  framework 
agreement has an impact. 

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123 

 
 
 
 
                                                             
Exhibit 3-56: Country differences in use of framework agreements

-9% 

-7% 

-7% 

-7% 

-8% 

-7% 

-6% 

-7% 

-2% 

-3% 

-4% 

-3% 

-4% 

-1% 

Malta

Spain

Portugal

Luxembourg

Cyprus

Italy

Hungary

Lithouania

Bulgaria

Liechtenstein

Greece

Czech republic

Poland

Finland

Austria

Iceland

Belgium

Estonia

Germany

France

Slovenia

Ireland

United Kingdom

Latvia

Slovakia

Netherlands

Romania

Denmark

Sweden

Norway

6% 

0% 

0% 

1% 

2% 

7% 

8% 

5% 

6% 

4% 

10% 

11% 

11% 

20% 

23% 

28% 

-15%

-5%

5%

15%

25%

35%

It turns out that the attitude towards the use of framework agreements matches the geographical 
location of countries. Nordic countries use framework agreements relatively often, while Southern and 
South-Eastern European countries do use the framework agreement notably less often . Notable 
exceptions to this geographical division are Finland and Iceland (framework agreements are used much 
less than in the neighbouring countries), and Romania (framework agreements are used much more 
than in the neighbouring countries). 

The use of electronic auction, centralized purchase and type of evaluation mechanism 
The use of an electronic auction and purchasing on behalf of another entity strongly increases the 
likelihood that a framework in concluded. Criteria aimed at selecting the most economically 
advantageous tender (MEAT) makes it also more likely that a framework agreement is chosen, as 
opposed to criterion aimed at selecting the cheapest offer.  

 SMEs' access to public procurement markets and aggregation of demand in the EU 

124 

 
 
 
 
Exhibit 3-57: Techniques in procedure 

Criteria lowest price

-3% 

Criteria MEAT

Jointly purchased

Electronic auction used

Total

8% 

4% 

4% 

Type of CAE 
Most types of CAEs have a preference for or against the use of framework agreements. We see that 
regional and local agencies and bodies governed by public law have a particular tendency to use 
framework agreements. Regional and local authorities and other authorities have a particular 
inclination to avoid using a framework agreement.  

Exhibit 3-58: Type of contract contracting authority and entity 

Other

-2% 

Total

Regional or local authority

-1% 

National/federal agency

0% 

National/federal authority

Not specified

Utilities

Governed by public law

Regional or local agency

1% 

0% 

0% 

2% 

2% 

-2%

-1%

0%

1%

2%

3%

4%

Sector of CAE 
In every sector, CAEs show a preference for or against using framework agreements. It is interesting to 
note that particularly contracting entities in the utility sector (postal, railway, water, electricity, gas and 
heat, health services) show a strong preference for the use framework agreements. On the other hand, 
sectors that are related to the soft and hard infrastructure of a country show less preference for the use 
of a framework agreement. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

125 

 
 
 
 
 
 
 
Exhibit 3-59: Sector of CAE 

Environment

-3% 

Port-related activities

-2% 

Other

-2% 

Education

Recreation, culture and religion

-3% 

-3% 

Urban railway, tramway, trolleybus or bus services

-1% 

Housing and community amenities

-2% 

Exploration and extraction of coal and other solid fuels

-1% 

General public/services

-2% 

Economic and financial affairs

Public order and safety

-1% 

-1% 

Exploration and extraction of gas and oil

7% 

Social protection

Defence

0% 

Airport-ralated activities

Health

Production, transport and distribution of gas and heat

2% 

2% 

6% 

6% 

Electricity

Water

Railway services

Postal services

9% 

9% 

12% 

12% 

This distinction between sectors seems to confirm the hypothesis that more standardized products are 
easier to aggregate than more complex products. Particularly in the utility sectors, the types of services 
are relatively standardized and consist of large volumes. An example is maintenance of the power grid. 
This is opposed to the soft and hard infrastructure of a country that requires more tailor made 
operations, in low volumes. One can think for instance about building a road in a community, which is 
relatively ad-hoc work and details differ per situation (building on sand or on clay, and use of cobble 
stones or concrete). 

Type of contract 
The data show two effects. First, there is a very strong tendency to avoid using framework agreements in 
works contracts with a negative tendency of 7 percent. The effects for the other two types of contracts 
are virtually the same, as indicated by the statistical insignificance of the coefficients. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

126 

 
 
 
 
Exhibit 3-60: Type of contract 

Works contract

-7% 

Service contract

Supply contract

3% 

3% 

These results again confirm the hypothesis that aggregation is more likely in standardized products or 
services. Works contracts involve building projects which are almost always unique due to the spatial 
and institutional circumstances that require unique approaches.  

Type of work 
In the dataset we distinguish between six aggregated types of activities to be conducted under the 
contract as identified by CPV codes: Businesses, Commodities, Construction, Machinery, Manufacturing 
and Other. The models show statistically significant coefficients for all categories in all datasets. 

Exhibit 3-61: Activity in contract 

Machinery

Business

-1% 

-1% 

Construction

0% 

Other

Manufacturing

Commodities

0% 

3% 

-3%

-2%

-1%

0%

1%

2%

3%

Total

4% 

4%

5%

Looking at the actual effects, we see a relatively strong tendency to use framework agreements in 
commodities and manufacturing. A tendency to avoid framework agreements is visible in business and 
machinery. 

Again, this confirms our hypothesis that aggregation is more likely for standardized products and 
services. Commodities and manufacturing represent goods, which show a high factor of standardization. 
This is opposed to business and machinery, which are more unique services and is consequently harder 
to aggregate. 

Similar to most of the previously mentioned variables, for activity in the contract the effect is less strong 
for below threshold value contracts than for above threshold contracts. This holds true for both the 
negative and the positive effects. 

Step 2 - Results of the use of framework agreements 
The second step of the analysis is to test the effect of using a framework agreement on the various 
dependent variables. 

If a framework agreement is used, the average number of offers is increased by 1,4 compared to the 
situation when a framework agreement is not used. This indicates a stronger competition for a 
framework agreement than that for other types of contracts.  

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127 

 
 
 
 
 
The use of framework agreements results in a longer duration of the procurement procedure70. 
Nevertheless, it leads to less time available for companies to prepare a proposal (on average 0,5 days 
less) while CAEs take 5,7 days extra to award a proposal.71  

Regardless of the number of offers, the chance an CAE selects a winner from another country using a 
framework agreement is approximately 1 percent-point less when compared to the situation in the 
absence of a framework. 

The value of framework agreements is notably higher than that of non-framework agreements. On 
average, framework agreements are 2.683.874 euros larger than single contracts. The largest part of this 
effect is explained by and confirms the hypothesis that a framework agreement is a form of 
aggregation.72  

The findings also suggest an increase in the use of framework agreements strengthening competition 
when tendering for the contract. There is a tendency to make more use of open procedures (+2,0 
percent point) and negotiated procedures that include competition (+2,8 percent point).  

Conclusions and implications 
We have explored what drives the decision to use a framework agreement and what the results of a 
framework agreement are. The findings of this chapter are roughly the same as the ones of the 
investigation of a centralized purchasing. 

First of all, we found support for the idea that framework agreements are a tool CAEs use to aggregate 
the demand: the contract sizes for framework agreements are larger than that of the single contracts. 
Consequently, we also found that competition for the framework agreements is fiercer. 

Secondly, drivers for the use of framework agreements are mostly country specific. In some countries 
framework agreements are very popular, while in others not. We see that the use of framework 
agreements has risen over the years. Especially the large jump in popularity of the framework 
agreement in 2009, following the budgetary austerity of governments in that very same period. Thus, 
budgetary concerns could be a major reason to aggregate the demand through using framework 
agreements, is interesting to observe. A possible explanation for this strong increase may be an 
increased attention of procuring authorities/entities to achieving cost savings by means of aggregation, 
with budgetary concerns as key driver for this shift in attention. 

70 On average the duration is 5,4 days longer. 
71 Please note, due to rounding errors, the sum duration to award, and duration to submit an offer, does not equal 
duration for the entire procedure. In addition, the analyses do not constitute the same observations due to missings 
for one of the key dates. 
72  Another  explanation  of  this  effect  may  be  that  a  maximum  possible  contract  value  of  a  framework  contract  is 
reported in the TED database. A maximum contract value is not equal to the actual realized value, which is usually 
lower  than  the  maximum  value.  Thus,  the  true  effect  size  is  probably  not  as  large  as  the  results  of  the  statistical 
analyses show. 

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128 

 
 
 
 
 
                                                             
Cost 
effectiveness 
of market 
aggregation 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

129 

 
 
 
 
 
 
4 Cost effectiveness of market 

aggregation 

4.1 Introduction 
This section provides an analysis of cost effectiveness of market aggregation in the public procurement 
markets in Europe.  

The first part of the chapter looks at process cost of demand aggregation in EU public procurement 
process. Following this part we look at competition and potential gain and loss in quality, compliance, 
and transparency by use of aggregation demand, before we look at aggregation and impact on SMEs 
market access. We close up the chapter with conclusion remarks.  

Potential economic gains from demand aggregation stem from two main sources: (i) Price savings from 
buying in bulk; and (ii) Costs savings from lower transaction costs of combining procedures. The gains 
are potentially off-set by other factors, such as negative impacts on competition, more difficult access 
for SMEs and quality concerns. For now however, we will try to understand the potential gains in 
transaction cost savings.  

Effectiveness cannot be directly measured or calculated from the data sources. To deal with this 
challenge, we use a number of proxies to make inferences about the relative effectiveness of different 
types of market aggregation techniques, entities, and countries by measures of competition, procedural 
aspects, and perception by survey respondents. The number of bids is also analysed and used as a proxy 
for effectiveness.  

As a hypothesis the number of received bids (increased competition), all other things equal, the CAE 
will enter into a more effective contract with the preferred supplier that meet the selected evaluation 
criteria. (i.e. the sum of best quality and best price) 

Analysis of the survey results and interviews are also incorporates in this chapter. In the survey the 
respondents were asked about different perception of efficiency. 

Finally, we look at aggregation and impact on SMEs' market access by analysis of an online survey 
among economic entities tendering for public procurement contracts. The respondents are asked about 
experience with and views about framework agreements. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

130 

 
 
 
 
 
4.2 Process cost with demand aggregation 
Demand aggregation of procurement can potentially support achieving economies of scale. It can also 
potentially benefit smaller organisations by achieving the same terms as larger organisations, if the 
contract is set up to allow multiple accesses. Demand aggregation across organisations can simplify the 
tendering process leading to reduced procurement cost for buyers and reduced bidding costs for 
suppliers. It can also reduce project management and contract management costs.  

