Czech Business Today

The financial crisis and the overall economic downturn are accompanied by austerity measures and budget cuts in most EU countries. In the environment where economy generates less money, EU citizens and decision-makers pay even more attention than before to how the public resources are spent. 

This is also one of the reasons why the European Commission proposed public procurement reform at the end of December 2011, which should ensure that public authorities spend taxpayers’ money more effectively and transparently. In addition, public procurement reform is also one of the twelve flagship initiatives under The Single Market Act presented by the Commission in April 2011. The main message behind the proposal of a new directive is simple – simplification. 

On one hand, it should be easier for companies to take part in public procurement under the new rules, mainly because of cutting red tape and new financial capacity requirements for participation in public tenders. This is good news especially for SMEs who could not participate in public procurement so far either because of staff shortage or insufficient turnover threshold. 

On the other hand, the simplification of the procedure should have positive effect also on public procurement submitters, as the use of electronic communication should be extended and the red tape should be cut. While simplification is usually perceived as a positive sign, especially in relation with EU legislation, the reaction of businesses is not so positive. 

European business organisations, being it BUSINESSEUROPE with Czech Confederation of Industry as one of its members, or EUROCHAMBRES and UEAPME with Czech Chamber of Commerce, do not think that new rules are necessary. When we omit the transparency issues, public procurement is perceived as a very complex and complicated issue for businesses in the Czech Republic, and especially SMEs have often difficulties reaching money from public tenders. Most Member States implemented the current legislation on public procurement in 2006 and in 2007; therefore, in general, business organizations require no major changes in the new directive that would probably cause more harm than good. Although simplification is presented as the main positive aspect of the new directive, SMEs will probably not receive the message very clearly when they will have to comply with new rules. Instead, according to business organizations, the Commission should focus on better application of current legislative at national level. 

Although the aim of The Single Market Act is to implement all the flagship initiatives until the end of 2012, public procurement reform should not be done hastily, warn business organizations. In the end, it is approximately 18% of EU GDP that is at stake.