8 - The legality of SME development policies under EC procurement law

Summary

Introduction

The attainment of certain industrial objectives is one of the main ‘horizontal policies’ for which Member States have sought to use their purchasing power. In the past, public procurement was used to support domestic industry, in most cases through a ‘buy national’ strategy, protection of national enterprises from foreign competitors or the promotion of a ‘national champion’ in a particular sector of the economy. More recently, the issue of the participation of small and medium-sized enterprises (SMEs) in the market for public contracts has received considerable attention. The concern expressed is that although SMEs are the backbone of the European economy they do not win public contracts in a percentage analogous to their share of the overall economic activity in the Community. This chapter examines the legality under EC law of various measures that can be used to increase participation of small and medium-sized economic actors in the procurement market. After a discussion, in section 2, of the reasons which may support a policy in favour of SMEs, section 3 focuses on the practice of reserving for them specific contracts by excluding larger firms. Then, section 4 addresses the question whether an awarding authority can request a main contractor to subcontract part of the work to SMEs, and section 5 focuses on the measures which can help adapt procurement processes to their specific needs.