In this section we investigate the cost of the procurement processes measured in terms of person-days 
(in full-time equivalents), and compare demand aggregation techniques with stand-alone purchases. 

Data on the cost of the procurement processes and market aggregation are not readily available 
therefore unique data are collected for this study. The input for the cost analysis is provided from 1.200 
purchasers across Europe who have reported the number of person-days spent for establishing both 
centralized procurement and framework agreements, as well as the number of person-days spent per 
request for framework agreements. The respondents provided the information with reference to a 
specific and recent purchasing contract for which they indicated themselves as the person responsible.  

When asking the respondents to estimate the costs, we simply asked them to provide a number (in 
person-days) for all activities related to the contract, from identification of need to contract award.  

To analyse the cost of the aggregated procurement process, we have used two methods. First, we used a 
descriptive approach that reported the median costs over all respondents, and compared the cost to 
regular procurement contracts. These analyses were conducted by person-days, which were chosen as 
the core parameter as they are a robust estimate, which leaves little room for interpretation. The second 
method used monetary cost calculations by linking labour cost to the person-days cost.  

  Cost in person-days staff time of centralized purchasing 
4.2.1
The total person-days of staff time for establishing a given centralized purchase contract is on average 
30 person-days. This is higher than the average person-day staff time of all procurement of 2273. 
However, given that joint contracts mostly replace more-than-one standalone contract, the comparison 
value is possibly lower. 

Exhibit 4-1: Total person-day staff time  

When disaggregating the results by how many 
CAEs the contract represents, we find that those 
who are acting on behalf of only one CAE have 
higher person-day staff time (person-day staff 
time of 25) than the organisations acting on 
behalf of between two and five CAEs (person-day 
staff time of 20).  

Note that the staff time for the contracting CAE 
increases significantly in more complex 
configurations, i.e. with more than six CAEs 
involved. Average staff time is here above 40 
person-days.  

When distributing these costs among all the CAEs involved, which is a more appropriate benchmark to 
compare against the standalone contract, we find that there are significant savings involved. Average 
staff time by entity is reduced to about six person-days. Note that this is an underestimation as staff 
time by the (second tier) CAEs involved is not captured in this survey. The databases do not contain any 
information on who these CAEs are. 

73 Numbers from survey 2011, Public procurement in Europe: Cost and effectiveness. Strand/Ramada/Canton 2011 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

131 

3022Joint purchasingAll procurement* 
 
 
  
                                                             
 
 
 
Exhibit 4-2: CPBs total person-day staff time 
according to number of CAEs acting on behalf of 

Exhibit 4-3: Average person-day staff time per 
CAE acting on behalf of  

Source: Proprietary survey with 450 respondents; Team analysis 

Exhibit 4-4: Person-day staff time per Member 
States and EEA 

Person-day staff time per Member 
States and EEA 
When analysing the total person days of staff 
time for establishing a given centralized 
purchase contract across the Member States 
we find that there is a significant difference 
between countries.  
CPBs in Romania, Cyprus and Czech Republic 
are on top of the list, with a median of 
respectively 150, 102, and 98 person-days 
staff time for establishing a given centralized 
contract. This could partly be due to a 
variance problem in the data with relatively 
few respondents from these countries. 
Countries such as Luxembourg, UK, and the 
Scandinavian countries are all above the 
average person-days staff time. These 
countries have all more than average 
contracts with relatively high value and many 
participants. In the bottom of the list we find 
Spain, with only a median of 3 person-days of 
staff time.  

Source: Proprietary survey with 450 respondents; 
Team analysis 

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132 

25 20 40 45 Only oneBetween 2-5Between 6- 10More than 1025654,5Only oneBetween 2-5Between 6- 10More than 1015010297,560605040403532,532,530303027,5202014,512,512865,553ROCYCZITSKLUUKSENODKIEHUPLAllNLBGEESIFRDEFILVLTATES 
 
 
 
 
 
 
 
 
 
 
 
 
  Cost in person-days staff time of framework agreements 

4.2.2
Framework agreements represent an aggregation of demand over time. Doing this, framework 
agreements, in the initial stage, aggregate a larger part of administrative burden of a procurement 
process. This would be expected to lead to significant cost savings, especially if the number of call-offs is 
high. To estimate the cost of framework agreements a modified approach was used. For each formal 
contract established there are call-offs under each agreement. The average cost of a call-off74 is thus 
calculated as the framework setup cost (fixed) in terms of person-days plus the yearly contract stage 
call-off cost (variable) divided by the number of yearly call-offs.  

An estimate of average process cost 
When calculating the total process cost for framework agreements, we find that the average person-days 
staff time for each call-off is 8. This is lower than the average person-days staff time of contracts in 
Europe of 22 days (in 2010). It is also lower than an estimate average person-days staff time of 16 for 
each call-off found in 2011.75 There are more data behind the estimate in this study and thus possibly 
more accurate. 

Exhibit 4-5: Person-day staff time 

Exhibit 4-6: Person-day staff time according to 
different types of call-offs76 (median days) 

Source: Proprietary survey with 748 
respondents; Team analysis  

When calculating the average person-days staff 
time of the framework contract, the total staff 
time is spread among the multiple requests 
throughout one year. We find that the person-day 
cost decreases with more requests. This means 
that a framework agreement with more requests 
within one year will lower the cost per request. 
Call-offs under framework contracts has lower 
costs than any other form of procurement and 
lead to process cost savings for authorities. 

Exhibit 4-7: Person-day staff time per call-off 
(median days) 

Source: Proprietary survey with 748 
respondents; Team analysis 

74 Individual contracts that can be made throughout the term of a framework agreement 
75 Strand, Canton, Ramada 2011 
76  Random  and  Rotation  second-stage  award  schemes  are  taken  out  of  this  analysis  due  to  few  data  on  award 
schemes. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

133 

822Framework agreementAll procurement*57881210CascadeOne supplier frameworkOtherAverageDiscretionaryMini-competitions351053OneBetween 1-10Between 11-50More than 50 
 
 
 
 
                                                             
 
 
   
 
 
 
 
 
 
Person-days staff time for stage one and 
two alone 
The first stage of a framework contract 
involves sending out a tender that will return 
bids. This involves an average person-day cost 
of 25. This is higher than the EU benchmark of 
22 days. It is important that the selection of the 
second stage award scheme has to be included 
in the tender for the framework agreement, 
and there is variation in the use of person days 
in first stage, depending on the selected 
second-stage award-scheme. Our survey states 
that the person-day staff time of setting up a 
mini-competition scheme is more than 1,5 
times as expensive as using a cascade scheme 
for the second stage.  

Exhibit 4-8: Person-day staff time stage one 

Source: Proprietary survey with 748 respondents; 
Team analysis 

After the framework contract is established, 
there are call-offs under each agreement. The 
call-offs can either be done through an agreement of, mini-competition, cascade, discretional selection 
between suppliers, through a one supplier framework, rotation, or random selection. Beyond that, there 
is less variation in the cost of the methods of award. One supplier framework exhibit somewhat higher 
process costs, while predetermined schemes like cascades are the cheapest forms based on person-days 
staff time. 

Each individual contract has much lower costs because most of the administrative elements of the 
tender are no longer required (included in stage 1). The average person-day cost of the second stage is 3.  

Exhibit 4-9: Person-day staff time stage one77 

Exhibit 4-10: Person-day staff time stage two78 

Source: Proprietary survey with 748 respondents; Team analysis 

77 See footnote 76 
78 See footnote 76 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

134 

202122252530CascadeDiscretionaryOtherAverageOne supplier frameworkMini-competitions233355CascadeOne supplier frameworkOtherAverageDiscretionaryMini-competitions2522Frameworkagreement stage oneAll procurement* 
 
 
 
 
 
 
 
 
                                                             
 
 
 
 
 
 
 
 
 
 
Exhibit 4-11: Total person-day staff time per request per 
Member States and EEA 

Person-day staff time per 
Member States and EEA 
Next we turn to a presentation of 
person-days staff time for framework 
agreements across countries. Looking 
at the person-days observations we 
find that Germany, Spain, and 
Netherlands have the lowest person-
days staff time per request. In the 
midrange we find United Kingdom and 
Sweden. United Kingdom is known for 
having a large share of high value 
contracts, but it seems that this does 
not affect the person-days staff time 
spent on each request. Latvia and 
Czech Republic seems to have a high 
median person-day staff time on each 
request, this is probably due to a low 
number of observations in these two 
countries.  

Source: Proprietary survey with 748 respondents; Team 
analysis 

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135 

41382120191714131212109887666443CZLVEELTPLITDKROSLSKHUUKSEAllPTFINOFRNLESDE 
 
 
 
 
 
 
 
 
 
4.3 Monetizing cost 
Next we turn to an analysis of monetized procurement cost. The analysis is done by linking labour cost 
to the person-day cost observations reviewed above. The costs are determined by the number of person-
days spent by the purchaser on each contract (See calculation in chapter 4.2.1); and the standard cost of 
each person-day of time79. When multiplying the total person-day costs by labour costs we relied on 
data from Eurostat and OECD source to determine the average salary costs for different countries. This 
number does not distinguish between salary variations among sectors or other categories. We also 
included a standard uplift of 25 percent as it is customary in activity based costing models.80 When 
analysing the cost of purchases, we have, as above, distinguished between centralized purchases and 
framework agreements.   

4.3.1

 Centralized purchasing  

Cost by country  
We use median as the expression of the 
CPBs typical contract.  

Surprisingly, high wage countries are 
not the only ones who have the highest 
score. Both Cyprus and Italy have 
medium high wages (respectively 149 
and 221), yet still top the list. Note that 
the findings from Cyprus are especially 
sensitive to a small number of 
respondents, but the findings from Italy 
are more statistically robust. 
Unsurprisingly, both Sweden and 
Norway are near the top of the list. UK is 
also high up, with both high unit costs 
and above average person-days spent on 
each contracts. This is most likely due to 
the country's many large purchase 
entities. Fourteen out of the top twenty 
largest purchase entities in Europe are 
located in UK and nine out of top-ten 
centralized purchasing contracts (by 
value) are located in UK (see chapter 
3.3.2).  

In the low range we find countries with 
both lower wages and lower person-days 
spent on each contract. 

