ESBA - The Independant Voice for Small Business

ACCESS TO PUBLIC PROCUREMENT: ESBA SUPPORTS A EUROPEAN SBAct TO PROMOTE INNOVATION AND GROWTH IN EUROPEAN SMES

Brussels, July 24th 2006

Public Procurement accounts for about €1500 billion or 16% of EU GDP every year. It is therefore in principle a key tool to facilitate innovative SMEs’ growth into the global market leaders, which Europe needs today to achieve the Lisbon Agenda goals. Access to Public Procurement contracts in the EU is, however, too limited. It is estimated that only 5% are awarded to SMEs, which hinders the EU’s ability to become ‘the most competitive and dynamic knowledge-based economy in the world’ by 2010.

Traditionally, the rules of competition dictate that Public Buyers favour established, large enterprises over young, innovative SMEs, irrespective of quality or price. Despite the EU’s commitment to opening up the Public Procurement market, implementation of the 2004 ‘General’ and ‘Utilities Directive’ has been beset by delays and negative discrimination persists. ESBA thus supports France’s submission to theECOFIN Council on 5 May 2006, which favours the establishment a US-Style Small Business Act (SBAct) in Europe to regulate competition and foster growth and jobs.

The American SBAct determines the proportion of contracts that must be awarded by Public Buyers to SMEs. Several measures have been adopted to achieve these objectives. All small contracts (less than $100,000) are ring-fenced and 2.5% of external R&D contracts from the main Public Agencies are awarded to SMEs through the Small Business Innovation Research Programme (SBIR). In 2003, the US awarded $ 95 billion or 40% of its Public Procurement contracts to innovative, high-growth SMEs, through the SBAct, figures with which the EU cannot compete.

Comparisons between the EU and US demonstrate the SBAct’s impact. European SMEs are smaller than in the US (EU SMEs have 6 staff, American 19). In the past two decades, US SMEs have generated 7 times more new global players (Europe has 9 in the world top 1000, America 64). There are also twice as many large companies per inhabitant in the US than the EU (Europe has 2006/380 million, America 3176/291).

In order to compete with the US and facilitate SMEs’ growth into global market leaders, the EU must institute a SBAct for Europe and set SME quotas in the award of Public Procurement contracts. The US has a ‘preferred supplier position’ for SMEs within the Government Procurement Agreement (GPA) of the WTO. ESBA asks the EU to obtain a similar agreement. AUS-Style SBAct would generate an additional €100 billion in Public Procurement contracts for innovative, high-growth SMEs in the EU and create 1000 new large companies. Renegotiation of the GPA therefore offers a genuine opportunity to make progress towards achieving the Lisbon Agenda goals.

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Note to the editor:

ESBA is a non-party political European group, which gathers member organisations from 22 European countries. It currently represents over 1.5 million small business entrepreneurs and is one of the largest organisations based on voluntary (vs. statutory) membership in Europe. ESBA cares for small business entrepreneurs and the self-employed and represents them through targeted EU advocacy activities. It also works towards the development of strong independent advocacy and benefits groups in European countries. For more information, please contact: secretariat@esba-europe.org

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Page last updated: 10/10/2007 10:55:06 AM