EU plan would steer public contracts toward European suppliers

The European Commission has proposed overhauling EU public procurement rules so national authorities and public bodies, including schools and hospitals, can give greater preference to goods and services made in Europe. The draft contains no binding “made in Europe” quotas.

The proposals would also require public buyers to place more emphasis on quality, environmental sustainability and local supply chains instead of choosing solely on price. The regulation must still be approved by the European Parliament and EU ministers and could change during that process.

What the draft would change

The Commission said the new regulation would give public-sector purchasers greater legal certainty when considering European bids. Buyers could restrict or reject bids from countries without a public procurement agreement with the EU or without binding international procurement rules.

The draft would merge three existing laws into one. It is intended to make clear that public authorities can choose a European product over a foreign one when the rules allow it, rather than assuming EU law requires them to select the cheapest offer.

Key figures

• EU public procurement is estimated at 15% of the bloc’s gross domestic product, or about €2.6tn a year.
• Quality would receive a minimum 30% weighting in contract awards, unless buyers explain why they did not use it.
• Labour-intensive contracts would carry a minimum 50% quality weighting.

Why China is central to the proposal

Brussels is concerned about Chinese companies gaining ground in European transport and infrastructure markets, including through state subsidies that can make their offers cheaper than those of European competitors.

In April, the Commission blocked a Chinese rolling-stock company from joining a consortium building a new Lisbon metro line after finding that subsidies had given the firm an unfair competitive edge. The Commission also opened an investigation last year into Chinese security company Nuctech over suspected subsidies and tax breaks; that investigation has not reached a final conclusion.

Which foreign suppliers could be affected

The Commission said firms from non-EU countries with public procurement agreements with the bloc are not expected to face barriers under the latest draft. Officials said existing agreements protect reciprocal market access for UK companies.

An online tool is planned to show public purchasers which countries are covered by EU free-trade agreements and other international procurement deals. Membership of the World Trade Organization’s government procurement agreement would be an important indicator; mainland China is not a party to that agreement.

What happens next

The draft regulation must be negotiated and agreed by the European Parliament and EU ministers before it can enter into force, and the text is likely to be amended during that legislative process.