Regulaton & Policy
EU Auditors: More Needs To Be Done To Address EU Public Procurement Errors

A report by the European Court of Auditors outlines public procurement problems in EU member states and the efforts being made to address them. Between 2007 and 2013, €349 billion was allocated in the area of cohesion policy through the European Regional Development Fund, the Cohesion Fund and the European Social Fund. A significant portion of this money was spent through public procurement. Between 2009 and 2013, over 1,400 transactions co-financed from the EU budget were examined, including verifying public procurement procedures relating to almost 700 projects. Around 40 percent of these contained errors relating to public procurement; 29 percent of which were ‘serious,’ 49 percent were ‘significant’ and 22 percent were ‘minor.’

According to the report, a failure to comply with EU or national public procurement rules constitutes an error. Errors in the ‘serious’ category resulted in a lack, or complete absence, of fair competition or the award of contracts to those who were not the best bidders. The report found that some of the errors came down to EU directives not being correctly transposed by member states, inconsistent interpretation of legislation, member states complicating the framework with additional regulation, and a lack of administrative capacity and insufficient planning.

The Court also examined whether the Commission and Member States are taking appropriate and effective actions to address the problems. Although both have begun taking measures to address issues, a lot still needs to be done in terms of analysing the problems and implementing actions. A lack of detailed and coherent data collected by the EC and Member States on the nature of public procurement errors means that there is limited analysis of their underlying causes. However, some member states are beginning to collect data in a systematic way.

As part of the report, the Court made six recommendations. Among these, it suggested that the EC should develop a database on irregularities, which would help in generating meaningful analysis of public procurement errors. The EC should use its own data and data provided by Member States to analyse the frequency, seriousness and causes of public procurement errors in the area of cohesion policy. Member States should also develop and analyse their own databases on irregularities and work with the EC. The auditors suggested that a high-level group be set up to provide leadership in tackling public procurement errors and to promote improvements and simplification in public procurement. Furthermore, the EC should update and publish its internal action plan on public procurement.

According to an article in the Times of Malta, the Court also mentioned an assessment made by the Commission in 2015, which noted that a number of member states had not fulfilled the conditions needed for use of European Structural and Investment Funds for public procurement between 2014 and 2020. The Court recommended that if the public procurement conditions are not put in place by the end of 2016, the EC should use its powers to suspend payments to these member states until they fulfilled the conditions.

Free EU publications, like this Special Report – “Efforts to address problems with public procurement in EU cohesion expenditure should be intensified,” can be obtained via the EU Bookshop (http://bookshop.europa.eu)