Exhibit 4-12: Median cost of an centralized contract (in 
thousand euros) 

Source: Proprietary survey with 450 respondents; Team 
analysis 

79  Total  labour  cost  for  2009  and  real  unit  labour  cost  growth  rate  for  2010,  2011  and  2012  as  reported  from 
Eurostat. The total labour cost statistic includes wage and other costs.  
80 We apply a mark-up on labour cost which covers items such as: Personal training and development, Information 
technology, Entertainment, Office articles, Subscriptions, Memberships, general indirect costs, depreciation, Rent, 
Insurance, Light, Electricity and water, Repairs. This is in addition to the total labour cost reported from Eurostat. 
The  mark-up  applied  in  SCM  models  in  most  countries  is  typically  between  25-30  percent.  The  following  daily 
labour costs including uplift of 25 percent are used for each country: CZ 81, CY 149, UK 288, DK 321, HU 69, LV 47, 
LT 52, PL 67, RO 39, SE 312, NO 361, EE 71, ES 149, FI 264, FR 261, IT 221, NL 309, PT 110, SK 64, SL 127, DE 
258. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

136 

15,213,412,611,010,28,68,07,56,76,56,06,05,53,92,72,52,12,11,91,41,41,30,30,30,2CYITSENOGBNLCZIEAllDKROPTBESKFRDEFIHUSIEEPLATLTLVESUK 
 
 
 
 
 
 
                                                             
 
 Cost per participant of centralized purchasing 
We find that, CPBs acting on behalf of only one entity have a higher overall cost than the organisations 
acting on behalf of between one and five entities. This is unexpected since the CPBs acting on behalf of 
more companies tend to be larger organisations. There is only a small difference in the total cost of 
organisations acting on behalf of between six to ten and more than ten entities  

If we look at the organisations' total cost divided by the number of participants in the contract, we find 
that there is an opportunity to achieve economies of scale. Aggregating more than one contract into a 
centralized purchase lowers the average cost per contract and will hence increase the opportunity to 
achieve economies of scale.   

Exhibit 4-13: CPBs cost (in thousand euros) 

Exhibit 4-14: Cost per participant in the contract 
(in thousand euros) 

Source: Proprietary survey with 450 respondents; Team analysis 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

137 

4,94,510,111,7Only oneBetween 1-5Between 6-10More than 104,91,81,31,2Only oneBetween 1-5Between 6-10More than 10 
 
 
 
 
 
 
 
4.3.2

  Framework agreements 

Cost by country 
To analyse the cost of framework agreements we first look at the total cost for the authorities/entities of 
framework agreements, including both person-days of staff time used to establish a framework 
agreement and to conclude a call-off to the supplier under the agreement. We only look at the cost for 
the authorities/entities of establishing a framework agreement. 

When calculating the total cost for framework agreements we find that the first year average total cost of 
framework agreement is 17.600 euros. This is close to three times the cost of a centralized purchase 
contracts (average cost of a centralized purchase is 6.700 euros).  

Norway and UK top the list with respectively a cost of 25.800 and 21.600 euros on average for a 
framework agreement. This is mainly due to their high labour cost in the countries, but also, to some 
extent, the above average person-days spent on each framework agreement. UK is closely followed by 
Slovenia and Sweden. Not surprisingly, in the low range we find lower wages countries. 

The picture does not change much if we only look at the total cost of establishing a framework 
agreement. UK, Slovenia and Norway still top the list, while the low-wages countries, such as Estonia, 
Romania and Hungary, are situated in the lower range. 

However, when looking at the first year total cost of framework agreements per request we find that the 
average cost per request is 3.000 euros. Only four countries have total cost per request over the average 
of all. France, Poland, Denmark, and UK have all total cost per request over 3.000 euros while the rest 
of the countries have total cost per request of less than 3.000 euros.  

Exhibit 4-15: Total cost of a 
framework agreement (in 
thousand euros) 

Exhibit 4-16: Cost of 
establishing a framework 
agreement (in thousand euros) 

Exhibit 4-17: Total cost of 
framework agreement per 
request (in thousand euros) 

Source: Proprietary survey with 748 respondents; Team analysis 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

138 

25,821,620,220,018,718,718,717,617,417,316,416,115,313,911,911,59,47,85,95,03,9NOUKSLSEDKITLVAllFIPTCZDEPLNLESSKFREEHULTRO8,67,67,26,76,46,26,26,26,26,26,15,25,24,94,34,03,13,02,72,01,7UKSLNOSEDKITLVAllPTNLFIFRDECZSKPLLTESEEROHU9,77,36,03,73,02,92,72,71,91,71,51,31,21,00,90,80,60,60,40,40,2FRPLDKUKAllCZDEEENLITNOFISESLESROSKLTPTLVHU 
 
 
 
 
 
 
 
 
Cost by number of requests 
When calculating the average cost of the framework contract, the total cost is spread among the 
multiple requests throughout one year. We find that the most expensive contracts are those with more 
than 50 yearly requests. The contracts with a large number of yearly requests are also the contracts with 
the highest value. We also find that the cost per request is decreasing with more requests until more 
than 50 yearly requests. Framework agreements with more than 50 yearly requests become more 
expensive than contracts with between one and fifty yearly requests81.  

Exhibit 4-18: Total cost of a framework 
agreement according to number of yearly 
requests (median, in thousand euros) 

Exhibit 4-19: Total cost of a framework 
agreement per request (median, in thousand 
euros) 

Source: Proprietary survey with 748 respondents; Team analysis 

81 It is based on an average cost of 50 requests. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

139 

6,010,621,4177,4OneBetween 1-10Between 11-50More than 506,01,80,73,5OneBetween 1-10Between 11-50More than 50 
 
 
 
 
 
 
 
                                                             
Exhibit 4-20: Total cost of establish a framework 
agreement (median, in thousand euros) 

Exhibit 4-21: Cost according to different types of calls 
(median, in thousand euros) 

Cost of different types of calls82 
The analysis indicates that the first stage of 
a framework contract involves an average 
cost of 6.231 euros83. There is some 
variation with regards to the selected 
second stage award schemes being used. 
The analysis indicates that the cost of 
setting up a mini-competitions framework 
agreement is close to twice as expensive as 
setting up a discretionary framework 
agreement.  

After the framework contract is established, 
there are calls under each agreement. The 
calls can either be done through an 
agreement of, mini-competition, cascade, 
discretional selection between suppliers, 
through a one supplier framework, 
rotation, or random selection. Each 
individual contract has much lower cost 
because most of the administrative 
elements of the tender are no longer 
required.  

When we look at the different award 
schemes, there is variation among the cost. 
Cascade and mini-competitions exhibit 
somewhat higher process costs, while 
schemes like one-supplier framework and 
discretionary seems to be the cheapest 
forms. Note that the cost related to the use 
of the cascade scheme is high due to the 
registration of several high value call-offs. 
The average cost of the use of framework 
agreement is 15,8.  

Source: Proprietary survey with 748 respondents; 
Team analysis 

82  Random  and  Rotation  second-stage  award  schemes  are  taken  out  of  this  analysis  due  to  few  data  on  award 
schemes. 
83 Median cost of establish a framework agreement. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

140 

8,66,26,26,25,34,80102030Mini-competitions amongmultiple suppliersOne supplier frameworkAverageCascade (Prioritized ranking)OtherDiscretionary020406080Mini-competitions amongmultiple suppliersOne supplier frameworkAverageCascade (Prioritized ranking)OtherDiscretionaryCost of establishing the framework agreementCost of concluding requests to suppliers under the agreement15,321,115,826,416,013,0 
 
 
 
 
                                                             
 
 
Maximizing aggregation over time – four years 
The maximum permitted duration of a framework agreement is four years. This four-year rule exists to 
ensure that EU public procurement markets are opened up periodically to competition. If the contract 
authority use the maximum duration of the framework agreement it will save even more costs compared 
to an average procurement since the cost of establishing the contract are covering more call-off over a 
longer period of time.  

When finding the process cost of framework agreements over the maximum duration of four years, we 
have used the person-day cost reported by the respondents and the average number of call-offs over one 
year, aggregating up to the maximum length of four years. 

Exhibit 4-22: Total cost of a 
framework agreements with a 
duration of four years 
(median, in thousand euros) 

Exhibit 4-23: Yearly cost of a 
framework agreements with a 
duration of four years 
(median, in thousand euros) 

Exhibit 4-24: Total cost per 
request of a framework 
agreements with a duration of 
four years (median, in 
thousand euros) 

Source: Proprietary survey with 748 respondents; Team analysis 

The total cost of a framework agreement in the EU with duration of four years is 38.100 euros. This 
accounts for an average annual cost of 9.500 euros. However, from Exhibit 4-22 and Exhibit 4-23 we 
can see large differences between the countries. Finland has the highest cost of using a framework 
agreement over the maximum duration, closely followed by the other northern countries due to their 
higher daily rates. Romania, Lithuania, and Portugal have the lowest process cost of using a framework 
agreement with duration of four years.  

When breaking the process cost down to cost per request we found an average cost of 1.200 euros per 
request of a framework agreement over the maximum duration of four years for all the countries.  

  The effect of aggregation on realised savings 

4.3.3
When analysing the typical costs of different aggregation techniques against typical procurement costs, 
we have used the median values. We have estimated the unit costs by dividing the total cost of a 
framework agreement with a maximum duration with the average number of requests under the 
agreement. Similarly, we have divided the total cost of a centralized purchase with the average number 

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141 

7,110,516,918,323,825,028,530,931,031,732,235,638,143,848,149,149,349,857,966,9ROLTPTHUFRNLEECZDEESITSKAllUKSLPLNOSEDKFI1,82,64,24,65,96,27,17,77,77,98,18,99,510,912,012,312,312,514,516,7ROLTPTHUFRNLEECZDEESITSKAllUKSLPLNOSEDKFI0,30,40,50,60,70,70,80,80,81,01,21,21,21,21,31,41,51,61,61,9ROLTPTHUFRNLEECZDEESITSKAllUKSLPLNOSEDKFI 
 
 
 
 
 
of participants in the contract, giving the average cost per authority. However, the cost of centralized 
procurement does not include the cost of implementing the contracts for all the authorities 
participating. By doing this we can analyse the effect of aggregation on savings.  

Exhibit 4-25: Average cost per CAE of one procurement with 
different techniques of aggregation (in thousands euros) 

There are large differences 
between the different 
aggregation techniques and a 
typical procurement. A typical 
procurement has a cost of 5.500 
euros84 for the CAE involved. 
This is more than the cost of both 
framework agreements and 
centralized purchases. 
Centralized purchasing has an 
average cost of only 1.300 euros 
while framework agreement has 
an average cost of 1.200 euros. 

Source: Proprietary survey with 1.198 respondents; Public 
procurement in Europe, Cost and effectiveness, 2011; Team 
analysis 

Even though framework 
agreements appear to be most 
commonly used in high wage countries, it seems to offer savings opportunities. Framework agreements 
are closely followed by centralized purchasing with only 100 euros difference. The CAEs have potential 
to save cost by using techniques for aggregating demand. 

It is important to be aware that the cost of centralized procurement includes the pre-award process 
including the award itself, but does not include the cost of post-award activities like implementing and 
operating the contract for each of the authorities involved in the centralized procurement. Experience 
from implementation of centralized awarded contracts shows that each participating authority has to 
allocate some local resources to administer and implement the agreement. These implementation costs 
are not implemented in the calculation above. Other local post-award costs e.g. integration with local 
financial or ICT systems are not included in the calculations. Hence, we will expect the cost to be higher 
for these contracts. The level of these post-award costs will vary from each authority. 

