Reading the results: our take on the recent EU Public Procurement Directives consultation

The European Commission just published the results of its public consultation on evaluating the EU Public Procurement Directives. 

As Professor Sanchez Graells helpfully puts it in his take on the conclusions, the findings are something of a mixed bag, with many split or inconclusive responses depending on who is answering. For example, why ask respondents if competition grew or dropped when we know from a fairly robust statistical analysis by the EU Court of Auditors that it dropped? 

We think one of the key opportunities in this Directive revision is boosting digitization. You can read our consultation response here. Better data and technology can drive a transformational shift towards better procurement that stimulates innovation, competition, and sustainability.

There are some breadcrumbs that we can follow from the survey to this end, and here’s what we think the Commission and governments can do about it. 

1. On corruption: some progress, but room to strengthen integrity measure

38% of respondents believe the 2014 Directives helped reduce corruption, with only 15% disagreeing. This is encouraging, but more must be done, as public procurement remains governments’ number one corruption risk. 

What should be done?

• We should improve structured data collection to support anti-corruption efforts. Both the scope and quality of information collected should be reviewed, and eForms should become a by-default data collection standard across the EU (including below TED thresholds). Better data is an absolute must for more robust corruption detection mechanisms. 
• We should improve interoperability across government datasets, linking procurement data to beneficial ownership information, e-procurement, spending transactional data, tax data, and other datasets.  
• Increase the use of data analytics and AI to detect red flags early, with a focus on prevention. We’re happy that the to-be-adopted Directive on Combatting Corruption expanded the scope of application to include the prevention stage. 

2. On green, social, and innovative procurement: diverging perceptions on progress

While public authorities are generally positive (over 50% agree the Directives have helped improve green and other procurement), companies generally disagree. Nearly half say the Directives have not encouraged green (46%), social (50%), or innovative (54%) procurement.

What should be done?

• Whilst progress is disputed, the direction of travel does not seem to be. We’ve documented the rapid progress that can be made with a clear political commitment to make sustainable and innovation-friendly procurement the default, not the exception, for example, in Lithuania, and how to set up minimum green standards (e.g. South Korea). 
• The Directives can help by clarifying legal uncertainty about the linkages of sustainability considerations and procurement contract subject matter. UNCITRAL model law can help as it provides wording guidance, especially concerning policy objectives being a legitimate consideration in individual procurements. 
• We can put data and measurement of sustainable procurement at the core of reforms, encouraging quicker and more informed transition.
• The Directives can also help by encouraging pre-market engagement and flexible competitive procedures to enable testing and demonstration of new technologies. 
• The Directives should also address supply chain issues around green tech.    

3. On competition and single bidding: a worrying picture 

The EU Court of Auditors’ report is pretty definitive that we need to improve competition in Europ, and 38% of respondents say competition levels in procurement markets are too low, and nearly 30% consider single bidding too frequent. Interestingly, 58% of respondents here believe this is more about market structure than poor procurement practices.

What should be done?

•  A study of more than 3.5 million government contracts across Europe determined that every additional item of information shared about a tender decreases the risk of a single bid contract. So we should be increasing the transparency of the process, not reducing it by elevating thresholds for competitive processes. The best way to do this will be to go digital so the transparency is embedded into the transactional contracting process as opposed to filing separate, duplicative reports and notices afterwards. 
• Encouraging better market engagement, bidder outreach, and more use of lots.
• Collect and analyze more data for more nuanced competition analysis to map where energy is lacking and target interventions.
• Where markets are structurally uncompetitive, explore pre-commercial procurement or dynamic purchasing systems as alternatives.

Final thought: The Directives will only as good as their implementation

Perhaps what this survey shows most clearly is that the Directives can only be part of the solution. Real impact comes from how they are implemented nationally around a vision of inclusive, competitive, innovative procurement. We don’t dispute that a legislative reset is needed; however, we firmly believe that a central priority of the transformation should be digitization and unleashing the power of procurement data. If we do that, we can fix other simplification, competition, and innovation issues much more easily.