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According to the EU’s Enterprise DG, public procurement contracts amount to more than €1.5 trillion a year, or 16% of the EU’s GDP. The sheer size of this market makes it extremely attractive to large and frequently multinational companies, and the rules governing it are both complex and fiercely fought over. In this context, the EU Public Procurement Directive and EU competition policy are concerned to ensure that that there is a “level playing field” and that procedures are as transparent as possible. However, there is concern from many quarters that local SMEs and social enterprises may be excluded by the sheer weight and complexity of tendering processes and their inability to deal with new e-procurement systems.

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  • Larger markets
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  • According to the EU’s Enterprise DG, public procurement contracts amount to more than €1.5 trillion a year, or 16% of the EU’s GDP. The sheer size of this market makes it extremely attractive to large and frequently multinational companies, and the rules governing it are both complex and fiercely fought over. In this context, the EU Public Procurement Directive and EU competition policy are concerned to ensure that that there is a “level playing field” and that procedures are as transparent as possible. However, there is concern from many quarters that local SMEs and social enterprises may be excluded by the sheer weight and complexity of tendering processes and their inability to deal with new e-procurement systems.
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  • According to the EU’s Enterprise DG, public procurement contracts amount to more than €1.5 trillion a year, or 16% of the EU’s GDP. The sheer size of this market makes it extremely attractive to large and frequently multinational companies, and the rules governing it are both complex and fiercely fought over. In this context, the EU Public Procurement Directive and EU competition policy are concerned to ensure that that there is a “level playing field” and that procedures are as transparent as possible. However, there is concern from many quarters that local SMEs and social enterprises may be excluded by the sheer weight and complexity of tendering processes and their inability to deal with new e-procurement systems. European procurement law allows local authorities to insert certain social clauses in their terms of reference, for example to encourage the employment of long-term unemployed or disadvantaged people, in their procurement procedures (although they are not allowed to discriminate geographically by specifying that businesses or their workers must come from a specific location) and the Commission supports what it has called “green” procurement. New and small firms tend to lack information, skills and networks. Above all they have little knowledge or experience of the formal procedures from large companies and public authorities. If they did, they would not have the capacity to employ dedicated staff to scout round and go through formal procedures. If they did win a contract, they might have difficulty complying with all the conditions. Cash flow may also be an issue as payments come in large tranches and can be delayed. Social enterprises face a slightly different set of problems. In the past, contracting bodies were often unwilling to accept tenders from social enterprises because they did not understand this type of company. There was overt discrimination against them. Potential clients may be unfamiliar with how they are set up and how they work. They may be confused by the fact that they are sometimes not constituted as companies with shares and suspicious of the very low capital gearing, reflected in a lack of assets on the balance sheet.
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