Twelve levers for the development of the Single
Market – Developments on public procurement

Ms Kristin SCHREIBER
Deputy Head of cabinet of Commissioner Barnier
NB: The information contained in this presentation is not binding for the European Commission
and does not present an official position of the European Commission

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Rationale for Single Market Act II
• Potential: from 1992 to 2008 the Single Market
generated an 2.77 million extra jobs and an
2.13% extra GDP
• Single Market Act I : 12 key proposals to further
develop Single Market: Parliament and Council to
adopt
• More is needed: potential unexploited, economic
crisis ›››Single Market Act II
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Single Market Act II
12 levers
1. Rail transport
2. Maritime transport
3. Air transport
4. Energy
5. Citizen mobility
6. Access to finance
7. Business environment
8. Services
9. Digital Single Market
10 E-invoicing in procurement
11. Consumers
12. Social cohesion & social
entrepreneurship
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4 drivers
1.Integrated networks
2.Mobility
3.Digital economy
4.Social
entrepreneurship,
cohesion and consumer
confidence

Delivery of SMA Actions
• Quickly adopt SMA I proposals
• Commission to table SMA II proposals for all
legislative key actions by spring 2013 and nonlegislative by end-2013
• European Parliament and Council called upon to
adopt SMA II legislative proposals by spring 2014

Public procurement in figures
•

Public procurement in the EU = 2.200 billion euros in 2009 (19% of
the European' Union's GDP)

•

Contracts falling under EU Directives = 420 billion euros (3.5% of
the European Union's GDP), of which:
• works: 39%
• Services: 38%
• Supplies: 23%

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Preparatory works
 Comprehensive evaluation of the impact and
effectiveness of EU public procurement legislation
(published 24.06.2011)
 Public consultation by Green Paper on the
modernisation of EU public procurement policy (over
620 replies; synthesis published 24.06.2011)
 Conference on the modernisation of EU public
procurement policy (30.06.2011)
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Objectives of the Reform
1. Simpler /
more flexible
procedures
3. Better access
(SMEs, crossborder trade)

2. Strategic use

4. Sound
procedures

5. Governance / Professionalisation of procurement
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1. Simplification
Measures proposed by the Commission:
• broadening the existing negotiation possibilities,
with safeguards needed to protect against abuse.

• reduced documentation requirements, in particular
through:

• use of self-declarations from bidders (only the winning bidder has to
provide formal certificates)
• extension and, in the medium term, the generalisation of electronic
communication in public procurement: 100 billion euro savings per
year expected

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2. Strategic use of public procurement (a)
• introduction of 'life-cycle cost' concept: to encourage public
authorities to consider the full life-cycle of the products/services
they want to purchase;
• contracting authorities might also take into account the
production process of the specific works, services or supplies
to be purchased, such as the inclusion of vulnerable and
disadvantaged people or the use of non-toxic substance, in
their award decisions;

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2. Strategic use of public procurement (b)
• labels: specific labels might be requested by contracting
authorities provided requirements are linked to the subjectmatter of the product;
• innovation partnership: new procedure for developing
products and services not yet available on the market;
• specific simplified rules for social, health, cultural and
assimilated services:
• higher threshold – EUR 500 000;
• below threshold: typically no-cross-border interest
• Member States free to decide on procedures, only requirement: exante (and ex-post) publicity + non-discrimination principle.

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3. Better access to SMEs
• 60% of the contracts falling under the European public
procurement Directives are awarded to SMEs.
• SMEs will benefit from:
• general simplification measures (reduction of
documentation requirements and e-procurement)

• specific SME-friendly measures:
• subdivision into lots ('apply or explain');
• maximum turnover cap (=3x estimated contract value)

In addition:
• Reporting on the success of SMEs

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4. Sound procedures
• "conflicts of interests" clarified + Member States have to take
measures to effectively prevent, identify and remedy them;

• exclusion grounds strengthened and extended e.g. to cases of

unduly influence on the decision process or serious misrepresentation in
providing information on the absence of grounds of exclusion;

• rules on abnormally low tenders strengthened: compulsory
exclusion in case of abnormally low tender in particular due to noncompliance of EU law in the field of social and labour law and
environmental law and international social and environmental law;

• rules for contract modifications during execution:

substantial modifications of contract shall lead to new tender procedure.

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5. Governance
• increase monitoring at national level: Member States have
to take ownership of monitoring the correct application of the
Directives;
• reporting to the Commission on monitoring (e.g. information on
sources of wrong application, legal uncertainties, level of SMEs
participation);
• through monitoring, enhance the prevention and detection
of procurement fraud, corruption and conflicts of interest.

