A new study by the European Court of Auditors (ECA) shows that in recent years more and more governments (national, regional, and local) have been directly approaching specific suppliers for their contracts.
The 2014 reform and an adjustment in 2017 largely failed to bring any improvement. Both bidders and governments found them cumbersome compared to more flexible procurements in the private sector. The share of public contracts awarded to SMEs also did not increase.
The three main indicators of competition in public procurement—tenders with a single bidder, negotiated awards, and number of bidders—remained unsatisfactory in most member states. In 2021, almost half of all contracts were awarded in procedures with only one applicant.
According to the Court of Auditors’ inspectors, negotiated awards are only permitted under very specific circumstances; they restrict competition and should be an exception. Instead, these awards occurred more frequently in nearly all member states and accounted for about 16% of all procurement procedures reported in 2021.
Furthermore, the number of public contracts with a single bidder in the entire EU has nearly doubled since 2011. The number of companies submitting bids has almost halved, from about six to three companies per procedure.
“Over the past ten years, the EU has failed to increase competition for public contracts. Unfortunately, we are now facing a lost decade,” says Helga Berger, the ECA member responsible for the audit. The Court of Auditors believes the European Commission should introduce an action plan to make public procurement more attractive for companies.