Looking at the procurement angle of the Letta report

The Letta report on the single market (Much more than a market) released yesterday contains some ideas for public procurement, namely achieving higher integration for the public procurement market while realising strategic goals. These are explored in detail in a reasonably sized section called 'A more European and more strategic public procurement market. In addition, procurement is peppered throughout the document as appropriate in connection with other priorities and ideas.

While its most important idea comes at the end, the section starts by addressing the elephant in the room of the ECA report and its findings on the weakening of procurement competition, growing process duration, poor data and the Commission's spotty enforcement. At the same time the report tries to square the circle by calling for more streamlined and clear procurement goals while asking for more strategic use of procurement. Herein lies the internal contradiction of the report: we either aim for simplification and streamline or we pile more objectives, goals and ideas into procurement. These two ideas are orthogonal to one another and pursuing one implies letting go of the other.

The report also criticises the use of lowest price as the sole award criterion and how this practice 'undermines the true potential of public spending', calling for its critical examination. It is true that this warrants further research but there are a few explanations as to why contracting authorities overwhelmingly prefer lowest price over MEAT. The first is that is much easier to use and as such less prone to mistakes or challenges. It is also easier to defend from criticism and to deploy with limited resources or be it staff or, yes, knowledge. If we haven't transitioned from lowest price to MEAT in 20 years, trying to force contracting authorities to jump straight to adding strategic objectives is a misplaced ambition in my view. This is a topic I will be covering at a hybrid session next week.

According to the report procurement is to be used for creating 'high-quality jobs, characterised by fair wages and conditions underpinned by collective agreements'. It is important to unpack these ideas into what is really meant between the lines. Public procurement is not (and should not be) an extension to a country's social welfare system or the Social Security Ministry. It is a means to an end: meeting in the market a need that cannot be met/bought/provided in-house. A similar critique can be made to idea of fair wages and collective agreements. Agreeing to those means two things: one, a weaker single market since economic operators from countries where wages are lower can effectively be cut off from participating in procurement in higher wage countries. Two, this is yet another example of the lack of political capital to achieve the underlying goal of achieving higher wages in any given Member state. If higher wages are worth pursuing then the political capital should be spent in raising the minimum wage across the board and not just trying to shoehorn public contracts to partially achieve that goal and at considerable cost.

The report also goes back to the perennial favourite idea that seemed to have fallen out of fashion over the last few years: innovation. It seems to be oblivious to the fact that if there is a strategic objective really embedded into the current crop of EU procurement rules that's innovation. Frankly, it has succeeded where it could and how it could and I apply my usual scepticism of mandating objectives by fiat even when the topic is close to my heart.

Keeping the best for last, the section includes one final crucial idea which, for me, is the most important. As I have been saying discreetly for a few years - and more publicly recently - the current procurement legal framework is unable to achieve the single market. Part of the problem (only part, I acknowledge!) is the choice of Directive(s). Those have been the choice for legal framework since the 1960s but come with significant drawbacks: long transposition periods that may or may not be complied with and cross-border differences and uncertainties. I agree with the report that the time is right to consider if a Regulation (and only one) would not be a more suitable way to pursue a single market.