December Story: A ‘Tender’ Tale of Transparency and Other Fairytales in the EU Procurement Edition

By Andreea Gudin

As we peer through the fog of direct acquisitions and navigate the maze of single-bid auctions, the fairy godmother of fair play seems to have abandoned the procurement ball. The question echoes: Who holds the golden slipper of benefit in this twisted procurement tale?

Drawing insights from the recently unveiled “Special Report: Public Procurement in the EU” by the European Court of Auditors, it’s apparent that competition for contracts in works, goods, and services has dwindled over the past decade, reaching a concerning low in 2021. This revelation sets the stage for my exploration into the shadows of a procurement landscape that appears far from tender.

So, who truly benefited from these public tenders over the past 10 years?

The initial impression is that only a few major, well-connected players gained significant advantages. With a substantial increase in direct acquisitions and a doubling of single-bid auctions, the authenticity of open competition comes into question.

Unveiling the Shadows of a Less Then Tender Tale

Analysing the data, the picture that emerges is one of a market marked by opacity and excessive concentration of power. Cross-border tenders seem to be more of a bedtime story, while large companies in certain sectors largely control contract distribution. Efforts to stimulate competition, such as splitting contracts into small lots, appear to be illusory, as everything ultimately ends up in the hands of the same players. The lack of price data and monitoring means we don’t truly know who is receiving our money and how much we’re paying for it. This situation is exploited by already powerful players, directly impacting public costs and, consequently, our pockets.

Bureaucratic Quagmire: A Critical Lens on Reform Objectives

The report also highlights a clear failure of the 2014 reform objectives. The increased duration of administrative procedures, coupled with a lack of simplification, contradicts the initial goals. It all becomes a cumbersome bureaucratic machinery, to the detriment of SMEs and transparency. My question is: why were these objectives not achieved, and who or what hindered progress?

Adding to the above is the lack of a unique traceability identifier in tenders. For ten years! It becomes almost frustrating, and I want to understand who truly benefits from this chaos because, surely, citizens don’t seem to be on the list.

A theater of the absurd where we witness open competition only on paper, and in reality… In reality, behind the figures, the shadow of underground agreements and understandings seems to take shape.

Despite aspirations for a single and integrated market within the European Union, cross-border tenders reveal a different reality. Only 5% of total contracts are awarded in this manner. So how “unified” is this European market really?

Is there a subtle attempt at protectionism, ironically undermining the idea of cross-border competition? I don’t believe anyone intended to undermine the very foundation of fair and free competition that the single market should promote. Things are much more blunt than they appear.

Figures reveal that before the creation of the single market in the late 1990s, only about 2% of public procurement contracts were awarded to companies from other member states. However, even after the creation of the single market, this percentage has remained around 5%.

Let’s go further, as all of this could indicate a significant level of intermediaries and manipulations behind the scenes of this apparently transparent landscape. The ECA report brings to light a fundamental issue in European public procurement – the lack of traceability and adequate competition. And it doesn’t even cross our minds that this situation can be understood as a result of opaque and insufficiently controlled practices. No way!

Traceability Woes: A Decade Without a Clear Identifier

Back to reality: A burning hypothesis would be that approximately 30% of total public procurement involves intermediaries and goes through a circuit of level 3 contractors, raising serious questions about who the real beneficiaries of public funds are. Without knowing who truly executes public contracts and how much these services cost, an environment conducive to inflation and unjustified expenses is created, and there’s no talk of a healthy market. Transparency is still the exception, not the norm.

Ah, my dear readers, we enter the backstage of chaos, where European public tenders have turned into a carnival of obscurity. Who lurks in the shadows and manipulates financial puppets? The question is of the day, and the answers are so clear that they hide in the shadow of absurdity.

So, as we watch the development of this act in European dramaturgy, it is up to us to bring these questions to the forefront and seek answers that restore balance in favour of transparency, real competition, and benefits for the entire European community. It is time to critically examine the public procurement system because, ultimately, every citizen has the right to efficient and fair administration of their resources.

Argument No. 2: If you even think about efficiency, fairness, and transparency, a collaborative approach between national authorities, European organisations, and tender participants is needed.

So, for all authorities involved, in case you decide to truly serve the interests of citizens and European businesses, start by listening to public’s opinion and maybe, just maybe, you will not stubbornly tick all the boxes of Mark Fischer’s arguments about what Capitalist Realism means.

Let’s move to business: What do we need?

European Standards for Procedures

Implementation: European Commission, with the support of member states.
Expected Impact: Simplification and opening up of competition so that you don’t feel thrown into a Kafka novel.
How to Implement? By introducing a standardized and clear guide for public tenders.

Rigorous European Monitoring

Implementation: European Court of Auditors and an independent monitoring agency.
Expected Impact: A shine on public tenders under the spotlight, eliminating the darkness of uncertainty.
How to Implement? By establishing a centralized and publicly accessible electronic system, monitored by an independent agency.

Transparent European Database

Implementation: National authorities in collaboration with the European Commission.
Expected Impact: Increased trust in contractor selection, eliminating phantom firms.
How to Implement? By introducing a central online platform, updated in real-time by national authorities.

