Understanding Public Procurement

The procedures for Public Procurement in the EU can seem a daunting task with many rules and regulations which require potential businesses and contracting authorities to abide by. EU Public Procurement is the method in which national government, public authorities or other public agencies purchase goods, services or commission work from potential contractors or service providers. The aim of EU procurement is to achieve an internal market in public procurement and these derive from the Treaty of the European Union as well as from Procurement Directives.

The benefit for liberalising the public procurement market is that it encourages free trade, on the basis that it makes an important contribution to economic growth. The European Commission estimate that public procurement account for approximately 16% of the EC's gross domestic product (GDP). The publication of public procurement opportunities are published in the Official Journal of the European Union (also referred to as the OJEU) with some public contracts being regulated by two European Directives.

These European Directives regulate contracts related to public works, supply and service contracts (Directive 2004/17/EC) as well as regulate contracting authorities associated with water, energy, transport and postal services (Directive 2004/18/EC). The directives cover public contracts that are above a certain threshold. Further information regarding the 2010 Thresholds (Regulation (EC) 1177/2009) is available.

How can public sector contracts benefit you?

Each year the public sector spends a huge amount of money and is always looking for new suppliers. However small your business, there are always opportunities to enter this market. Even if you are already supplying one part of the public sector, it is worth looking for opportunities in other areas.

Public-sector organizations are good customers. They have to be fair, honest and professional in the way they choose suppliers and in any dealings with them. Most are also long-standing, stable customers, and have to pay promptly and in line with agreed contract terms. Public-sector organizations have to pay accounts within 30 days (or any other agreed credit period) of receiving a valid bill or invoice.

You may also find that trading successfully with the public sector can give added credibility with private-sector customers.