The procurement Directive(s) is(are) getting reviewed

Last week, in her speech on the political guidelines for her new term as Commission President, Ursula von der Leyen announced the following in relation to public procurement:

"We must also make better use of public procurement – which accounts for 14% of EU GDP.

A 1% efficiency gain in public procurement could save EUR 20 billion a year. And it is one of the main levers available to develop innovative goods and services and create lead markets in clean and strategic technologies. I will propose a revision of the Public Procurement Directive. This will enable preference to be given to European products in public procurement for certain strategic sectors. It will help ensure EU added value for our citizens, along with security of supply for vital technologies, products and services. It will also modernise and simplify our public procurement rules, in particular with EU start-ups and innovators in mind."

I do not think it takes anyone by surprise that the Commission will be reviewing the procurement Directive in its coming mandate. Historically, procurement Directive(s) have been reviewed every decade or so and the current set is from 2014 and over due for an update. Despite the singular use of 'Directive' it seems to me that the other substantive Directives will be reviewed as well. How, it is anyone's guess at this stage but there are some tea leaves in the statement above to parse.

Efficiency

As someone who has been perennially concerned with efficiency in public procurement (and in fact the reason I got into it during my degree) it is great to see efficiency mentioned right at the top of the statement, but then the 2011 Green paper on the modernisation of EU public european policy was subtitled 'Towards a more efficient European Procurement Market.' We all know how that panned out. As such, it is important to balance out that efficiency mention with what comes after: innovation and lead markets for clean and strategic sectors. This means to me that efficiency improvements are probably amount to a token gesture and that the real action is coming from the 'strategic priorities' angle.

Innovation and lead markets in clean and strategic technologies

Pursuing these will be done at the expense of efficiency - and yes, simplicity - since they increase complexity into the system and thus reduce competition as well. That would certainly be my expectation from a UK-less Council less hamstrung about the internal market and instead bending procurement rules to allow a degree of favouritism. Avoiding favouritism and discrimination I may add is one of the key reasons why the procurement Directives exist in the first place and that many seem to forget.

A preference for European products for certain strategic sectors

Bearing in mind that measures already exist to protect certain sectors - defense, I'm looking at you - this can only be seen as an expansion of the same logic elsewhere and in line with the previous section. But this is a sure sign that discrimination *is* coming but the Commission seems to bank that it will happen only at the border of the EU and not inside of it. But the dam is clearly breaking here. It should be noted as well that we already have mechanisms on the access of third countries suppliers namely the International Procurement Instrument to try and balance commercial relationships (well, their subsidies) with countries that are not party to the GPA or with which the EU has a trade deal covering procurement. So this can only mean that these discriminatory measures will go beyond than what is already in the books. This can mean for example that the IPI will be enhanced or that more stringent rules may apply to specific sectors. But how would those target the GPA/FTA parties and partners?

Modernisation and simplification

The statement ends with another fig leaf on modernisation and simplification, this one I think for the European Court of Auditors after its December 2023 report. Again, a reminder that the 2014 Directives were supposed to have delivered on both counts and frankly that did not really happen. In fact the 2014 reform was disastrous on the modernisation angle. From a technology perspective the originally proposed European Procurement Passport had to be significantly re-designed during the legislative process into the ESPD and as for eCertis, the least said the better. From then on the Commission has tried to improve the technology side of things within the limits of the corner it painted itself into.  I am, however, a bit more optimistic that the Commission this time around will understand procurement is a function within the public sector and not simply a procedural island left to its own devices. Modernisation of procurement must happen in tandem and connection with the rest of the public sector and not by itself.

As for simplification I am not really sure what can be achieved at the legal level, especially with a Directive. I still think most of the problems are practical and not helped by a profusion of platforms where data is locked in and public systems where data is siloed and not easily retrievable, but that again is more a problem of modernisation than simplification.

What the Commission could simplify, however, is the profusion of procurement rules (mostly exclusion grounds) that have been added to the rulebook in sectorial legislation or the IPI itself. *Real* simplification here would amount to getting rid of exclusion grounds altogether from the procurement procedure in the sense that these should not be done by contracting authorities (which have no interest on them and are using as free compliance enforcers) but instead centralise them so that the cost of compliance checking is borne by those institutions or bodies advocating for them.

What is missing: competition

Despite the fig leaves I highlighted, the Commission does not seem to see competition as a fundamental issue to improve in the upcoming revision of the procurement Directive. If it was not mentioned here it is hard to see how it will magically become important further down the line. This may signal as well how difficult the Commission realises improving competition might be and instead is going after the low hanging fruit where it can score easy wins. Time will tell.

What is missing: sustainability

While there is a mention to 'clean' the silence on 'sustainability' in the statement is deafening. For all the talk that the 'discourse had changed' on sustainability, as I mentioned here, the discourse is indeed changing but not in the direction that proponents of mandatory sustainability might want it to. I remain of the opinion that procurement has a role to play in addressing climate change but that is a narrow sliver of evidence based intervention and not a broad brush approach as proposed by many.