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State of play
• Commission adopted proposals on 20 December 2011
• Council:
o Examination (Council Working Group) almost finished; negotiation
mandate to be adopted soon
o Twice discussed in Competitiveness Council (February and May 2012)

• European Parliament:
o Draft Report issued by Rapporteur in IMCO (Internal Market and
Consumer Affairs) – more than 2500 amendments
o IMCO vote on report planned on 29 November (public procurement
Directive) and 18 December ('utilities' Directive)

• Adoption of the directives planned under Irish
Presidency beginning of 2013 (March or April)
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Proposal for a
Directive
on the award of concession contracts

What are concessions?
 Partnerships between the public and the private sector
 Contractual arrangements, usually for big infrastructure projects or for
provision of services of public interest
(e.g. building and managing motorways)

 Private partner is remunerated by being permitted to exploit the work or
service

(e.g. in the case of motorways the remuneration is received in the form of tolls
paid by the users)

 Private

sector

bears

risk,

traditionally

(e.g. risk that the motorway will not be used)

born

by

the

public

! Over 60% of all public-private partnerships qualify as concessions.

sector

Why concessions are important?
 Important share of the economic activity in the EU
(e.g. in 7 Member States in the water, waste, health and transport sectors,
concessions were estimated to be worth € 138 billion annually).

 Mobilisation of private capital and know-how for large projects of long
duration
 Ensure efficient spending of taxpayers' money.

Current EU regime on concessions
Works concessions (Dir. 2004/18)
Finding investment opportunities
Competing on equal footing
Reviewing unlawful practices

how to publish notices for such
contracts
how to award a contract – ???
how to appeal

Services concessions (EU Treaty
principles)
???
???
???

Why a directive on concession contracts?
•

The current situation is not satisfactory

 Legal uncertainty which discourages the public and private sector to
use concessions
(no clear definition of concessions or how to conduct bids/select the best offer).

 Existence of entry barriers
(disparity of national rules; awarding contracts without any competition).

 Insufficient legal protection of tenderers in case of unlawful practices.
! As a consequence - no real EU single market in the area of
concessions.

Therefore rules are needed
• Single, clear «rule book» for concessions.
• Simple set of rules for all sectors where concessions exist.
• Increased flexibility because of the complexity of these contracts.

Content of the Proposal – main elements
• Clear definition on what is a concession.
• Publication of notices in the Official Journal of the EU.
• Procedural guarantees when conducting a procedure.
• General requirements on how to select & exclude candidates.
• Extension of judicial protection (Remedies Directives) to service
concessions and works concessions in vital sectors like water,
energy and gas.

International Procurement Instrument

Proposed Regulation, adopted by the European Commission
(21 March 2012)

Economical context
• EU’s public procurement market open to third countries (up to 85%
in the GPA, in practice even more).
• But lack of market access in non-EU countries for EU companies,
goods and services + lack of fair competition in the Internal Market
• Our trading partners do not commit to open their own markets to
the same extent and/or apply restrictive measures to their public
procurement. Emerging economies, with rapidly increasing
procurement markets, are also moving towards strong restrictive
industrial policies

Overarching problems
• Loss of potential EU exports between €4 and 12 billion.
• Limited capacity for EU companies to create economies
of scale due to protectionist measures in third countries
• Distorted business decisions (not based on economical
reasoning but on third countries policies)
• No fair competition – no level playing field

Objectives
• Boost EU exports in public procurement markets
outside EU
• Increase EU leverage in negotiations
• Increase legal certainty regarding third country access
to EU procurement market
• Ensure EU international commitments are respected

Public procurement in the EU
• Total estimated EU public procurement market was
+€2.4 trillion in 2010
• Total estimated EU PP market under scope of EU
Directives was almost €420 billion or 18% of the total
PP market in 2010
• The EU market guarantees access to GPA covered
goods and services at all levels of government

Proposed regulation: clarification of rules
• Article 4 confirms that covered goods and services are
granted equal treatment as EU goods and services
• Article 5 establishes principle of openess of EU
procurement market unless application of Articles 6 or
8-10.

1st tool: article 6
•

Possibility for contracting authorities to exclude foreign (noncovered) bids
• Above the threshold of 5 million Euro, contracting authorities may ask
the Commission for authorisation to exclude a foreign (non-covered by
EU international commitments) bid if there is a lack of substantial
reciprocity or if we have negotiated reservations;

2nd tool: article 8-10
• Investigations by the Commission of repeated discriminatory
policies in non-EU countries against EU suppliers, goods or services
• Consultation and negotiation with non-EU countries with a
view to solve concerns and open their markets
• Possibility for the Commission, if all attempts to open their market
have failed, to adopt proportional restrictive measures
against the concerned non-EU country (market access
restrictions, price penalties)

Additional tool (Article 7):
abnormally low tenders
• Commission proposal for modernisation Directives: Articles 69/79
• In case of abnormally low tender: obligation to ask explanation
(e.g. state-aid, compliance with social/environmental legislation)
• If, for tenders with more than 50% non-covered goods/services the
contracting authority intends to accept the justifications
provided, the contacting authority should inform the other
tenderers, including the reasons for the abnormally low character
of the price