EVALUATION OF SMES’ ACCESS TO PUBLIC PROCUREMENT MARKETS IN THE EU DG Enterprise and Industry Final Report September 2010 Evaluation of SMEs’ access to public procurement markets in the EU Final Report Document Control Document Title Evaluation of SMEs’ access to public procurement markets in the EU (2009 update) Job No. 30257541 Prepared by Máté Péter Vincze, Juliette Mathis, Anca Dumitrescu, Ali Erbilgic, Eva Coscia, Maurizio Megliola Checked by Nick Bozeat, Máté Péter Vincze Date September 2010 2 Evaluation of SMEs’ access to public procurement markets in the EU Final Report CONTENTS 1 INTRODUCTION..................................................................................................... 5 1.1 Background to the report......................................................................................... 5 1.2 Methodology ........................................................................................................... 6 1.3 Structure of the report ............................................................................................. 7 2 PATTERNS AND TRENDS IN PUBLIC PROCUREMENT ABOVE EU- THRESHOLDS ....................................................................................................... 8 2.1 General patterns and trends.................................................................................... 8 2.2 Direct cross-border procurement ........................................................................... 14 2.2.1 Introduction ................................................................................................. 14 2.2.2 Contracts given to companies located abroad.............................................. 14 2.2.3 Companies bidding on foreign markets........................................................ 16 2.3 Summary .............................................................................................................. 19 3 PUBLIC PROCUREMENT AND SMALL AND MEDIUM-SIZED ENTERPRISES .. 20 3.1 Introduction........................................................................................................... 20 3.2 General trends ...................................................................................................... 21 Country differences in access to public contracts............................................................. 23 3.3 Factors influencing SMEs’ share in winning public contracts.................................. 28 3.3.1 Introduction ................................................................................................. 28 3.3.2 Analysis of the individual factors.................................................................. 29 3.3.3 Compound analysis of the factors................................................................ 38 3.4 Summary .............................................................................................................. 41 4 PUBLIC PROCUREMENT PRACTICES ON THE GROUND................................. 43 4.1 Introduction........................................................................................................... 43 4.2 Suppliers’ views .................................................................................................... 43 4.2.1 The sample ................................................................................................. 43 4.2.2 Access to information on public tenders....................................................... 46 4.2.3 Obstacles to participation in public procurement .......................................... 49 4.2.4 Views on measures to improve access to public procurement...................... 52 4.3 Contracting authorities and entities’ views ............................................................. 54 4.3.1 The sample ................................................................................................. 54 4.3.2 Information on tenders................................................................................. 55 4.3.3 Procurers’ perception of SMEs’ strength and weaknesses ........................... 57 4.3.4 Promoting SMEs’ access to public procurement .......................................... 59 4.4 Summary .............................................................................................................. 66 5 SMES AND ELECTRONIC PUBLIC PROCUREMENT ......................................... 68 5.1 Introduction........................................................................................................... 68 5.2 The benefits of eProcurement ............................................................................... 68 5.3 Stages of electronic public procurement................................................................ 71 5.4 Users’ experience with eProcurement systems...................................................... 73 5.4.1 Overall patterns of use ................................................................................ 73 3 Evaluation of SMEs’ access to public procurement markets in the EU Final Report 5.4.2 Procurers’ use of electronic tools along the procurement process ................ 77 5.4.3 SMEs’ use of electronic tools along the procurement process...................... 78 5.4.4 The perceived benefits of eProcurement for SMEs ...................................... 79 5.4.5 Barriers to implementing eProcurement tools............................................... 82 5.4.6 Problems with the use of eProcurement tools as perceived by SMEs........... 85 5.5 Initiatives on the ground ........................................................................................ 86 5.5.1 Case studies ............................................................................................... 86 5.5.2 Lessons learnt............................................................................................. 89 5.6 Summary .............................................................................................................. 91 6 SMES AND INNOVATION IN PUBLIC PROCUREMENT...................................... 93 6.1 Introduction........................................................................................................... 93 6.2 Innovative elements in public procurement ............................................................ 94 6.2.1 Description of the key innovative elements .................................................. 94 6.2.2 Overall patterns of use ................................................................................ 98 6.2.3 Use of practices encouraging innovation along the procurement process..... 99 6.2.4 SMEs’ views on innovative practices ..........................................................102 6.3 Competitive dialogue procedure...........................................................................104 6.4 Pre-commercial procurement ...............................................................................105 6.4.1 Characteristics of pre-commercial procurement ..........................................106 6.4.2 The pre-commercial procurement cycle ......................................................107 6.5 The benefits of pre-commercial procurement........................................................108 6.6 Practical implementation of pre-commercial procurement .....................................109 6.6.1 Small Business Innovation Research (SBIR): the US example....................109 6.6.2 Initiatives in Europe ....................................................................................110 6.7 Summary .............................................................................................................112 7 CONCLUSIONS AND RECOMMENDATIONS.....................................................114 7.1 Key conclusions...................................................................................................114 7.1.1 The impact of specific procedures ..............................................................114 7.1.2 Suggestions for other initiatives..................................................................116 7.1.3 Effectiveness and adaptability ....................................................................117 7.1.4 Efficiency....................................................................................................118 7.2 Recommendations ...............................................................................................118 4 Evaluation of SMEs’ access to public procurement markets in the EU Final Report 1 INTRODUCTION 1.1 Background to the report This is the final report of the assignment concerning the “Evaluation of SMEs’ access to public procurement”. The assignment was undertaken by GHK as leader of the European Policy Evaluation Consortium (www.epec.info), in cooperation with TXT e- solutions s.p.a., Milan, within the framework contract for the provision of studies and other supporting services on Commission evaluations (ENTR/04/093-FC-Lot 1). The evaluation was commissioned by the Directorate E “Promotion of SMEs Competitiveness”, Unit E4 – “SME Policy Development” of the Directorate-General. This study is mainly conceived as a follow-up to the 2007 study1. The latter covered 25 Member States and analysed data on public procurement from 2002 to 2005. The study identified a number of critical issues for SMEs, formulated a set of recommendations and described a number of good practices. The overall purpose of the current study was to evaluate the progress made since the previous study (2007), to assess the effectiveness