The EU public procurement market, including EU institutions and Member States and local governments, total around USD 800 billion annually.
This market is regulated by four “classic” Directives: public works, public supplies, public services and utilities. The Directives cover contracts above a certain threshold in all public sectors except utilities, which is regulated by a separate Directive, applicable to private as well as public undertakings.
Most EU tenders for public works/supplies are open to U.S. companies.
However, some contract opportunities in the utilities sector (water, transport, and telecommunications) are closed to U.S.-based companies because of certain articles in EU law permitting a local content requirement of 50 percent.
Moreover, in the utilities sector, preference must be given to an EU bid over a non-EU bid if the bids are equivalent and the price difference is less than 3 percent.
Procurement rules are in the process of being reworked and simplified. Amendments include the clarification of existing Community Directives by merging the Supplies, Services and Works Directives. The second aim of the reform is to adapt procurement rules to modern administrative needs. Rules would be softened for complex contracts where a dialogue between contracting authorities and tenderers is envisaged to determine the contract conditions (while maintaining the principle of transparency and equal treatment).
In addition, contracting authorities would be able to specify their requirements, not only in terms of standards, but in terms of performance, which would made it easier for U.S. firms to bid on EU tenders.
Lastly, the new proposal foresees the exclusion of the telecommunications sector from the Utilities Directive and provides for the exclusion of sectors, such as water or electricity, once liberalization is achieved in these areas. U.S. firms will be able to bid in these sectors once they are excluded from the Utilities Directive.
The direct consequence of this move is that public or private telecoms operators will not have to follow European procurement rules when awarding contracts; however, they will still be liable to follow relevant national rules.
The changes proposed by the European Commission were reviewed by the European Parliament in January 2002, and are now again in the hands of the European Commission and Council for approval. The debate is likely to last for some time, however, as some of the changes proposed by the European Parliament are controversial.
The USG has achieved a number of successes in negotiations with the EU, including the Government Procurement Agreement and the Memorandum of Understanding, obtaining equal access for U.S. companies for all central and subcentral government procurement in some utilities sectors, including the heavy electrical market sector.
Tenders financed with EU grants or loans are also governed by EU public procurement law, with the exception of procurements using the PHARE or ISPA (programs for Central and Eastern European countries) and TACIS (NIS) funds. In the latter cases, participating companies have to be based within the EU or the CEE/NIS countries and the goods supplied must have had their last substantial phase of manufacturing within the EU. (NOTE: detailed project financing is treated in Chapter 8).
The U.S. Commercial Service at the U.S. Mission to the European Union has developed a database of all European public procurement tenders that are open to U.S.-based firms by virtue of the Government Procurement Agreement. EU public procurement announcements are also available on CD ROM, which can be ordered from EU official sales agents worldwide.
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