The European Committee of the Regions has called for a halt to the revision of EU rules for public procurement, on the grounds that the latest reforms the EU are still young and are falling short in significant ways. In recommendations adopted on 8 October, the EU's assembly for local and regional authorities said that, without imposing new rules, the EU could address important problems by easing access for medium-sized companies and encouraging harmonisation through, for instance, labelling schemes.

The recommendations by the CoR are significant economically, because local and regional administrations are responsible for 45% of public procurement in the EU. The EU's last reforms, adopted in 2014, were prompted by the belief that public-sector contracts could be an important catalyst for growth and remove barriers to investment within the EU single market. The CoR's proposals are also significant institutionally, because they draw heavily on the work of a new pilot scheme intended to ensure that local experiences are fed back into the EU's policy-making.

The opinion was drafted by Thomas Habermann (DE/EPP), President of the County of Rhön-Grabfeld in Bavaria and member of the Christian Social Union. The recommendations reflect findings from a joint CoR and CEMR survey on the implementation of Public Procurement rules in the member states launched in March 2019 as well as from a July 2019 report by the Network of Regional Hubs for EU Policy Implementation Review , which the CoR launched this March.

Mr Habermann said: "The reforms introduced in the EU public procurement directives are laudable in intent – a vast majority of the regions and local authorities perceive the 2014 reforms as positive in principle – but, in practice, there are shortcomings that range from the regrettable to the fundamental. Small businesses are winning fewer contracts than the EU had expected, and cross-border procurement has not brought any added value for local and regional authorities. Though EU-wide procurement procedures are carried out regularly, costing considerable time and money, few if any cross-border contracts are awarded. Moreover, local and regional authorities do often not see the need to apply strategic procurement objectives, particularly in the field of innovation."

He continued: "Why is this the case? For the typical regional or local administration in the EU, budgets are tight, research and development are not a priority, and the products they buy are relatively basic. Given the money that they spend, public administrations consider economic use of funds as a priority. They generally factor in aspects of sustainability, but they lack the reliable and clear EU-wide labelling and certificates, particularly in the field of environmental sustainability, that would be needed to create legal certainty and to reduce burdens for contracting authorities on the ground. Companies from other countries may offer attractive products and prices, but different laws, tax regimes and administration create obstacles that are difficult to overcome. And procurement rules are just not simple and transparent enough to attract small businesses."

Mr Habermann said: "The reforms are still young – few member states managed to meet the 2016 deadline for transposition – and civil servants are still being trained, so the risk of errors is high and some more benefits may yet emerge. On top of that, as often happens, national governments have added their own conditions – what experts call 'gold-plating' – so some remedies may lie with national capitals, not Brussels. For the time being, the main needs are to let the reforms settle down and to avoid extra burdens for public authorities through new rules."

"Still, we think this uniquely thorough survey has already revealed important short- and long-term lessons," Mr Habermann said. "Firstly, the EU and national governments should not expect local-government contracts to be the sole driver of all policy goals, be they related to sustainability or to social policy. Public procurement needs a balanced approach that takes into account the easy applicability of rules by all public authorities, irrespective of their size, and also the principle of local self-governance. Secondly, to boost local economies, the EU should focus more on getting bids from medium-sized companies. Thirdly, tender criteria are not the best way to attract bidders from other countries; it would be better, for example, to promote common labelling and recognition of national certificates."

The majority of recommendations are based on an extensive consultation mechanism developed and launched by the European Committee of the Regions because of concerns that too little information is available on the local and regional impact of EU legislation. The joint survey of CoR and CEMR as well as the Regional Hubs project, which began a two-year pilot phase in March, involves the CoR, the European Commission, and 36 associated regions in 16 countries and focuses on three areas: public procurement, air quality, and cross-border health-care.

The public-procurement report and Mr Habermann's political recommendations are the first output of the Regional Hubs project. They come four weeks before the next president of the European Commission, Ursula von der Leyen, takes up office.

In a separate set of recommendations adopted by the CoR on 8 October, the CoR called for the European Commission to foresee funding to support the Regional Hubs mechanism, if the pilot phase proves a success. The Regional Hubs initiative emerged from a task-force looking into ways to ensure that EU policymaking is more open and reactive to feedback from local and regional administrations and national parliaments. The task-force, which was headed by the First Vice-President of the European Commission, Frans Timmermans, issued a report in mid-2018 that endorsed many of the positions of the CoR.

Contact:

Andrew Gardner

Tel. +32 743 843 981

andrew.gardner@cor.europa.eu