EU Unveils Public Procurement Act

Brussels wants simpler tenders, stronger quality standards and greater preference for European suppliers

The European Commission has proposed a sweeping rewrite of the rules governing public contracts across the European Union. The Public Procurement Act would consolidate the existing framework, create a connected digital marketplace and give greater weight to quality, labour standards and supply resilience. Yet its success will depend on whether simplification increases competition without weakening transparency or national social protections.

Presented on Wednesday, 9 September, the reform concerns the public money spent on services and infrastructure ranging from hospitals and schools to transport, energy systems and urban development. According to the Commission, public procurement represents approximately 15% of EU gross domestic product.

The legislation remains a proposal. It must be negotiated and approved by the European Parliament and the Council before it can enter into force.

One regulation in place of three directives

At the centre of the Public Procurement Act proposal is a plan to repeal the three principal directives adopted in 2014 and gather procurement rules currently scattered across numerous sector-specific laws into one directly applicable regulation.

The Commission argues that this would make the system more consistent across the single market. Directives require national governments to transpose EU requirements into domestic law, which can produce significant differences in interpretation and implementation. A regulation would apply more uniformly, although national authorities would continue to organise and manage their own purchasing.

The proposal would reduce the number of principal procurement procedures from five to three. It would also give public buyers more scope to consult markets and negotiate with potential suppliers, bringing some procedures closer to purchasing practices in the private sector.

A dedicated innovation procedure would allow authorities to develop and acquire solutions that are not yet commercially available. This could be especially relevant for healthcare, clean transport, energy efficiency and digital public services, where authorities may need technology that existing catalogues cannot provide.

A connected digital marketplace

Brussels also wants national electronic procurement systems to become interoperable parts of a European digital marketplace. A company registered on one connected platform should eventually be able to find opportunities and submit bids across the EU without repeatedly supplying the same documents.

The Commission says automatic checks and a common framework for procurement data could reduce administrative costs by an estimated €650 million annually. It expects approximately €80 million of those savings to benefit public buyers and €570 million to benefit businesses.

That promise matters particularly for smaller companies. Complex documentation and differing national systems can make bidding for public work disproportionately expensive for small and medium-sized enterprises, even when they are capable of delivering the contract.

Digitalisation, however, will not remove every obstacle. Smaller suppliers will still need accessible procedures, proportionate financial requirements and contracts divided into manageable lots. Authorities will also need adequate staffing and technical skills to use the new system effectively.

Moving beyond the cheapest offer

The proposal would make the best price-quality ratio the default method for awarding contracts. Quality criteria would normally account for at least 30% of an evaluation, rising to 50% for labour-intensive contracts.

Those criteria could cover environmental performance, innovation, security, resilience and social considerations. Contracting authorities could depart from the proposed weighting under an “apply or explain” mechanism if they demonstrate that quality is protected through other requirements.

This change addresses a persistent concern that public authorities interpret procurement rules as requiring them to choose the lowest initial price. Cheap contracts can prove costly when they produce poor construction, unreliable services, repeated delays or employment conditions that make it difficult to retain skilled workers.

The European Trade Union Confederation welcomed the proposal’s recognition of collective bargaining but called for stronger mandatory social conditions. It also warned that replacing directives with a regulation must not prevent countries or local authorities from maintaining protections that exceed EU minimum standards.

That concern will be central during negotiations. Simplification can reduce unnecessary paperwork, but broadly worded flexibility can also weaken oversight if authorities are not required to document decisions, disclose conflicts of interest and monitor subcontracting chains.

European preference with legal limits

The Act would establish a horizontal framework allowing public buyers to consider a European preference. It would clarify which suppliers and products are protected by the EU’s international procurement commitments and allow restrictions in defined circumstances.

The Commission could intervene where a third country has not provided European companies with fair access to its procurement market, or where dependence on a narrow group of foreign suppliers creates risks to supply security or the EU’s economic interests.

This is not an automatic requirement for authorities to buy only European goods. Any preference would have to respect international commitments and the specific rules ultimately approved by Parliament and the Council. The distinction matters as the EU debates how to support domestic production without replacing open competition with protected markets.

The proposal nevertheless marks a significant change in industrial policy. It gives public purchasing a more prominent role in the wider discussion about European industry and competition from China, particularly in sectors where subsidised production or unequal market access can place EU suppliers at a disadvantage.

Competition remains the harder problem

Simpler rules alone do not guarantee more bidders. A European Court of Auditors investigation found that competition for public contracts declined between 2011 and 2021. The share of procedures attracting only one bidder rose from 23.5% to 41.8%, while the average number of bidders fell from 5.7 to 3.2.

The auditors identified bureaucracy, restrictive criteria, specifications tailored too narrowly and market concentration among the causes. They also found that the 2014 reforms had not produced a measurable improvement in SME participation.

The new Act therefore carries several objectives that may pull in different directions. Authorities are expected to simplify procedures, increase competition, favour quality, strengthen European supply chains and advance environmental and social policy. Each objective can be justified, but combining them will require clear guidance and careful oversight.

The eventual measure of the reform will not be the number of pages removed from the rulebook. It will be whether more responsible businesses can compete, whether workers’ rights and environmental standards are protected, and whether citizens receive better public services for the money spent in their name.