Procurement rules: €20 billion saved at a cost of €5 billion

30 June 2011
Not an organisation to let a small thing like a financial meltdown get it down, the European Commission yesterday published a rather self-congratulatory statement entitled How the EU budget delivers value to you. I’m sure it was mere coincidence that it appeared on the same day the Commission also announced it wants a 5 per cent budget increase and new tax to pay for it. Buried toward the end of this release was this little gem of a paragraph: “People working in [the Internal Market and Services Directorate General] are also at the origin of EU rules that have led to open and competitive public procurement, which has generated savings of approximately €20 billion. This far exceeds the costs generated by the regulatory framework, which are estimated to be €5 billion.” I’m not sure the public sector buyers receiving a court summons from a disgruntled supplier or those governments fined by the European Court for a breach of the rules will be quite so ready to offer their hearty congratulations for this hard work. But the numbers themselves are also rather beguiling. How have these savings been realised? Over what time period have they been achieved? And how are the €5 billion in admin costs being measured? I find it very difficult to believe the combined cost of bureaucracy brought about by the rules for every single contracting authority in the EU’s 27 member states is as low as this, when the Commission itself recently found that the average public tender process costs €28,000 a time.
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