The cost of framework agreement will decrease with the time duration of the contract. The cost of the 
framework agreement the first year is 3.000 euros compared with a framework agreement with the 
maximum duration of four years with a cost of 1.200 euros.  

84 Estimated cost of all procurements from Public procurement in Europe, Cost and effectiveness, 2011 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

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5,5 1,3 1,2 All procurements*Centralized purchasing perparticipantFramework agreement withfour years duration per call-off 
 
 
 
 
                                                             
 
 
 
Exhibit 4-26: Total cost of all procurements compared with 
centralized procurement (in thousand euros) 

Possible savings for CAEs only 
When estimating the total savings of 
using centralized procurement and 
framework agreement for CAEs, we 
compare the use of centralized 
procurement against all procurement 
and then calculate the potential 
comparing costs of framework 
agreement with all procurements.  
The typical procurement has a cost of 
5.500 euros85  for the CAE involved.  

Source: Proprietary survey with 450 respondents; Team 
analysis 

1. Using centralized procurement 
To calculate the comparable cost of 
all procurement with centralized 
procurement we found the number of 
typical contracts a centralized procurement contract can replace. A proxy for this number is the average 
number of authorities that are included in a centralized procurement contract. We calculate the cost of 
centralized procurement (1.300 euros) with the average number of participants (5,2). Also, we calculate 
the average total cost of all procurement with the average numbers of participants of a centralized 
procurement contract (5,2). Doing this we find that all procurement has a total cost of 28.500 euros 
while the total cost of centralized procurement has a total cost of only 6.700 euros. 

When comparing the total cost of all procurements with the total cost of centralized procurement we 
find that the CAEs have the potential to save around 80 percent of the process cost attached to awarding 
the contracts if using centralized procurement instead of typical procurement contracts for each of the 
CAEs 

Exhibit 4-27: Total cost of all procurements compared with 
framework agreement with maximum duration 4 years (in 
thousand euros) 

2. Using framework agreements 
To calculate the comparable cost of all procurement with framework agreement, we found the average 
number of call-offs of a framework agreement over the maximum duration of four years to be used as a 
proxy for the number of typical 
procurements a framework can 
replace. Analogous to the comparison 
of centralized procurement and all 
procurement we calculated the 
average cost of framework agreement 
per request (1.200 euros) with the 
average number of call-offs (8,1) – 
giving a total of approx. 9.500 euros 
Then, we calculate the average total 
cost of all procurement (the typical 
procurement has a cost of 5.500 
euros86  for the CAE involved) with the 
average numbers of call-offs in a 
framework agreement (8,1) to find the 
total cost of all procurements. Our 
analysis finds that all procurements 
have a total cost of 44.500 euros, 
while the total cost of framework 
agreements is only 9.500 euros. Based on the calculation the total savings for CAEs using framework 
agreement compared to typical procurements can be about 80 percent.  

 Source: Proprietary survey with 748 respondents; Team 
analysis 

85 Estimated cost of all procurements from Public procurement in Europe, Cost and effectiveness, 2011 
86 Estimated cost of all procurements from Public procurement in Europe, Cost and effectiveness, 2011 

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28,56,721,80 %20 %40 %60 %80 %100 %All procurmentsCentralized procurementTotal costSavings44,59,535,00 %20 %40 %60 %80 %100 %All procurmentsFramework agreement with fouryear durationTotal costSavings 
 
 
                                                             
 
 
 
 
 
 
 
4.4 Competition 
To assess the level of competition in procurement in the EU we look at the behaviour of the number of 
bids and different contracts characteristics. The number of bids can be interpreted as an indicator of the 
strength of competition. We expect that when the competition is strong there will be better procurement 
outcomes. Further, we expect that high competition will lower the price level. It is also expected that 
more transparency would give more competition for public contracts. For now, we will concentrate on 
analysing the level of competition. We will discuss gain and loss of transparency in the public 
procurement process in chapter 4.7 

When analysing the number of bids we report both median and mean levels. The mean is a less reliable 
measure of the typical number of offers because it is greatly influenced by a small number of contracts 
with relatively high number of bids.  

Most EU advertised tenders receive between 4 and 6 with an average of 5 bids87. One in five tenders 
receives only one bid. The averages for the open and for the restricted procedures are higher, indicating 
that these procedures attract more competition than negotiated procedures, and this is not surprising as 
the access to the negotiated procedure is conditional.. We also find that framework agreements and 
centralized purchasing attract more bids.  

Exhibit 4-28: Number of bids for framework 
agreements by year (mean and median) 

Exhibit 4-29: Number of bids for framework 
agreements by country: 2009-2012 (mean and 
median)88 

Sources: The TED database; Team Analysis. Note: Bids calculation with 1 percent of awards with 
highest bids excluded. 

First stage competition of a framework agreement is more intense than average. The first 
stage of framework agreements is possibly the most competitive tool in the European procurement 
markets. The average (mean) number of bids in some countries exceeds 20. The median for the region is 
5 with a mean value above 10 and with an average of 11,4 for the period. This is one more bid in average 

87 Median number of bids for all procurements in Europe, 2011 
88 Lithuania and Iceland are taken out of this exhibit due to uncertainty in the data  

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0123456789101112132009201020112012Number of bids9 12 10 13 9 7 5 6 5 5 6 7 4 4 4 5 4 7 4 4 2 2 3 3 3 3 2 2 0 21,9 21,1 19,7 17,6 17,1 13,9 11,4 9,7 9,7 9,4 9,3 9,2 8,8 8,4 7,5 7,5 7,1 7,0 6,6 6,3 5,6 5,3 4,9 4,2 4,0 3,8 3,6 3,2 LVUKESIEFISEAllNODKROPTHUFRBEDENLSIMTCZITELPLEEBGLUATSKLICY 
 
 
 
 
 
 
                                                             
than for the average procurement, meaning that framework agreement aggregate more competition 
than an average procurement contract. 

There are also large differences between Member States. The number of bids received varies 
dramatically between groups of countries. While the top group receives an average of eight or more bids 
for each invitation to tender, the bottom group only receives three or less. Such large differences in 
degree of competition could significantly affect the outcomes of public procurement procedures.  

When analysing the percentile distribution of bids, it becomes even more apparent that frameworks are 
highly competitive. 25 percent of contracts are awarded in Europe without competition. For frameworks 
the percentage is less, at about 10 percent. Competition stays more intense throughout the percentile 
distribution of competitions. 20 percent of framework contracts are awarded on the basis of more than 
15 bids.  

Exhibit 4-30 Percentage of competition per type of procurement 

Source: The TED database; Team Analysis 

The nature of the contract may however differ from open contracts. First, framework contracts may not 
specify all requirements up front. As such, a competition may be more about demonstrating general 
experience and qualifications and less about specificity. While this could entail that such competitions 
are simpler and less of a burden on suppliers than regular competitions, we have earlier found that 
framework competitions, at the 1st stage, are more costly for firms than the average contract. 

The first stage of framework agreements is a competition in line with the general rules in the EU. This 
includes publications, timelines and other requirements as for any other procurement above the EU 
threshold level. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

145 

All procurementsBaseline:All procurements, number of bids per competition25% of competitions = 1 tender15% = 2 tenders12% = 3 tenders10% = 4 tend.6% = 54% = 6Framework contractsJoint purchasing - 5 10 15 20 25 30 - 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90NumberofBidsPercentile of competitions 
 
 
 
 
The second stage is more varied and is depending upon the selected methods for call-offs in the 
framework. There could be one or more suppliers, and there could also be a prioritized call-off schedule 
(cascade). The different mechansims have great impact on the degree of competition. The specific 
requirements for call off competitions are not specified and leave a great deal of flexibility to the CAE. 

Second stage competition processes is regulated in less detail than the first stage and are therefore more 
flexible. In principle, the award scheme can use a wide range of mechanisms as long as they are 
determined in advance, that is that the terms are made clear to participants during the tender process 
for the master framework agreement. There are little, if any, specific regulations as to how the second 
stage awards should be conducted. Basic principles of transparency, traceability and non-discrimination 
will apply, but there are no detailed provisions for i.e. notice periods, nature of competition, etc. 

There exist several methods aligned with the general principles to carry out the second stage 
competition. Where the framework agreement is awarded to one provider, the purchasing authority can 
call-off the requirement from the successful supplier when it is needed and there is no competition. 
Where the framework is awarded to several suppliers, there are mainly two ways to carry out a call-off.  

- 

If the terms laid out in the framework agreement are detailed enough for the purchasing 
authority to be able to identify the best supplier for that particular requirement, then the 
authority can award the contract without re-opening competition. This can be done through a 
prioritized call-off schedule (cascade), rotation, discretionary or random.  

-  However, if the terms laid out in the framework agreements require a mini-competition, the 
competition should be held with all suppliers within the framework agreement capable of 
meeting the particular need. The mini-competition scheme will take advantage of the actual 
market dynamic between the selected suppliers.  

The CAE sets a time limit according to the complexity of the call-off. The authority should award the 
contract to the supplier who fulfils the criteria and has the economically most advantageous tender or 
offers the lowest price. 

When analysing the second step of framework agreements it becomes clear that there is less 
competition in this phase compared to the first phase of establishing the agreement. Only 1 of 5 
framework agreements opens up for competition among suppliers through mini-competitions. The 
share is considerably higher for works contracts where it reaches 37 percent. Overall, there is no 
competition in about 80 percent of all call-offs in framework agreements.  

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146 

 
 
 
Exhibit 4-31: Types of award schemes89 used in 
the second stage of framework agreements 
(percent of total) 

Exhibit 4-32: Types of award schemes90 used in 
the second stage of framework agreements 
amongst types of contract (percent of total)  

Source: Proprietary survey with 748 
respondents; Team analysis 

Nearly half (44 percent) are one-supplier frameworks. This is more prevalent in supplies contracts. 
Nearly a third are categorized as other, meaning some other mechanisms (in many cases variations of 
the main mechanisms shown in the figure). 

Framework agreements with competition has in average (median) a higher value than non-competition. 
Especially cascade, prioritized ranking, stands out. While the other methods have an average (median) 
value of between 440 000 euros, cascade has an average (median) value of 2,7 million euros.  

Exhibit 4-33: Value of contracts with 
competition (mean and median) 

Exhibit 4-34: Value among types of contracts91 
(mean and median) 

Source: Proprietary survey with 748 respondents; Team analysis 

89  Random  and  Rotation  second-stage  award  schemes  are  taken  out  of  this  analysis  due  to  few  data  on  award 
schemes. 
90 See footnote 87. 
91 See footnote 87. 

