Europe Linking Public Procurement Systems

Photo: EU Commissioner for Information Society and Media Viviane Reding.

The European Commission is moving a step closer to making it easier for companies, in particular small and medium-sized enterprises (SMEs), to bid for public-sector contracts anywhere in the EU; a crucial step towards achieving the single European market. The Commission will co-finance a pilot project, driven by eight European countries that will create the conditions to link existing national electronic public procurement (e-procurement) systems. Simplifying cross-border procurement will generate savings on administrative and transaction costs and will benefit taxpayers who ultimately pay for public purchases. The project will invest more than EUR 19 million over three years, EUR 9.8 million of which will come from the European Commission's Competitiveness and Innovation Program.

"E-procurement already allows businesses to bid for the largest buyers in the EU: governments," said Viviane Reding, commissioner for Information Society and Media. " By making sure their systems work together, member states are helping European businesses to win public-sector contracts anywhere in the EU. This is a crucial step towards completion of the single European market."

Government contracts amount to more than 16 percent of the EU's gross domestic product (GDP), but many European companies, especially SMEs, miss out on this substantial business because of the extensive paperwork required for bidding for government contracts, particularly across borders.

Several member states have already realized the high impact of e-procurement, generating savings on administrative and transaction costs by eliminating invoices and orders by fax or e-mail, the reduction of data entered manually and the time businesses spend queuing, filling out forms and sorting out paper work. While e-procurement is paving the way for simpler, more open and transparent public procurement at national level, the cross-border challenge remains.

The European Commission is working with Austria, Denmark, Finland, France, Germany, Hungary and Italy as well as Norway (as a member of the European Economic Area) to enable companies from one country to respond to public procurement tenders in another. The project will not replace but rather build on existing national e-procurement systems using information and communication technologies to enable them to communicate with each other. This would allow, for instance, a Czech or Swedish company to bid for a Spanish or Hungarian government contract as easily as for a contract in their home country.

The results go beyond saving taxpayers' money and having leaner procedures: by levelling the playing field for SMEs, the backbone of Europe's economy, cross border e-procurement can boost competitiveness by providing tools for businesses to access the entire European market for public services. At present, SMEs account for 67 percent of employees in the business sector and 58 percent of turnover in the EU, but only win 42 percent of government contracts.

Background

This eProcurement project is a large scale pilot driven by participating countries and focusing on cross-border provision of ICT services that are already operating at national, regional or local level. These pilot projects aim to develop common specifications that can gain wide acceptance, enabling different national systems to communicate and interact with each other so that citizens and businesses can enjoy the full benefits of the single market.

This pilot project, called PEPPOL (Pan European Public Procurement on-line), focuses on cross-border activities within the procurement process. It will enable all member states and other stakeholders, including standardization bodies, the software industry and SMEs, whether participating in the project or not, to follow the work and influence the definition of specifications as they will be developed.

Later this month the Commission will launch another large-scale pilot project on electronic identity that will allow EU citizens, to use their electronic identity and access public services wherever they are in Europe.