The European Union intends to make public procurement a central pillar of its new industrial policy, favoring domestic companies when awarding hundreds of billions of euros in contracts for infrastructure, energy, healthcare, and education. On Wednesday, the European Commission introduced the Public Procurement Act (PPA), following a recommendation from the Draghi report on boosting competitiveness.
The annual volume of public procurement in the EU is approximately 2.5 trillion euros, equivalent to nearly 15 percent of the bloc’s GDP. According to European Commissioner for Industry Stéphane Séjourné, about 600 billion euros of that total will fall under the new rules. He described this spending as an «annual economic stimulus program» that is four to five times larger than the EU budget. Consolidating three directives and two dozen smaller legislative acts is expected to save 650 million euros annually and reduce bureaucratic burdens.
Changing evaluation criteria and European preference
The European Commission plans to shift how tender winners are selected, moving beyond price to prioritize «quality». Quality criteria—including environmental, social, innovation, security, and sustainability aspects—will carry a weight of at least 30 percent, rising to 50 percent for labor-intensive contracts. If quality is defined by technical specifications, public buyers will still be able to select bids based solely on price. Commission research shows that environmental and social criteria are currently applied inconsistently across EU countries, as some authorities fear legal challenges if they reject the lowest-priced bid.
The new PPA draft gives public buyers additional tools to favor EU goods and services. Specifically, they will be able to limit tender participation, set requirements for the origin of goods and services, and reject bids if less than 50 percent of the contract’s value is performed within the EU. As Stéphane Séjourné noted, this will allow public buyers to favor European buses over Chinese ones, and in some cases, exclude Chinese suppliers from tenders entirely.
Goods covered by origin rules in other legislation, such as the Industrial Accelerator Act or the Critical Medicines Act, must comply with both sets of requirements. Meanwhile, critics argue it is contradictory for the EU to push for easier access to public procurement in other countries, such as India, while simultaneously restricting access to its own market for foreign companies.
Simplifying rules and supporting innovation
Stéphane Séjourné called the project an «act of radical simplification». Unlike a directive, a regulation is directly applicable in EU countries and leaves less room for maneuver during national implementation. The PPA is also intended to make it easier for companies to find and participate in tenders across the EU. To achieve this, a network of digital platforms will be created to ensure interoperability between the 123 national and local systems currently operating in different countries.
The European Commission also introduced the European Innovation Act, championed by European Commissioner for Research Ekaterina Zaharieva. The document aims to make public buyers «anchor clients» for new products to help European-developed innovations reach the market. A key challenge is that startups often lack access to necessary capital.
The document notes that innovative ideas developed in Europe too often fail to reach the market, struggle to gain a foothold in other EU countries, or fail to become the foundation for new growth industries. The European Innovation Act was initially broader and more ambitious, but according to documents obtained by POLITICO, its scope was narrowed following two negative opinions from the Commission.
Source: Politico