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147 

44 %29 %18 %6 %3 %One supplier frameworkOtherMini-competitions amongmultiple suppliersCascade (Prioritizedranking)Discretionary26%22%37%4%4%49%28%15%5%1%41%28%18%8%3%One supplier frameworkOtherMini-competitions amongmultiple suppliersCascade (Prioritizedranking)DiscretionaryServiceSupplyWorks0400000800000CompetitionNon-competition - 2 000 000 4 000 000Cascade (Prioritizedranking)Mini-competitionsamong multiple…One supplier frameworkOtherDiscretionary 
 
 
 
 
 
 
 
 
 
 
 
                                                             
Also, the use of framework agreements 
leads to an increase in competition according 
to a small majority of the interviewees. The 
main reason behind this increased 
competition is the increased value of the 
procurement under framework contracts. A 
quarter of the interviewees see no 
differences, while another quarter of the 
interviewees believe demand aggregation 
lead to a reduction of competition. This 
latter group mainly points to administrative 
burdens that accompany framework 
contracts, which leads to a reduced interest 
from competing firms. 

Exhibit 4-35: The effect of the use of demand 
aggregation techniques, like framework agreement, 
on the level of competition 

Source: Proprietary survey with 215 respondents; 
Team analysis 

The question of whether use of framework contracts leads to market barriers received a mixed opinion. 
About half of the interviewees see no increase in barriers, while the other half indicated increased 
market barriers as a result of higher contract values, which often lead to stronger selection criteria and 
higher administrative burdens. Also a temporary foreclosure of the market for companies that did not 
qualify for the framework was identified as a potential market distortion. It was noted that the issue of 
foreclosure particularly plays a role for framework contracts on national levels. For framework contracts 
on a regional level, the situation under a framework agreement is often comparable to the alternative 
situation where a single supplier has a long-term contract. 

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148 

56 %21 %23 %Increase in competitionNo effectDecrease in competition 
 
 
 
 
 
 
 
Centralized purchasing reflects almost exactly the same pattern as framework agreements. Recall 
that the two techniques are not mutually exclusive. Nearly half of centralized purchasing contracts are 
framework agreements. 

Exhibit 4-36: Number of bids for centralized 
purchasing agreements by year (mean and 
median) 

Exhibit 4-37: Number of bids for centralized 
purchasing agreements by country (mean and 
median) 

Sources: The TED database; Team Analysis. Note: Bids calculation with 1 percent of awards with 
highest bids excluded. 

Like framework agreements, centralized purchases are more intense than the average procurement 
contract. These contracts have an average number of bids of 5 (median) and are like framework 
agreement a competitive tool in the European procurement markets. 

However, the average (median) number of bids varies between an average of two and eleven bids across 
the region. Not surprisingly, UK tops the list. As mentioned in chapter 3, centralized contracts are high 
in value especially in UK high value contracts attract more bidders resulting in more bids per contract. 
More than half of the countries have a lower average of bids on centralized procurement than the 
average procurement in Europe.  

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149 

0123456789101112132009201020112012Number of bids11 5 11 8 5 7 7 6 4 5 5 5 5 7 4 3 4 4 4 3 4 3 3 4 2 3 3 2 2 2 -19,8 15,8 14,4 13,1 11,4 10,8 10,5 10,1 10,1 7,6 6,4 6,4 6,3 4,8 4,7 4,7 4,5 4,4 4,3 4,3 4,2 4,2 4,0 3,8 3,7 3,1 3,1 2,7 2,7 UKDKIEESAllSEPTFIFRNOLVNLDEISBGITLUATBEELCYROCZLISIEEHULTSKPLMT 
 
 
 
 
 
 
 
 
 
 
 
Also, the use of CBPs leads to an increase in 
the level of competition according to 86 
percent of the interviewees. Only one percent 
means that the use of CBPs will decrease 
competition. Large procurement volumes, 
offered by CBPs, will normally increase 
competition in the market, affecting prices 
and other terms in ways that are favourable 
to the purchaser. An individual authority will 
rarely have a procurement volume large 
enough to generate prices that are 
comparable to those obtained in a situation 
where an aggregation of needs among many 
procuring entities has been made. The 
potentially large sales volumes that can be 
expected under centralized procurement 
mean that economies of scale can be 
exploited by economic operators. 

Exhibit 4-38: The effect of CPBs on the level of 
competition 

Source: Proprietary survey with 215 respondents; 
Team analysis 

It should be noted that arguments against centralized purchasing has also been raised. Large volumes 
may also restrict competition by favouring larger supplier rather than small suppliers. As discussed in 
chapter 2, the SMEs opportunities to participate in larger tenders also fall within this category of small 
suppliers. We will come back to how centralized purchasing affects the competition for SMEs. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

150 

86 %13 %1 %Increase in competitionNo effectDecrease in competition 
 
 
 
 
 
 
 
4.5 Potential gain/loss in quality by use of market 

aggregation 

This section looks at the quality of procurement procedures. Authorities attribute high importance to 
quality in the procurement process. A large majority of entities do not see any disadvantages in the use 
of a centralized procurement or framework agreement, and believe that aggregation of demand can 
deliver benefits through better quality management information. Most of the identified disadvantages 
are related to the addition of an extra layer (the CPB) in the procurement process. According to the 
interviewees, this may lead to a slower overall process. Also, the chances of miscommunication increase. 
The addition of an extra layer can result in a reduced control of the CAE, for example on the extent of 
involvement of local suppliers or SMEs. More generally, cooperation issues may arise. Interviewees 
have indicated the need to compromise on their wishes, especially were the CPB had a framework 
agreement in place that did not suit the needs of the CAEs. Finally, CAEs have pointed out that the use 
of a CPB means that there is no know-how developed within the CAE, resulting in an increased 
dependency on the CPB. 

The two main objectives of procurement that were mentioned by interviewees are achieving the best 
quality and lowest price. Achieving the best quality was considered as the most important aspect for in 
the procurement with 87 percent of the interviewees rating quality as important to very important. Only 
5 percent considered it not important (not important and little important). The importance of reduction 
of administrative burdens, increasing competition or ensuring a smooth process received a more mixed 
view from the interviewees, with a majority taking a neutral view on these objectives and roughly 
similar share of interviewees labelling the object as important or not important.  

Exhibit 4-39: Importance of various qualitative aspects of market aggregation in procurement 

Source: Interviews with 215 respondents 

We also found that between 45 percent and 29 percent of respectively the entities and CAEs stated that 
centralized purchasing and framework agreement gives improvement in quality of the level of procured 
works, goods, or services. Also, the standardisation of procedure is considered to be a contributing 
factor to the effect. 35 percent of the authorities felt that centralized purchasing reduce the risk related 
to reliability of suppliers, default of suppliers, etc. However, only 24 percent stated that centralized 
purchasing speeds up the procurement process.  

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151 

2 %0 %16 %16 %23 %3 %2 %21 %19 %25 %35 %39 %22 %19 %13 %52 %42 %13 %15 %8 %0 %10 %20 %30 %40 %50 %60 %70 %80 %90 %100 %QualityPriceEnsure smooth processIncrease competitionReduce administrative burdenNot important234Very important 
 
 
 
 
 
 
 
Exhibit 4-40: Qualitative aspects of centralized purchasing 

Source: Proprietary survey with 450 respondents; Team analysis 

We also asked the interviewees about the 
effect of CPBs on quality of procurement. 
More than 80 percent believe that 
involvement of a CPB leads to an increase in 
the quality of the procured works, goods or 
services. The main driver behind this result 
is the expertise and professionalism 
available at the CPB. Also, standardisation 
of procedures is considered to be 
contributing to the effect. Only 4 percent of 
the interviewees stated that involvement of 
a CPB leads to a decrease in the quality of 
procured works, goods or services. 

Exhibit 4-41: Effect of CPB on quality 

Source: Interviews with 215 respondents, Team 
analysis 

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8% 21 %14% 25% 11% 21 %18% 28% 32% 24 %22% 12% 13% 5 %13% 12% 0 %20 %40 %60 %80 %100 %Centralized purchasing gives improvement in qualityFramework agreements gives improvement in qualityCentralized purchasing reduces risks related toreliability of suppliers, default of suppliers, etc.Centralized purchasing speeds up the procurementprocessNot true234Very true81 %15 %4 %IncreaseNo EffectDecrease 
 
 
  
 
 
 
 
 
 
 
 
 
 
4.6 Potential gain/loss in compliance 

On compliance, 86 percent of the respondents believed that the level of compliance increased due to 
involvement of a CPB. Especially the development of expertise at the CPB plays a role in this respect. 
Their professionalism i.e. dedicated legal departments and procurements experts may be an additional 
driver for the increased level of compliance at CPBs.  

We will address two risk elements related to 
compliance. First the risk of breach of procurement 
legislations and internal routines and second the 
risk of breach of compliance to the awarded 
contract. The respondents' comments in the survey 
will be the main source for the discussion below. 

Exhibit 4-42: Effect of CPB on compliance 

Compliance to legislation, internal rules and 
procurement procedures 
The 86 percent response on increased compliance 
indicates that the CAEs expect high level of 
professionalism from the CPB. It is argued that due 
to the professionalism and increased compliance the 
poor suppliers will weed out and as such secure deliverables during the contract period. It is also 
reported that increased visibility and standardization of processes have positive effects on the 
compliance. 

Source: Interviews with 215 respondents, Team 
analysis 

On the other hand some reports that the formalities increase with coordination (the administrative 
burden and paper work) and combined with too detailed specifications this might effect and reduce the 
competition. In the long run some are sceptical about the cost level at the CPB due to all the formalities 
and paperwork. Process cost may increase. 

In addition some CPBs have procurement processes quality assured or certified from monitoring agents. 
Some CPBs are even certified according to ISO-standards and have their own internal auditor for the 
monitoring of compliance according to legislation and internal regulations. The use of certified and 
professional CPBs will contribute to reducing both financial (professional contracts) and reputational 
risks (breach of procurement laws) for the participating authorities. 

It is recommended to enter into a service level agreement (SLA) between the CPB and participating 
CAEs to regulate and coordinate activities and clarify the priorities and responsibilities. 

Compliance to the CPB awarded contract 
In some situations the CPB can be perceived as an additional level (CPBs) between the CAE and the 
supplier. Some respondents state this as a possible reason for reduced ownership of and compliance to 
the contract. It occurs that a CPB awarded contract is apprehended by the CAE as too expensive or the 
selected products/services have too poor quality. To mitigate these risks the CPB and CAEs should 
collaborate and focus on the implementation and dissemination of the contract clauses among the users 
in the CAE organisation to ensure ownership and compliance to the agreement. The interviews indicate 
also that disagreement in the pre-award activities either selection and/or prioritization of award criteria 
(quality vs. price) in the specification process is a possible area of disagreement and can challenge the 
users' compliance to the contract. To achieve consensus among several CAEs on these issues, may 
challenge the work of the CPB. The strategy of selecting CPB should be well implemented in the CAEs 
organisation and service level agreement (SLA) between each CAE and the CPB should regulate the 
business relation. 