Survival Guide: Assistance for Participants

Implementation: European Commission in collaboration with business organizations and public procurement experts.
Expected Impact: Broader and more informed participation in tenders.
How to Implement? By developing and promoting a detailed online guide and training sessions for participants.

Sanctions for Improper Practices

Implementation: Court of Justice of the European Union and national law enforcement agencies.
Expected Impact: Effective discouragement of improper practices.
How to Implement? By reviewing and consolidating existing legislation on sanctions for public procurement violations.

But that’s not all!

Directive 2014/24/EU on Public Procurement

Proposed Amendment: Introducing clear criteria for evaluating previous experience, including special scoring for financial and ethical transparency.

Regulations on Transparency and Access to Information

Proposed Amendment: Improving procedures for access to documents and online publication of all relevant documents in the public procurement process.

Anti-corruption Legislation and Whistleblower Protection

Proposed Amendment: Expanding protection for whistleblowers to include those reporting violations in public procurement, along with appropriate sanctions against any form of reprisal.

Further Assistance? As a Decade of ‘Nothing’ in This Realm Calls for an Extensive Set of Measures – Who, why, and how?

Unified Tender Platform (UTP)

Implementation: EYTC and the European Commission.
Expected Impact: Simplifying access to tenders and increasing participation.

Transparent Feedback Mechanism (TFM)

Implementation: EYTC in collaboration with the European Commission.
Expected Impact: Accountability and continuous improvement of the tender process.

Mentorship Programs for New Participants (MPNP)

Implementation: National agencies and EYTC.
Expected Impact: Increasing the chances of small businesses to compete in tenders.

Publication of Real Costs (PRC)

Implementation: European Court of Auditors and EYTC.
Expected Impact: Financial transparency and risk reduction.

Preservation of Participants’ Anonymity (PPA)

Implementation: National authorities and EYTC.
Expected Impact: Preventing undue influences and promoting a fair process.

Increase Quota for Cross-Border Tenders (CCT)

Implementation: European Commission and EYTC.
Expected Impact: Supporting economic integration and increasing competition.

Antitrust Monitoring (AM)

Implementation: Antitrust authorities and EYTC.
Expected Impact: Preventing anticompetitive practices and maintaining a fair market.

Online Education Platform (OEP) for Tender Procedures

Implementation: EYTC and educational institutions.
Expected Impact: Increasing the knowledge level of participants and improving the quality of offers.

Sanctions for Non-transparent Bid Presentations (SNB)

Implementation: EYTC and national authorities.
Expected Impact: Discouraging opaque practices and increasing process integrity.

Algorithmic Audit of Bids (AAB)

Implementation: EYTC and technology experts.
Expected Impact: Identifying and preventing false or manipulative bids.

Ethics Courses in Tenders (ECT)

Implementation: EYTC and ethics institutions.
Expected Impact: Promoting ethical practices in the tender process.

Promotion of Local Initiatives (PLI)

Implementation: National authorities and EYTC.
Expected Impact: Supporting local businesses and balancing contract distribution.

Funds for Anti-corruption Investigation (FAI)

Implementation: European Court of Auditors and EYTC.
Expected Impact: Increasing the effectiveness of investigations and reducing corruption.

Early Warning System for Deviations (EWSD)

Implementation: EYTC and monitoring institutions.
Expected Impact: Identifying deviations from procedures in early stages.

Transparency of Decisions (TD)

Implementation: European Commission and EYTC.
Expected Impact: Increasing trust through transparent decision-making.

Periodic Review of Procedures (PRP)

Implementation: National authorities and EYTC.
Expected Impact: Constant adaptation to economic and technological changes.

Promotion of the Startup Ecosystem (PSE)

Implementation: EYTC and startup organisations.
Expected Impact: Increasing innovation and diversifying tender participants.

Continuous Monitoring of Participants’ Performance (CMP)

Implementation: EYTC and national authorities.
Expected Impact: Identifying and promoting consistent performance.

International Benchmarking (IB)

Implementation: European Commission and EYTC.
Expected Impact: Comparing with the best international practices to improve the tender process.

Quarterly External Audits (QEA)

Implementation: National Agency and EYTC.
Expected Impact: Increasing transparency and rapidly identifying financial issues.

Progressive Financial Sanctions (PFS)

Implementation: European Commission.
Expected Impact: Discouraging violations and proportionally penalizing deviations.

Contractor Performance Evaluation Mechanism (CPEM)

Implementation: National Agencies and EYTC.
Expected Impact: Selecting and maintaining efficient and ethical service providers.

Whistleblower Protection Law (WPL)

Implementation: European Parliament.
Expected Impact: Significant increase in reports of abuses and fund fraud.

Independent Advisory Group (IAG)

Implementation: Independent organizations and National Agencies.
Expected Impact: Ensuring an independent and fair voice in the tender process.

Standards for Documentation Transparency (SDT)

Implementation: European Commission.
Expected Impact: Increasing transparency and reducing possibilities for misinterpretation.

Bilateral Agreements for Bureaucracy Reduction (BABR)

Implementation: Member States and the European Commission.
Expected Impact: Streamlining processes and reducing bureaucracy.

The end.

Andreea Gudin