1. Executive Summary
Små og mellemstore virksomheders The present public procurement market in the EU amounts to more than 5.000 million DKK. The size of this market alone makes it interesting to look at the opportunities for Danish companies abroad. However, only a very small part of this gigantic market is performed as cross border contracts. The lack of integration in procurement markets played a key role when the Commission initiated a broad European debate on the future of public procurement in the EU, i.e. the Green Paper (1997) and later the Communication (1998). The debate has centred an immense focus on SMEs. What are their opportunities, their obstacles? How can SMEs be stimulated to seek new procurement markets abroad? In a Danish context, SMEs, in particular, play a vital role due to their dominant business structure. With this background, the Danish Competition Authority has conducted a study into the experiences, possibilities and barriers of Danish SMEs in relation to EU-procurement abroad. The target is clear; by providing an insight into SMEs and EU-procurement, the Competition Authority seeks to take on initiatives that stimulate a more fruitful EU-procurement climate. This will, hopefully, lead to more Danish companies participating in procurement contracts in the Member States. The scope of the study is fivefold. Firstly, to provide information on which type of Danish companies have experience in EU-procurement abroad, and which type of companies that do not. Secondly, to provide information on future perspectives for Danish SMEs. Thirdly, to identify the most important barriers for a higher participation in tenders abroad. Fourthly, to investigate views and experiences of Danish companies on complaints over presumed legal breaches of the procurement directives. And lastly, to bring forward concrete recommendations dealing with the perspectives and barriers for Danish SMEs in the area of procurement contracts abroad. The study is the first quantitative of its nature in Denmark, and is based on two telephone surveys involving more than 2.000 interviews with Danish companies. What are the conclusions? The report concludes that Danish companies expect a higher degree of participation in EU-procurement abroad. These positive assessments do not only stem from companies that presently have sales primarily in the public sector in Denmark, but include to an even larger extent the companies that are already engaged in EU-procurement abroad. Thus, the analysis show that amongst companies with no experiences with procurement abroad, some 10\% have expectations to move into these markets. This would lead to an increase of active Danish companies, in total, by some 30\%. Furthermore, 47\% of companies that are already active on procurement markets abroad have expectations of more exports. The analyses have also given a comprehensive insight into the companies that are particularly targeted towards public contracts abroad. Despite the fact that larger companies have a higher export-rate than smaller companies, the majority with exports to the public sector abroad (54\%) are to be defined as SMEs (those with less than 100 employees). Furthermore, 64\% of these companies are based in only three main lines of business - mainly production businesses within the sectors of iron and metal, financial and business services and furniture. More key results:
All in all, the survey brings forward some very optimistic messages. Firstly, many companies are optimistic in terms of increased engagements with EU-tenders abroad. Secondly, supplying the public sector abroad is not a perspective reserved for larger companies - SMEs are active and able to match international competition. A long term strategy towards SMEs in the field of public procurement must, however, be based on a solid understanding of the barriers and problems that SMEs meet abroad. The study of problems and barriers has divided the businesses into two segments: those businesses that are active in exporting to the public sector abroad, and those who are not active in this field. Barriers for businesses with no experiences in public procurement abroad The report concludes that EU-procurement abroad is relevant to a key segment of exporting companies. In other words, participating in this field of business is not relevant to many Danish companies. This is either due to the fact that the nature of their products are, to a lesser extent, relevant for the public sector, or the fact that the companies organising their exports through local agents or subsidiary. However, the companies that are potential suppliers to the public sector abroad point at three main types of barriers as the background of not addressing these markets:
These types of barriers are characterised as being internal barriers that the companies themselves, to a certain extent, can influence. However, at the same time public authorities, business unions etc. have responsibilities to address initiatives dealing with these types of problems. Therefore, it is recommended to establish four types of initiatives. In short, the recommendations are:
Barriers for businesses that already have experiences with EU-procurement abroad In total, some 10\% of the businesses taking part in the survey are active on procurement markets abroad. These businesses have overcome the greatest barrier: submitting the first bid. The results show that this segment of active companies regard public procurement as interesting markets. All in all, this segment of companies sends a very positive message; the vast majority do not encounter essential problems related to presumed infringements of the public procurement directives. Unfortunately, one out of four companies do meet such problems. This must be considered as an alarmingly high rate. When analysing the barriers for businesses that export to public authorities abroad, the Competition Authority has concentrated on external barriers. The report concludes that the most damaging barrier is the indirect discrimination of foreign companies in the tender dossier (tender specifications). In all, the results show that the barriers are the following:
The Danish Competition Authority believes that these obstacles can be reduced or eliminated, mainly through concerted actions at a European level. In short, the recommendations are:
Danish experiences with complaints over presumed legal breaches The report concludes that Danish companies most often encounter problems with breaches on the procurement directives in Germany, France and Italy. However, it has to be taken into account that Germany is also the most important procurement market. On the other hand, countries such as Sweden, Norway and Holland, that are also important procurement markets, do not appear on the list of countries where Danish companies meet problems. The analysis shows that the businesses are reluctant to complain when they meet breaches of the procurement directives. Only three out of ten companies have either actually complained or have considered making a complaint. There is a tendency towards the fact that smaller companies complain more than larger companies. On the basis of the results, the recommendations are, in short:
In order for the above recommendations to happen effectively, a concerted effort from the central actors who are more or less actively operational in the area of public procurement is vital. Therefore, it is lastly recommended that the Danish Competition Authority should seek to work out a precise action plan dealing with the above listed recommendations.
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