The increase in CPBs use of resources i.e. coordination, of several CAEs is shown in Exhibit 4-2: CPBs 
total person-day staff time according to number of CAEs acting on behalf of. The exhibit shows that an 
increase of CAEs to be coordinated from the 1-5 level to 6-10 level doubles the use of resources for the 
CPB. It is likely that the same approach can be used about ensuring CAEs' use of the contract, though 
not quantified. It is supposed that the CPBs and the CAEs have to increase the use of resources to 
ensure local ownership and implementation of the contract, if the number of CAEs increases above 6. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

153 

86 %13 %1 %IncreaseNo EffectDecrease 
 
 
 
 
 
 
 
 
  
 
 
 
4.7 Potential changes in the level of transparency 

Overall, the respondents identified a positive effect on the level of transparency using a CPB. Around 85 
percent of the CAEs doing centralized purchasing saw an increase in transparency in the procurement 
process due to the involvement of a CPB. 

The use of eNotification among the CPBs increases 
their professionalism and it is clearly stated from 
respondents from different countries that 
mandatory use of eNotification systems has 
increased the transparency. Though the rules of the 
Directives are the same for CPB and CAEs, it seems 
that the role "to act on behalf of" increases the level 
of both compliance and transparency compared to 
the CAEs. This professionalism includes increased 
legal certainty as a main advantage resulting from 
the improved expertise at the CPB.  

Exhibit 4-43: Effect of CPB on transparency 

Source: Interviews with 215 respondents, Team 
analysis 

As discussed earlier in this report the value of the 
contract increases by the use of CPBs. It is also a 
notion that higher value contracts tends to promote the need for greater transparency, exemplified by 
the proper and more organized administration of paperwork and the swift response to tenderers to 
supply documents if any supplier asks. 

Some nations have introduced legislation or control mechanisms for monitoring the compliance of the 
procurement legislation. These "watchdogs" are reported to have an educational effect on the 
transparency. Summarized the use of CPBs is reported to have a significant impact on the transparency. 

Increased use of framework agreements – effect on transparency  
As reported in chapter 3.4.2, about 23 percent of contract awards in Europe is through framework 
agreements. The use of frameworks has increased in the past years and especially since 2009.  

Close to 75 percent of the authorities argue that framework agreements involve less complicated process 
and administrative burdens and more than 50 percent use framework agreements as a tool to avoid 
going through the full procedure as for standalone contracts.  

Exhibit 4-44: Aspects of framework agreement 

Source: Proprietary survey with 748 respondents; Team analysis 

The Exhibit 4-44 is confirmed by the respondents with the following comments: 

"The use of framework contracts allows more flexibility and reduces time administrative effort and 
costs. Another advantage is the reduction of tendering cost, having to go through the tender procedure 
once rather than several times. Furthermore, the use of framework contracts supports the close work 
between client and contractors with a mutual continuous improvement in the long term." 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

154 

7% 7% 20% 9% 8% 12% 28% 32% 22% 45% 33% 31% 0 %20 %40 %60 %80 %100 %Framework agreements involves less complicatedprocess and administrative burdenFramework agreements lets us aggregate demandfrom different business unitsWe use framework agreements mostly to avoid goingthrough the full procedures as for standalonecontractsNot true234Very true85 %13 %3 %IncreaseNo EffectDecrease 
 
 
 
 
 
 
 
 
 
 
"The flexibility provided; the ability to behave as a commercial buyer in the market; administrative 
costs are saved; better value of money; adaptation according to the product and the market; it is 
easier to apply uniformly social, environmental and SMEs support policies; better communication 
between buyers and sellers."  

"Competitive framework contracts lead to the right price. They give flexibility and security against 
companies going bankrupt for example." 

"Standardize contracts across large geographical area ensuring firms can deliver where we need the 
goods/services ensuring entry for SME’s into contracts in line with national policy." 

Generally the use of CPBs increases the transparency. On the other hand with the development in the 
use of framework agreements (broader use, larger contracts and increased competition in stage 1, 
combined with limited or no competition in stage 2, (44 percent one-single supplier award scheme) 
with no required award notice for call-offs, the transparency will be reduced, and there is the 
responsibility of the CPB and CAE to ensure the transparency that the call-offs are within the limitation 
and scope (amount and type of goods/services/works) of the awarded framework agreement.  

 SMEs' access to public procurement markets and aggregation of demand in the EU 

155 

 
 
 
 
 
4.8 Aggregation and impact on SME market access 
The online survey among enterprises tendering for public procurement contracts addressed the topic of 
views on different aggregation technics related to the market access for SMEs. The results from the 
survey suggest that tenderers are only marginally less active in pursuing framework agreements 
opportunities than bidding for single contracts. Most of the companies (47 percent) reported no 
preference over bidding for framework contracts as oppose to single contracts. 25 percent of the 
companies reported that they are less likely to bid for framework agreements, compared with 18 percent 
of respondents who are more likely to bid. These figures do not vary greatly depending on the class size 
of the company. (See Exhibit 4-45) 

There is also little difference between the overall successfulness of tenderers in winning framework 
agreements vs. single contracts. 46 percent of respondents did not perceive any difference in the success 
rate, whilst 20 percent are less successful and 15 percent are more successful in bidding for framework 
agreements than for single contracts. However, when looking at the success rate of bidding for the 
framework agreements, statistically significant differences between different company class sizes may 
be observed92: SMEs report to be less successful in bidding for framework contracts than large 
enterprises. 

Exhibit 4-45: The likeliness of bidding for 
framework agreements as opposed to single 
contracts by size class (percent) 

Exhibit 4-46: The success rate of bidding for 
framework agreements as opposed to single 
contracts by size class (percent) 

Proprietary survey with 1.353 respondents 

Proprietary survey with 1.345 respondents 

Note: Percentage missing from 100 percent = “Don’t know” 

Views were mixed about possible practical advantages of framework agreements. They are seen as being 
cheaper, less complicated, imposing a lower administrative burden upon tenderers, and giving more 
flexibility than single contracts. Less than a third of the surveyed companies agreed with these 
advantages; the majority of surveyed enterprises were neutral or disagreed, without significant 
differences between enterprise size classes.  

On average, only 25 percent of the survey respondents agreed fully or partly that bidding and managing 
framework agreements is cheaper for them; 25 percent said that framework agreements are less 
complicated. 27 percent held the view that administrative burden under framework agreements is 
lower, and 29 percent agreed that working under framework agreements gives them more flexibility. 
(See: Exhibit 4-47) 

92 Statistical significance was calculated using Fisher’s exact test and Chi square test. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

156 

 
 
 
 
 
 
                                                             
Exhibit 4-47: Views of survey respondents on perceived advantages of framework agreements 
(percent) 

‘Bidding for and managing framework 
agreements are cheaper’ 

‘Administrative burden under framework 
agreements is lower’ 

‘Procedures under framework agreements 
are less complicated’ 

‘Working under framework agreements gives 
us more flexibility’ 

Note: Percentage missing from 100 percent = “Don’t 
know” 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

157 

 
 
 
 
 
 
 
 
 
Exhibit 4-48: Views of survey respondents on 
access barriers to framework agreements 
(percent) 

‘Level of technical capacities required for  
framework agreements is too high’ 

‘Mix of skills and capabilities required for  
framework agreements is too broad’ 

‘Financial qualification levels required for  
framework agreements are too high’ 

Differences between different enterprise size 
classes become notable in the barriers to 
participation framework agreements. In 
general, micro- and small enterprises more 
frequently agreed that the level of technical 
capacities, the mix of skills and capabilities and 
the level of financial capacities required under 
framework agreements are too high (and the 
difference is statistically significant).  

20 percent of micro-enterprises and 17 percent 
of small enterprises agreed fully or partially that 
technical capabilities required for framework 
agreement are too high for them, compared to 
only 10 percent of medium-sized enterprises 
and 9 percent of large enterprises.  

Micro- and small enterprises were also more 
likely to agree that the mix of skills and 
capabilities required for framework agreement 
is too broad. 20 percent of the micro enterprises 
agreed or fully agreed with the statement as 
opposed to only 9 percent of large enterprises.  

The largest volatility of opinions on barriers to 
access was observed when asked about the 
financial qualification levels required for the 
framework agreement. 38 percent of the micro 
enterprises and 29 percent of the small 
enterprises agreed or fully agreed that financial 
qualification levels required for framework 
agreement are too high. In contrast, only 6 
percent of large enterprises and 12 percent of 
medium enterprises viewed this as an obstacle. 
The differences are statistically significant.  

Note:  Percentage  missing  from  100  percent  =  “Don’t 
know” 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

158 

 
 
 
 
 
 
 
 
 
 
 
 
Framework agreements are expected to have a 
positive effect on competition among shortlisted 
suppliers for each specific request. The 
increased competitiveness is expected to result 
in lower prices and higher quality of goods and 
services. This is partly confirmed by tenderers’ 
views: in total, more than a third of survey 
respondents (32 percent) agreed or fully agreed 
that the competition among shortlisted 
suppliers is higher. The views of different 
respondents on the effects on competition were 
homogenous.  

Exhibit 4-49: Views of survey respondents on 
market effects of framework agreements  
(percent) 

‘There is more competition among shortlisted 
suppliers for each specific request’ 

However, fewer respondents (26 percent) 
thought that the prices offered by the suppliers 
under framework agreements are lower.  

‘Suppliers offer better prices under framework 
agreements 

‘The quality of goods or services is higher under  
framework agreements 

Even lower per cent of the respondents (15 
percent) agreed that the quality of goods and 
services offered under framework agreements is 
higher. The opinion among different class sizes 
did not vary greatly.  

Note:  Percentage  missing  from  100  percent  =  “Don’t 
know” 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

159 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Although it could be hypothesised that framework agreements may close the market for several years, 
which is especially disadvantageous for smaller enterprises not being selected, there are no marked 
differences in the views on this subject between company size classes. Around half of the respondents 
(46 percent altogether) agreed or fully agreed with the statement that framework agreements close the 
market for non-participants more effectively, and no statistically significant differences between smaller 
and larger companies can be detected. 34 percent of respondents agreed that framework agreements let 
CAEs aggregate demand at a higher level without significant differences between company size classes. 

