European public procurement

European rules on public procurement are complicated and compliance is poor throughout Europe, including in the Netherlands. The European Commission accordingly wishes to revise its procurement directives. The Dutch government in turn wishes to revise the national rules based on the directives. The Netherlands Court of Audit has investigated the potential consequences of: (a) a revision of the threshold above which European procurement procedures are compulsory; (b) an obligation to divide public contracts into 'lots' to make them more accessible to small and medium-sized enterprises (SMEs); and (c) stricter supervision of compliance with the rules.


Higher threshold not necessarily beneficial to the Netherlands

The European Commission's plans do not envisage a change in the European procurement threshold, although it has been a matter of debate. The Dutch government wants to increase the efficiency of public procurement by raising the threshold above which the complicated rules must be observed. It looks as though a majority within the EU is in favour of a higher threshold. It is open to question, however, whether a higher threshold would actually be beneficial to the Netherlands. More public contracts would remain below the threshold and the European procurement rules would apply in fewer cases. In consequence, a far larger number of public contracts would probably be subject to all manner of national procedures. The differences between the procedures in one member state and those in another would widen. In such a scenario, the European Commission suggests that the number of cross-border contracts would decline. In our opinion, this might not be in the interests of the Dutch companies, which are relatively successful at winning public contracts in other EU member states.

Dividing up public contracts incompatible with large-scale procurement

Like the European Commission, the Dutch government is in favour of dividing public contracts up into 'lots' so that they are more accessible to SMEs. In our opinion, this would be incompatible with the government's ambition of centralising operational management, including the procurement function, within central government. To save costs, the government wants to contract large public works by means of a single tendering procedure. The incompatibility between the two ambitions (decrease in scale on the one hand and increase in scale on the other) could create problems in practice. Our brief analysis of practical experiences questioned whether the measure would increase market access for SMEs. In the cases we studied, splitting up public contracts did not increase the number of tenders submitted by SMEs. SMEs are reluctant to submit tenders chiefly on account of the corporate social responsibility (CSR) requirements made upon them. Smaller enterprises cannot always demonstrate that they can comply with the requirements.

Netherlands not yet able to comply with the reporting requirements of new supervision model

The European Commission is proposing that all EU member states appoint an independent national body to supervise public procurement. These bodies would have far-reaching duties and powers and an obligation to report to the Commission in detail. There is little support for this proposal within the Council of Ministers. In the Council's alternative, the member states themselves would organise supervision at their own discretion but would still be required to monitor public procurement and report on it in detail. We have identified two problems in these models:

  1. The information that must be reported to the European Commission in both supervision models is too limited for effective oversight of compliance with the rules in the member states. Public contracts that are incorrectly not put out to tender will not fall within the scope of supervision. 
  2. The Dutch government does not have access to all the data that have to be reported. In particular, information on the proportion of SMEs that tender for public contracts is not systematically recorded.