Regulaton & Policy
How Bulgaria’s public procurement competitiveness ranking could take a step up

According to the recent article Bulgaria: Under the new EU public procurement rules in Energy World magazine, new EU public procurement directives will have a large effect on Bulgaria, which made unrelated and separate amendments to its public procurement law earlier this year.

Public sector procurement remains a large market in Europe and currently accounts for around 19 percent of the EU’s GDP. In Bulgaria, where direct investments fell after 2009, the market holds particular importance and the volume of public procurements has been growing steadily since 2010. But even though public resources have shown to be one of the main and most stable economic drivers, Bulgaria still faces some issues within its public procurement sector that EU directives may go some way to improving.

The new directives hope to promote modernisation, simplification, rationalisation and accessibility. And of course, they reflect the principles embedded in the EU public procurement legal structure: receiving the best quality for the best price, non-discrimination and transparency, among others.

  • Receiving the best quality for the best price is one stipulation that could be better adopted in Bulgaria’s construction sector. Georgi Kolarov, President of the Bulgarian Green Building Council, was quoted in a Focus Information Agency article as stating there is no green public procurement in the nation’s construction sector. He argues that domestic amendments adopted in Bulgaria earlier this year should have already changed this, but still haven’t.“The lowest and not the most profitable price is still determining the selection of executors in public procurements,” he told an international conference on sustainable development in the construction sector. “The expenses on the life cycle and the environmental impacts are not taken into account.”He added that there were no laws requiring or encouraging sustainable building.
  • The new directives will continue a two-fold approach: public contracting authorities’ activities will be regulated by different directives from sectorial purchasers. In Bulgaria, as in many other countries, one piece of legislation regulates both the public and private sectors, which causes significant problems to sectorial purchasers. Procedures that are meant to discipline authorities’ spending of public funds in public sector procurement cause considerable difficulties to private companies’ deals in the utilities sectors. As sectorial purchasers are often foreign investors, they are used to established international good practices in making transactions. Implementing EU law, which recognises the differences between procurement in the public and private sectors, would alleviate such issues.
  • Measures encouraging SMEs’ participation in public procurement may also be advantageous for Bulgaria, especially after the country was named in the bottom group of the European Commission’s “competitiveness” rankings last month as reported by the Sofia News Agency. The reports are produced annually in order to provide evidence-based indicators to support policy making at EU and Member State level. Bulgaria was judged to have “modest and stagnating or declining competitiveness” by the EC’s report. European Commissioner for Industry and Entrepreneurship, Ferdinando Nelli Feroci, commented on the report, saying that more needed to be done to help companies and SMEs compete in the global market, such as tackling lack of investment, limited access to finance, high energy prices and inefficient public administration.The new directives include two measures designed to improve SME participation in procurement. Through the “apply and explain” principle, purchasers will divide contracts and work into smaller value lots so that SMEs can bid to carry out a small portion of the contract. The second measure involves the turnover limit that purchasers may require of companies before they may be allowed to bid for a contract. The definite minimum turnover will be generally limited to twice the estimated value of the contact, giving SMEs greater opportunity to compete.

For a small country, Bulgaria has provided the world with some incredible competitive sporting achievements – of the 204 countries that participate in the Olympics, 73 have not won a single medal. Bulgaria has a total of  220 to its credit, ranking it in the top 20 all-time Olympic medal table (courtesy of kashkaval tourist). With a leaf out of its own book, when EU public procurement directives are implemented into domestic law, Bulgaria has an opportunity to climb the higher echelons of the EC’s ‘competitiveness’ ladder.