Citizens Attitude to EU Procurement

Date: 28/10/11

On 26 September 2011, the European Commission released the results of a survey showing the views of more than 26,000 EU citizens about the single market. Tristan Meears-White, Partner and specialist in Competition and Procurement law at DWF, considers what the survey revealed about citizens’ attitudes towards EU procurement rules and how those attitudes tie in with the current challenge for organisations who deal with EU procurement rules in practice.

Interestingly, the Survey reveals that while over two-thirds of EU citizens (68%) believe that companies from their own country should be able to compete for contracts anywhere in the world, only 55% of those surveyed think that all foreign companies should be allowed to compete in their own country. 20% thought that the nationality of a company should be the deciding factor when it comes to awarding contracts.

The Survey also identifies that there is a real problem with a lack of awareness across Europe about what the single market actually is and what benefits it can bring. In fact, the requirements for openness and transparency in procuring public contracts are designed to reinforce competition, provide better protection against corruption and allow taxpayers to benefit from more effective services and better value for money EU Citizens tended to agree that the rules are doing their job in at least one respect; with two thirds of those surveyed thinking that procurement rules help to reduce corruption in the EU.

Despite the recognition that the procurement rules may provide some benefit, the result of the survey also highlighted an overwhelming perception across member states that the Internal Market only benefits big companies

As a result of EU procurement rules, the administrative requirements of the tender process can often seem disproportionate to the value of contracts awarded and can be expensive and time consuming, particularly for smaller businesses. Significant investment is required, often with a relatively low chance of success, which results in smaller businesses expressing a reluctance to submit tenders. Framework agreements are also perceived by some as creating closed shops and acting as a barrier to true competition. The rules have tied the hands of public authorities who must themselves contend with the administrative burden and the fear of the potential cost of not getting the procedure 100% correct.

The remedies available against Public Authorities under the Regulations include orders to set aside a decision made in the course of a tender procedure and the award of damages to an operator which has suffered loss or damages as a result of the breach. The 2009 Amendment Regulations extended the range of remedies available to operators and include the new remedies of prospective ineffectiveness of contracts and potential financial penalties imposed on a contracting authority.

In addition to the proceedings that may be brought by individual economic operators, the European Commission can also bring proceedings against the UK under Article 258 of the TFEU for failure to give the intended effect to the Directive or to comply with the Treaty itself. The European Court of Justice may order interim measures and impose fines until the breach is corrected.

With the number of large scale public sector contracts dwindling in the current economic climate, larger organisations are forced to tender for smaller contracts which in better times they would have ignored, and in putting their greater resource and know-how behind those bids, often edge out the SMEs who do not have the same ability to invest in procurement exercises. The result can be potentially high barriers for the smaller companies to traverse. 

The ‘overwhelming majority’ of those surveyed thought that the EU only benefits big business; perhaps in the present climate they may have a point although whether that is a function of the rules, the global economic downturn or a combination of the two must surely be open to debate.

Despite this perception, smaller bidder organisations are fully aware that the procurement rules are here to stay and their focus must be on how they best meet the challenges thrown down by those rules, understand the context within which contracting authorities operate and tailor bids in such a way as to maximise their prospects of success regardless of the size of organisation against whom they must compete.

Tristan Meears-White has a wide range of experience in:

• Advising contracting authorities on procurement processes
• Advising businesses on bid structure and content
• Representing unsuccessful bidders in challenging awards
• Representing contracting authorities under challenge from unsuccessful bidders