Exhibit 4-50: Views of survey respondents on aggregate market effects of framework 
agreements (percent) 

‘Framework agreements close the market for 
non-participants more effectively’ 

‘Framework agreements let CAEs aggregate 
demand at a higher level’ 

Note: Percentage missing from 100 percent = “Don’t 
know” 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

160 

 
 
 
 
 
 
 
 
 
Exhibit 4-51: Share of respondents by size class and 
by country disagreeing that selection of providers 
under framework agreements is transparent 
(percent) 

In general respondents disagreed that 
selection of providers under framework 
agreements is transparent.  

In total, 39 percent of respondents 
disagreed or fully disagreed that the 
selection of providers under framework 
agreements is transparent. Only 22 
percent of the respondents agreed or fully 
agreed with the statement. The opinion 
did not vary greatly among different class 
sizes. 

However, when analysing the opinion on 
the transparency of selection process 
under framework agreements by country 
of respondent, the views of respondents 
differ.  

66 percent of survey respondents from 
Hungary disagreed or fully disagreed that 
the selection process under framework 
agreements is transparent. High share of 
doubt on the transparency of the 
framework agreement process was also 
expressed by respondents from France (55 
percent of the respondents) and Romania 
(48 percent of the respondents).  

Companies from Belgian Italy, Finland, 
Lithuania, and Spain were less likely to 
express negative opinions towards the 
transparency of framework contracts. In 
Belgium, only 19 percent of the 
respondents believed that the process is 
not transparent and 39 percent agreed 
that the process is transparent. 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

161 

 
 
 
 
 
 
 
 
 
4.9 Enhancement in competition by use of 

eProcurement tools 

The survey indicates that from the CAEs point of view 73 percent (CAEs only) use online procurement 
tools and 27 percent are still dealing with manual procurement processes. The figures in Exhibit 4-52 
and Exhibit 4-53 give a high-level approach on the usage from eProcurement tools, but do not indicate 
what kind of tool or which part of the procurement process that will have most effect on competition 
and aggregation of demand.  

Exhibit 4-52: Usage of online procurement tools 
by CAEs 

Exhibit 4-53: Effect of eTools on competition 
according to CAEs 

Source: Interviews with 215 respondents, Team analysis 

In this chapter we will elaborate on the various eProcurement tools and their impact on competition for 
SMEs and aggregation of demand for CAEs. It is important to underline that there are several suppliers 
to the various eTools described below. This report will not promote any specific supplier, but we will use 
the infrastructure design from the EU initiated and funded large scale PEPPOL project93 to describe the 
eTools available through an entire electronic procurement process. The PEPPOL-project ended 
December 2012, and the results and governance/maintenance of the developed infrastructure and 
specifications were transferred to the OpenPEPPOL AISBL, a non-profit association under Belgian law. 
In the final report from the PEPPOL project the PEPPOL transport infrastructure94 is described in 
addition to the various eProcurement tools supporting documents (protocols) to be transported through 
the transport infrastructure. The procurement value-chain from the previous PEPPOL-project is 
illustrated in Exhibit 4-54 and shows the generic value-chain of procurement including the 
eProcurement tools. 

93 The PEPPOL’s transport infrastructure is based on a set of standardised communication protocols which ensure the 
interoperable, secure and reliable exchange of electronic documents between buyers and sellers within the EU. PEPPOL seeks to 
join the islands of e-procurement that currently operate across Europe by defining profiles based on common and nationally 
compatible standards and providing tools for interoperability, on both a national and cross- border scale. 
http://www.peppol.eu 
94 The ICT Policy Support Programme (ICT PSP) – one of the three specific programs within the Competitiveness and Innovation 
Programme (CIP) – aims at stimulating innovation and competitiveness through the wider uptake and best use of Information 
and Communication Technologies (ICT) by citizens, governments and businesses and in particular SMEs. – 
http://www.peppol.eu 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

162 

73 %27 %YesNo67 %26 %8 %IncreaseNo EffectDecrease 
 
 
 
 
 
 
 
                                                             
Exhibit 4-54: PEPPOL Components and enablers in the eProcurement value chain (from the 
PEPPOL - final report93) 

The PEPPOL transport infrastructure and components are expected to have the following impact on the 
SME-market with new business opportunities and increased competitiveness, while lowering costs with 
automated tendering solutions. By breaking down the barriers to seamless electronic communications 
across borders and communities, PEPPOL can enable suppliers to realise significant benefits 
For the CAEs the main impact is the significant reduction of administrative and transaction costs 
through standardised, speedy and streamlined procedures.  

To better understand each element in the total eProcurement process a short description of each of the 
components and other eProcurement tools (not supported by the transport infrastructure) is necessary. 
In Exhibit 4-55 the roles of each eTool, the impact on competition and the impact on aggregation of 
demand are described. 

Exhibit 4-55: ETools impact on the competition and aggregation of demand  

E-procurement 
tools: 

Role: 

Impact on 
competition for 
SMEs 

Impact on 
aggregation of 
demand 

eSignature 

Electronic validation of documents  

"The aim is to create 
interoperability between the 
different e-signature schemes, so 
that any CAE can validate 
certificates issued in other EU 
member states, enabling 
electronic submission of tenders 
and signing of contracts across 
borders. This means that an 
economic operator can use the e-
signature of its choice when 
submitting an offer or signing a 
document to any public sector 
awarding entity."95 

Reduce cost and 
simplify procurement 
process, increase 
market potential across 
border. 

No effect on 
aggregation, but 
simplify processes and 
reduce cost  

eSourcing tool 

Aggregation of demand from any 
user with connection and 

More accurate 
specifications in the 

Increase the possibility 
to aggregate demand 
from several partners. 

95 PEPPOL-project Final report to the EU: http://www.peppol.eu/news/openpeppol-news-2013/peppol-final-
report-a-story-of-success/peppol-final-report-pdf/view?searchterm=final+report 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

163 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                             
availability to the eTool (CAE 
specific eTool aggregating both 
historical data and future 
prognosis) 

RFPs for decision of GO 
or NOGO.  
If used by CPBs could 
have negative effect on 
competition due to 
aggregation of demand.  

The use of this tool by 
CPBs can be efficient 
in gaining economy of 
scale. 

eNoticing and 
eTendering 

eAttestation (Virtual 
Company Dossier or 
VCD) 

The aim is to create and increase 
competition by publishing 
tendering documents and fulfil the 
tendering process electronically, 
incl. notifying the market, transfer 
data to TED and ensure legally 
correct documentation. Various 
process tools have been developed 
and are available to the market -for 
the process from notifying to 
contract award.  

Qualification criteria  

"The aim of the VCD is to provide 
an inter-operable electronic 
document solution that supports 
the exchange of evidences across 
borders during the qualitative 
selection process of public 
procurement."96 

eAwarding and 
eContract 

Electronic tool for evaluation and 
contract validated by eSignature, 
including eAuction programs 

Increase market 
possibilities for all 
SMEs.  

Limited effect on 
aggregation, as the 
aggregation has been 
clarified in the 
eSourcing tool. 

Significant cost 
reduction and simplify 
procurement process by 
reducing administrative 
burden for the SMEs 

No effect on 
aggregation, but 
simplifies the 
qualification process. 

Reducing 
administrative burden 
for the SMEs and 
increased transparency 
on detailed level about 
the selection criteria. 

Substantial impact on 
price by use of e-
Auctions and simplify 
the process for 
contract 
administration  

eCatalogue 

An e-catalogue to submit offers 
about goods and services in a 
standardised format. 

Increase market 
possibilities 

"The aim is for any company in 
the EU to easily, securely and 
seamlessly create, validate and 
send an electronic catalogue of 
goods and services offered, either 
as part of a procurement tender 
issued by any European CAE or in 
response to an awarded contract. 
They can be a component of the 
pre-award tendering process or 
the post-award purchasing 
process."97 

Catalogues are used by 
economic operators to 
describe goods or 
services offered for sale 
and may be used by 
CAEs to source goods 
or services, or to obtain 
product or pricing 
details. The catalogue 
input is reusable for the 
ordering and invoicing 
process 

eOrdering and 
eInvoicing 

e-ordering and e-invoicing 
providing the buyer and suppliers 

Limited effect on 
aggregation, as the 
aggregation has been 
clarified in the 
eSourcing tool.  
But standardization 
has substantial impact 
on process 
improvement in the 
entire post-award 
process.  

Limited effect on 
aggregation, as the 
aggregation has been 

96 PEPPOL-project Final report to the EU: http://www.peppol.eu/news/openpeppol-news-2013/peppol-final-
report-a-story-of-success/peppol-final-report-pdf/view?searchterm=final+report 
97 PEPPOL-project Final report to the EU: http://www.peppol.eu/news/openpeppol-news-2013/peppol-final-
report-a-story-of-success/peppol-final-report-pdf/view?searchterm=final+report 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

164 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                             
clarified in the 
eSourcing tool.  
But standardization 
has substantial impact 
on process 
improvement in the 
entire post-award 
process.  

Reduce process cost 
and increase 
transparency for any 
economic operator – 
reduce administrative 
burden. 

with defined procedures to 
exchange common business 
documents. 

"The aim is to develop solutions 
that make it possible for economic 
operators to exchange cross-
border electronic orders and 
invoices with any CAE within 
Europe. Electronic ordering is the 
automated process of sending, 
receiving, acknowledging and 
processing of orders for goods or 
services while electronic invoicing 
is the automated process of 
issuing, sending, receiving and 
processing of invoice data by 
electronic means."98 

In Exhibit 4-56 we have summarized pros and cons comments from the survey regarding eTools effect 
on competition. 

Exhibit 4-56: "Statements" from the respondents' experience from eTools99 

Pros. 

  Cons. 

"We are convinced that online tools get 
advantages for SMEs. If the use of such tools is 
mandatory SMEs have the same starting 
conditions according to the tender process like 
big players." 

"We have the impression that it scares small 
enterprises who don't have much 
administrative personnel or knowledge. The 
paper version is often easier for them." 

"More difficult for SMEs, because of the lack of 
resources for good online procurement." 

"EProcurement could help small and medium 
enterprises significantly reduce expenditure 
incurred when drawing up contracts and/or 
entering into transactions (e.g. expenditure 
incurred when submitting requests, tenders for 
contractors) by possibly reducing the length of 
the procurement procedure, as compared to 
procurement using paper documents. Moreover, 
e-procurement could encourage small and 
medium enterprises to participate, because it 
would be easier for them to find the 
announcements and participate in the 
procurement procedures using electronic tools." 

"More transparency, simplification of process. A 
clear guide as to how to submit a tender."  

"It will be more expensive for the SMEs." 

"Nowadays, the majority of companies have 

"SMEs have less experience in using the online 

98 PEPPOL-project Final report to the EU: http://www.peppol.eu/news/openpeppol-news-2013/peppol-final-
report-a-story-of-success/peppol-final-report-pdf/view?searchterm=final+report 

99 Answers from question in the survey to CAEs: What is your opinion on the effect of eTools on competition? More 

specifically, does it increase or reduce competition? 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

165 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
                                                             
 
access to online services therefore there should 
not be really any barriers which would affect the 
position of SMEs." 

tools. So the bigger companies have an 
advantage in that respect." 

