Government procurement in the European Union

Government procurement or public procurement is undertaken by the public authorities of the European Union (EU) and its member states in order to award contracts for public works and for the purchase of goods and services in accordance with the principles underlying the Treaties of the European Union. Public procurement represents 13.5% of EU GDP as of 2007, and has been the subject of increasing European regulation since the 1970s because of its importance to the European single market.

According to a study prepared for the European Commission by PwC, London Economics and Ecorys, the UK, France, Spain, Germany, Poland and Italy are together responsible for about 75% of all public procurement in the EU and European Economic Area, both in terms of the number of contracts awarded through EU-regulated procedures and in value. The UK awards the most contracts in value terms and France has the highest number of contracts.

The basis of European procurement regulation lies in the provisions of the European Union treaties which prohibit barriers to intra-Union trade, provide the freedom to provide services and the right to establishment (three of the "Four Freedoms"), prohibit discrimination on the basis of national origin and regulate public undertakings and public monopolies. But these rules, being prohibitive in character, proved insufficient to eliminate the protection afforded by the Member States to domestic enterprises by preferential procurement practices. For this, positive regulation through secondary legislation which harmonized the procurement laws of Member States appeared to be needed.

The European Communities (EC) Council of Ministers adopted General Programmes in 1962 that envisaged the abolition of national quotas and restrictions in public procurement. Directive 66/683 prohibited rules requiring the use of national products or prohibiting the use of foreign products in public procurement, and Directive 70/32 applied the same rule to public supply contracts.

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