BRUSSELS — The EU wants to transform public procurement into a powerful tool of industrial policy by channeling hundreds of billions of euros spent on infrastructure, schools, energy or health toward European businesses. In its Public Procurement Act unveiled on Wednesday, Ursula von der Leyen’s Commission is following up on recommendations by economic reform guru Mario Draghi to give a lift to struggling European industry while shielding the bloc from external risks in an increasingly uncertain world. The sums involved are huge.
Public procurement represents up to 15 percent of the EU’s GDP — or around €2.5 trillion a year. Of that, some €600 billion is governed by EU rules, Executive Vice President Stéphane Séjourné told reporters. That ties in with von der Leyen’s broader second-term agenda of cutting red tape through a series of “omnibus” administrative reforms.
To harness public procurement to its strategic goal of strengthening European industry, the EU executive is betting on quality as the main driver in the awarding of public tenders. This would set a minimum quality weighting of 30 percent, rising to 50 percent for labor-intensive contracts. Environmental, social, innovation, security and resilience considerations would all count as quality.
Public authorities could still deviate from the rule if they can justify using price alone on the grounds that quality is guaranteed through technical specifications. While public authorities can already put green or social criteria at the center of procurement, Commission research found that their use was neither optimal nor consistent across the bloc. Some contracting authorities, for example, fear litigation if they turn down the lowest-price offer.
The proposal also spells out how public authorities can favor EU goods and services — a power that they enjoy under existing rules but rarely use. Under the new rules, authorities could restrict participation, impose origin requirements, and reject tenders where EU or “covered” content accounts for less than 50 percent of the tender’s value. The Commission’s goal is to provide greater clarity regarding how these rules are applied so that authorities can better evaluate European bids and, if necessary, exclude bids from non-covered countries, Séjourné said.
Goods that are covered by origin rules in other proposals, such as the Industrial Accelerator Act or the Critical Medicines Act would have to comply with both sets of rules. Séjourné described the procurement bill as “an act of radical simplification.” The Commission chose a regulation instead of a directive — over the objections of a majority of member countries. A regulation reduces the scope for divergent national transposition of EU procurement rules, making implementation in national law simpler and avoiding “gold-plating” by capitals.
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