Supply Side
Denmark and public contracts – missing opportunities in the single EU market

The Danish Export Association has found a bit of an anomaly in the EU’s public procurement database. When it comes to public tenders being put out within Denmark, Danish companies are happily scooping up a good 95 percent of them. But when it comes to the 50,000 or more tenders up for grabs outside of its home soil, Denmark is hardly visible as a player at all, winning only 43 of them in a 12-month period. With the aim of the single European market primarily to afford companies greater opportunity to expand successfully on a global playing field – we can only wonder why Denmark isn’t making more of these opportunities.

Or maybe it’s not just Denmark — the findings have triggered us to wonder whether the smaller EU member states struggle generally to compete on the larger turf of the common European marketplace, whether awarding or gaining contracts. When it comes to advertising tenders ‘cross-border’ the Evaluation of SMES’ Access to Public Procurement Markets in the EU report thinks size of country is not necessarily the determining factor and that institutional framework of a given country plays a great role. “For example, in Member States where public procurement is largely decentralised to regions and municipalities (as in Germany), tenders tend to be smaller and many of them will not exceed the EU thresholds above which publication in the Official Journal of the EU is obligatory.” 

And in the Evaluation of SMEs’ access to public procurement markets in the EU we hear that “The share of public works contracts in the total value of above-threshold procurement is strikingly high in Luxembourg (79%), Greece (69%), Portugal (66%) and Spain (57%), but very low in Denmark (14%) and Malta (4%).” Yet “The share of supply contracts is much above average in Malta, Cyprus, Bulgaria and Denmark,” none of which are particularly large countries. Frankly it’s a conundrum!

The Copenhagen Post offers that maybe trade protectionism, used by countries when they think their industries are being damaged by unfair competition from foreign companies, is to blame. Policies that restrict or restrain international trade, often done with the intent of protecting local businesses and jobs, have their place, but also carry the consequence of hiking up prices of public sector services.

Or maybe it’s just that countries prefer domestic suppliers, for obvious reasons like language or currency (Denmark and the UK being two nations opted out of the euro). Maybe it is because Denmark houses a higher proportion of SME suppliers than large firms. Maybe e-procurement platforms are cumbersome and uneconomic for the smaller enterprises to use.

On the flip side — surely if Denmark is providing 95% of its own firms to fulfil public contracts, then in itself it is guilty of protecting home suppliers. The Centre for Economics and Business Research found that the average cost to a UK public authority of attracting each bid from a potential supplier is £1,260, making the UK the fourth most expensive place in Europe for public bodies putting contracts out to market after Denmark, Norway and Italy in terms of high costs for this measure. 

Maybe a bit of everything is at play. Whatever the ‘maybes’ — the question is what can be done about it?

The EU is trying to do its bit — opening trade to more and more countries outside Europe to trigger and boost reciprocal arrangements (we reported on the Canada – EU CETA agreement here) and regulating to help SMEs find fewer barriers to competing for EU public sector contract awards.

We recently completed a series of posts looking into how small firms can be encouraged to compete more in the European public marketplace, and how to make it easier for them to do so. There are many steps that organisations and procurement professionals can take to make public contracts more accessible for as wide a range of bidding firms as possible. In these posts we suggest it is useful to look at this in terms of three stages of the procurement process: pre-procurement, procurement, and post-award.