Press release

EU to open up public procurement following UK government lobbying

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The new EU Procurement Directives will support public sector mutuals and boost small and medium enterprises.

The European Parliament has agreed a revised package of EU Procurement Directives. These include a number of UK wins - for which the government lobbied in Brussels - Minister for the Cabinet Office, Francis Maude has announced.

The EU Procurement Directives provide for transparent, fair and competitive procurement across Member States. The agreement forms part of the UK government’s push to reform the European Union, making it more competitive, cutting EU red tape and helping UK companies make the most of the EU’s single market.

The UK government’s commercial and procurement reforms saved the taxpayer £3.8 billion last year. These new changes to regulations will support further reform by making the public procurement process simpler, faster, less costly and more effective for business and procurers alike. Influencing the changes has been a priority for the UK government. The Cabinet Office worked to ensure this outcome for the UK, with Francis Maude and officials lobbying in the EU for the necessary changes.

The changes

Help for mutuals

The UK government is supporting public sector staff to form mutuals. There are more than 80 already live, delivering well over £1 billion of public services. Traditionally new mutuals are exposed to full competition, which may stunt their growth or even put them off starting up. Now government will be able to reserve contracts for services provided by mutuals before fully exposing them to EU competition.

A boost for small and medium enterprises (SMEs)

The UK government wants to level the playing field for providers of all sizes. We hope that 25% of government spend will be with SMEs by 2015. The new regulations will benefit SMEs by encouraging buyers to break large contracts into smaller lots and capping turnover requirements for businesses. The simpler processes could also save SMEs up to 60% of bidding process costs, according to European Commission estimates.

Reduced red tape

The new rules will see much simpler and more streamlined procurement processes, with only the winning tender being required to provide supporting paperwork, and more appropriate time scales in which suppliers have to respond to tenders.

Better supplier management

As part of the Civil Service Capabilities Plan, we are sharpening contract management skills across government. These new rules will help this by allowing government to exclude suppliers from a procurement procedure not only because of grave professional misconduct, but also because of significant or persistent poor performance.

Minister for the Cabinet Office Francis Maude said:

I am pleased that this new procurement directive includes several wins for the UK government. My officials and I have been lobbying on this directive in Brussels and with other member states. The changes will help encourage more public sector mutuals to spin out by protecting the newest from full EU competition rules. There are already 10 times more public sector mutuals than there were at the time of the 2010 General Election but, because we know they can help drive up productivity, we want to see even more.

Last year our commercial and procurement reforms saved taxpayers £3.8 billion. As part of our long-term plan to help the country live within its means we need to save even more. EU rules used to make it hard for government to exclude suppliers with a poor performance record and so it’s good news that the changes will make it easier for us to manage contracts effectively.

We will seek to transpose these rules into UK law quickly as the regulations will help British companies win business in other European countries.

Member states are required to transpose the directives by making national implementing regulations within 2 years from the date of EU adoption. The Cabinet Office is preparing ambitious plans for early transposition, so that the UK can take advantage of the additional flexibilities in the new rules as soon as possible.

The plans include supporting all public sector organisations to understand the changes and how to put these into practice, and consulting formally on the draft implementing regulations before they come into force, to confirm that the regulations implement the new rules effectively and do so in the best way.