Public Procurement

In contrast with restructuration in the sectors such as railway transport, which enjoy visibility and have potential to bring about medium to high levels of politicization and public debate, public procurement appears as a dull and technical topic which is dealt with at the level of low-profile, day-to-day bureaucratic politics of the EU. Yet, rules on public procurement determine the conditions in which public authorities (at all levels of governance) can award a contract for a firm to carry out a service on their behalf. While not all services provided through public procurement are welfare services, public procurement rules de facto interact with the way in which (and the legal form under which) public authorities will entitle a specific firm to provide economic or non-economic SGI.

From the outset, the liberalization of public procurement has been part of efforts to create a European Single Market[1] at the end of the 1980s, as specific national procurement rules were seen as main nontariff barriers reflecting protectionist attitudes of national governments willing to prevent foreign firms from entering the markets linked to public procurement. Hence, the economic rationale behind the liberalization of public procurement is that:

Integration of public markets, through the principles of transparency, nondiscrimination and objectivity in the award of public contracts, will bring substantial savings to the public sector, rationalize and allocate more efficiently human and capital resources and increase the productivity and competitiveness of European firms. (Bovis 2012, p. 148)

In 2011, the EU Commission put forward a series of three directive proposals—on public procurement, public procurement in the sectors of water, energy, transport and postal services, and on public concessions— aiming at updating the legislation from 2004 and further integrating related markets in the EU.

Under the auspices of Commissioner Michel Barnier, the Commission’s proposal did not have a strong neoliberal flavour. Barnier was appointed in 2010 as a successor to Fritz Bolkestein, who ended up being a political scarecrow, and Charlie McCreevy, the former ‘avowedly neoliberal’ Irish Minister of Finance (Phelan 2007, p. 38). His appointment resulted from strong French lobbying in order to push for more regulation of financial markets. As part of the Single Market Act strategy, the proposal on public procurement rules foresaw a ‘light’ liberalization regime for social services with a ‘limited cross-border dimension’ such as services to the person. Thus, a number of social, health and educational services would only be submitted to public procurement rules when the value of the contract exceeded €500,000.

The rapporteur on two of the three directives included in the legislative package on public procurement was Marc Tarabella, a member of the Belgian francophone Socialist Party, well known for his leftist positions within the European social democratic family. Tarabella proved very successful in strengthening the regulatory aspect of the piece by excluding the contracts between public authorities and public enterprises from the directive’s scope of application, by raising the threshold for the application of public procurement rules to social services to €750,000 and by making respect of social and environmental regulation (including collective agreements) central in the new legislative framework: the notion of ‘lowest cost’ for a service is complemented by the notion of ‘most economically advantageous’ on the basis of criteria which include qualitative, environmental and social considerations. In turn, public authorities shall not award contracts to undertakings which do not comply with their obligations with regard to environmental, social and labour law (including in the case of outsourcing); finally, abnormally low offers should be controlled on this basis. One ambiguous point which triggered contentious discussions seems to have remained in the final version of the directive: compulsory social security services are included in the list of the services covered by the directive. Since services for the payment of welfare benefits are clearly bound to generate possible contracts over €750,000, this would mean that, if granted to a firm through a contract, such services would necessarily be submitted to rules of competitive tendering. In order to avoid this, the EP report included amendments in Article 1 stating that:

  • 4. This Directive does not affect the freedom ofMember States to define, in conformity with Union law, what they consider to be services of general economic interest, how those services should be organised and financed, in compliance with the State aid rules, and what specific obligations they should be subject to. Equally, this Directive does not affect the decision of public authorities whether, how and to what extent they wish to perform public functions themselves pursuant to Article 14 TFEU and Protocol No 26.
  • 5. This Directive does not affect the way in which the Member States organise their social security systems.[2]

Still, the directive adopted in February 2014 was considered overall as rather progressive and welcomed by the ETUC. Thus, in the case of recent policy making in the realm of public procurement, liberalization was accompanied by a fair level of re-regulation. While public procurement is a rather technical issue which did not trigger contention beyond the EU institutional arena, a moderate EU Commissioner avoided polarization and pro-regulation actors within the EP were able to impose their views.

  • [1] See Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures forthe award of public service contracts.
  • [2] Directive 2014/24 EU of the European Parliament and of the Council of 26 February 2014 onpublic procurement, Official Journal of the European Union, L 94/65, 28 March 2014.
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