"SMEs are probably not aware of this tool since 
it is not well advertised; it is only used by 
organizations used to reacting to tenders. So it 
has no effect or little effect on SMEs' position." 

"No, as there is not a good enough structure in 
place for these online procurement tools to 
have an effect on SMEs."  

"This does not affect a lot SMEs. Everybody have 
today capability use e-channels." 

"There is a significant barrier to using those 
online tools." 

"SMEs have more trouble with the use of online 
tools, but we give seminars and educate SMEs to 
make it better. I think they can handle it. I also 
believe that you can simplify the process by 
decreasing the number of documents." 

"There is still a language barrier for SMEs as 
the procurement officers often write the 
request for proposals (RFIs) in their national 
language. The translation cost and risk are at 
the SME." 

"Easier for SMEs, because they don't know when 
they have to buy and with online tools, the 
process becomes easier." 

"There are risks because small companies don’t 
have trained staff for these procedures".  

"For the first uses it creates a barrier, because of 
lack of experience working with online tools and 
thus reduces competition. But as the usage of the 
online tools increases, so does the experience in 
using it, then it increases competition." 

"Very good, more and more small companies 
want to leave their contracts online." 

The received Cons are mostly about cost and competence concerns for the SMEs and the ability and 
willingness to change. The Pros are about the SMEs' possibilities and increased equality and 
transparency.  

From the survey 67 percent indicated that the use of eTools will increase the competition for the SMEs. 
This requires knowledge and competence of the e-Tools at the SME side and professionalism from each 
procurement officer. Still one-third of the respondents do not see the positive effect of eTools.  

The ability and willingness to implement eTools are barriers both at the economic operator and CAE 
side, and the organisations experiences from early use of procurement eTools are still associated with 
"not user friendly" processes. However, the PEPPOL solutions give any economic operator the 
possibility to communicate with any CAE using their own procurement or ERP-system. The 
infrastructure has been established for increasing the markets for SMEs and the CAEs.  

The main impacts for the usage of eTools are the reduction of process costs by establishing lean-
procurement processes and reuse of data in the complete electronic procurement process. In addition 
the eTools will contribute to increase competition and possibilities for SMEs to compete the cross-
border. For the CAEs the eTools have marginal effects on the aggregation of demand. The aggregation of 
demand will be decided in the evolution of the procurement strategy of each category, depending on the 
business ambition of the CAE.  

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166 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5  Concluding remarks 

This study investigate and describes SMEs presence in the overall public procurement, trends and 
techniques of marked aggregation and the impact on the way public procurement is carried out, in 
addition to the cost-effectiveness of market aggregation and its impact on competition and market 
access. Our analysis is based on a large empirical basis covering all contracts in the TED database in the 
period 2009-2011, two surveys including 2.573 respondents, both CAEs and suppliers and about 215 
semi-structured interviews with authorities and businesses. 

SMEs involved in about 46 percent of public procurements above EU-thresholds 
In the reference period between 2009 and 2011, an estimated 56 percent of all public procurement 
contracts above the EU-thresholds were awarded to SMEs (or groupings of companies led by an SME). 
In terms of the aggregate value of contracts awarded, this corresponds to a 29 percent market share. 
This figure is slightly below the estimates of the previous three-year period (2006-2008), although it 
cannot be determined whether this marks a genuine negative trend or merely indicates random 
fluctuations of the market or bias coming from a refined estimation methodology. In addition to being 
awarded a contract directly, SMEs do benefit from public procurement above the EU-thresholds also 
through other channels (e.g. as a member of a joint bid arrangement or as a subcontractor). It is 
estimated that when these additional channels are factored in, SMEs’ actual share in the total number of 
public contracts above the EU-thresholds is 17 percentage points higher than the volume of contracts 
they are directly awarded: 46 percent of aggregate contract value versus only 29 percent market share of 
direct contracts. 

The resulting figure of SMEs’ participation in below-threshold procurement is, not surprisingly, higher 
with just between 58-59 percent of contracting value.  

Aggregation of demand - technics increasingly used 
Aggregation techniques are used to improve cost-savings (market power and economy of scale) and 
efficiency of procurement (process improvement). We found basic support for the idea that centralized 
purchasing and framework agreements are tools CAEs use to aggregate their demand. The use of these 
aggregation tools have increased substantially (in terms of value) in the period from 2006 to 2011. 
Centralized purchasing constitutes about 20 percent of total value of contract awards in recent years. 
There has been remarkable growth in value terms. By number of contract awards, we find that the 
concept is much less frequently used and only constitute about 5 percent of awards in the last few years. 
Framework agreements constitute nearly 1 in 4 of all contract awards with regards to value. In terms of 
numbers they represent about 1 in 6 of all contract awards. 

Consequently, we also found that competitions by centralized purchasing and framework agreements 
are fiercer as indicated by the larger number of offers for these contracts, but that holds only for the 
larger contracts. More effective competition is also ensured by more professional procurement. This is 
visible by the reduced number of awards with limited competition. 

There are multiple factors both driving centralized purchasing and framework agreements. There are 
country specific factors that influence the decision, but also the sector and type of work influences 
whether the contract is centralized purchased or not. The use of framework agreements is most popular 
at national levels and is used with higher value there. Further, there are some few high value contracts 
that dominate the market. 

There are basically four factors that drive both the use of centralized purchasing and use of framework 
agreements. First is the cultural environment, captured by country specific effects. Mostly Northern and 
North-Western Europe shows an inclination towards using centralized purchasing and framework 
agreements while Southern Member States use it less, but there are exceptions. 

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The second factor for which might explain the use of centralized purchasing and framework agreements, 
is budgetary restrictions. We see a tendency to conduct more centralized purchasing procurements from 
2008 onwards. As from 2008, many (if not all) Member States saw reducing budgets, driving the search 
for opportunities to reduce the price of goods and services procured. One of those measures is 
aggregation in the form of centralizing procurement to harvest the economy of scale. The number of 
large contracts from UK supports this. 

The third factor is the level of standardization, or similarity of the procured goods and services. The 
more similar the procured products are, the easier it is to aggregate it without too much loss of 
flexibility in meeting the demands of individual authorities. This is supported by the fact that 
framework agreements are mostly about supplies and commodities. 

The fourth and perhaps the most important, though illusive, factor is professionalism of procuring 
authorities, for which we found several indications to be important in explaining the use of centralized 
purchasing. Firstly, the more professional a procurement authority is, the more likely other authorities 
are willing to take advantage of their expertise. Alternatively, the more professional an authority is in its 
procurement procedures, the more likely it is to engage in centralized purchasing. Nevertheless, despite 
several indications for this trend in our analyses, we stress that we could not test for this factor. 
Consequently, we are reluctant to state this conclusion with great confidence.  

An additional fifth driver for the use of only framework agreement is the experienced flexibility of the 
regime. It is an aggregation technique over time, maximum four years, which reduces the administrative 
burdens for the CAEs.  

Calculation of potential for savings  
The study shows large differences between the aggregation techniques and the typical procurement. The 
typical procurement has an average cost of 5.500 euros100. This is more than the cost of both framework 
agreements and centralized purchases. Centralized purchasing has an average cost of only 1.300 euros 
per contract/CAE, while framework agreement (four year duration) has an average cost of 1.200 euros 
per call-off.  

The study indicates that there are significant savings in aggregating demand either in centralized 
purchasing and/or by framework agreements compared to ordinary open procedure competitions. 
Compared to an optimal structure of organization of the CPB and maximum duration of the framework 
agreements, the CAEs have the potential to save around 80 percent of the pre-award process cost 
attached to awarding the contracts, if using centralized procurement or framework agreements instead 
of typical open procurement procedure. For one CAE using open procedure competitions for all 
procurements (8,1 procurement/year) have a total yearly cost of 44.500 euros while the total cost of 
respectively centralized procurements and framework agreements is only 6.700 and 9.500 euros. (See 
chapter 4.3.3 The effect of aggregation on realised savings explaining the comparison) 

It is important to underline that the price effect from the economy of scale (using CPBs) is not a part of 
the calculated savings.  

EProcurement tools affects competition, but not aggregation of demand 
The main impacts for the usage of eTools are the reduction of process costs by establishing lean-
procurement processes and reuse of data in the complete electronic procurement process. In addition 
the eTools will contribute to increase competition (eNotification) and possibilities for SMEs to compete 
cross-border. For the CAEs the eTools have marginal effects on the aggregation of demand. The 
aggregation of demand will be decided in the evolution of the procurement strategy of each category, 
depending on the business ambition of the CAE.  

Use of CPBs increases professionalism  
The study reflects that the transparency has increased (80 percent) by the use of centralized purchasing. 
However, the execution of stage two in framework agreement is important for the transparency and 

100 Estimated cost of all procurements from Public procurement in Europe, Cost and effectiveness, 2011 

 SMEs' access to public procurement markets and aggregation of demand in the EU 

168 

 
 
 
                                                             
competition. The selection of procedures for call-offs in stage two (see chapter 4.4) decides the 
distribution of call-offs among the supplier(s). The call-offs is just distributed to the awarded suppliers 
and in that case less transparent to the market, than an open procedure. For call-offs there are no 
required award notice. The survey for enterprises confirms that 39 percent of respondents disagreed 
that the selection of providers under framework agreements is transparent. Only 22 percent of the 
respondents agreed with the statement. 

Regarding compliance the increased professionalism in CPBs would increase the compliance to the 
legislation. In addition the CPBs and the CAEs have to increase the use of resources significantly to 
ensure ownership and compliance to the awarded contract if the number of CAEs increases above 6.  

The results of the study indicate that the professionalism of the procurement activities is not only 
concentrated to the improvement of the processes and reducing the process cost. By implementing the 
theory of portfolio models and smart procurement with category strategies as tools for public 
procurement can reduce cost and meet budget challenges. 

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This material was prepared by PwC, ICF GHK and Ecorys (the Consortium) for the specific use of the European 
Commission. It is not to be used, distributed or relied upon by any third party without the Consortiums prior 
written consent. 

The analysis and opinions contained in this presentation are based on publicly available sources, but the 
Consortium has not independently verified this information and makes no representation or warranty, express or 
implied, that such information is accurate or complete. All recipients of this material must make their own 
independent assessment of the material, and neither the Consortium nor any of its affiliates, partners, officers, 
employees, agents or advisers shall be liable for any direct, indirect or consequential loss or damage suffered by 
any person as a result of relying on any statement in, or alleged omission from, this material.  

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DOI : 10.2780/93799 

ISBN : 978-92-79-29924-7