Friday 31 October 2008

Small business and EU public procurement

Is it impossible for small companies to win public contracts? Public procurement is generally seen at least as a daunting task for smaller enterprises.

The Small Business Act for Europe was launched by the European Commission 25 June 2008 to lower the hurdles faced by small and medium sized enterprises (SMEs). The aim was neatly put by Commission president José Manuel Barroso: Less red tape and more red carpet.

As the Commission points out, during the last years 80 per cent of the new jobs in the European Union have been created in the 23 milion SMEs (each with less than 250 employees and a turnover of less than 50 million euro).

For a quick presentation of the Small Business Act (SBA), go to the press release “Think Small First”: A Small Business Act for Europe:


Small Business Act

Officially, the document is the Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions, “Think Small First” A “Small Business Act” for Europe , Brussels, 25.6.2008 COM(2008) 394 final:


The aim was to focus the Commission’s own activities and to infuse some small business thinking into the refounded Lisbon Growth and Jobs Strategy, before the member states conclude their next round of national Lisbon strategies.

The Commission calls the term Act symbolic. It could just as well be called misleading, since the SBA is primarily a political programme, with a modicum of related legislative proposals.

This is the wider context for the proposals concerning public contracts.


Public procurement proposals

Section V (page 10) encourages the European Union and the member states to make use of the Code of Best Practice providing guidance to contracting authorities on how they may apply the EC public procurement framework in a way which facilitates SMEs’ participation in public procurement procedures.

The Communication acknowledged the obstacles SMEs face when participating in public procurement markets, which account for16% of the EU gross domestic product (GDP). According to the Commission, further significant efforts are needed to reduce the remaining obstacles to SMEs accessing procurement markets, especially by alleviating requirements imposed by contracting authorities in award procedures.


Commission actions

The Commission promised to present a voluntary Code of Best Practice for contracting authorities, to trigger further change in the purchasing culture. It would provide guidance on how to reduce bureaucracy, improve transparency and information and ensure a level playing field for SMEs.

The Commission promised to further facilitate access to information on procurement opportunities by complementing the existing EU websites dedicated to public procurement with a series of initiatives such as optional publication of contract notices for below-threshold procurement, an online tool to find business partners, and increased transparency of public procurement requirements


Member states’ actions

Electronic procurement portals: The member states were ‘invited to’ set up electronic portals to widen access to information on public procurement opportunities below the EU thresholds.

Smaller lots: The member states could encourage their contracting authorities to subdivide contracts into lots where it is appropriate and to make sub-contracting opportunities more visible.

Reasonable demands: The Commission wanted the member states to remind their contracting authorities of their obligation to avoid disproportionate qualification and financial requirements.

Dialogue and training: The Commission also wanted to encourage constructive dialogue and mutual understanding between SMEs and large buyers through activities such as information, training, monitoring and exchange of good practice.


It is important for small businesses and their organisations to keep on the lookout for good practices in Europe, and to keep a watch on the laggards among the member states.

If you have good or deplorable examples of procurement practices in Europe, your comments are most welcome.

Ralf Grahn

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