Lowest price wins? Not anymore. Brussels wants public spending to deliver better value, with greener solutions, innovation and secure supply chains carrying more weight in who gets the deal.

European governments would have to give greater weight to quality when awarding public contracts under new rules proposed by Brussels. The €2.6 trillion market could also favour European products when foreign suppliers restrict access to their own contracts or create security risks.

The European Commission proposed the Public Procurement Act on Wednesday, presenting public purchasing as a tool for supporting European industry, environmental goals and economic security rather than simply obtaining the lowest price.

Public authorities spend approximately 15 per cent of the EU’s economic output each year on everything from schools and hospitals to railways, energy infrastructure and digital services. However, businesses and officials have criticised the current rules as complicated, fragmented and costly to administer.

The proposal would replace three EU directives and procurement requirements spread across other legislation with a single regulation. It would apply directly across the bloc without governments separately incorporating it into national law.

Quality gains ground over lowest price

Price and quality would become the standard basis for awarding public contracts. Quality would normally account for at least 30 per cent of the assessment, rising to 50 per cent for labour-intensive contracts.

Authorities could consider environmental performance, working conditions, innovation, security and the resilience of supply chains. They could still award a contract primarily on price but would have to explain how their requirements otherwise guaranteed sufficient quality.

The Commission also wants buyers to consider dividing large contracts into smaller lots, making them more accessible to smaller companies. New rules on consortium formation and prompt payments throughout supply chains are intended to reduce further barriers.

The reform follows a critical European Court of Auditors report, which found that competition for EU public contracts declined between 2011 and 2021. The proportion of procedures attracting only one bidder rose from 23.5 per cent to 41.8 per cent, while direct cross-border procurement remained limited.

European preference meets a shared digital platform

The act would establish a common framework for “European preference”, reflecting pressure to use public spending to support production within the bloc. However, it would not automatically exclude every foreign company or product.

Suppliers covered by EU trade agreements or the World Trade Organization’s Government Procurement Agreement would retain access. Public authorities could exclude bidders from countries without equivalent commitments. The Commission could also impose restrictions if a trading partner denied European companies promised access or if reliance on foreign suppliers threatened security of supply.

A European digital marketplace would connect existing national procurement platforms. Companies could find contracts and submit tenders across the EU without repeatedly providing the same documents. The Commission estimates that the overall reform could save public authorities and businesses approximately €649 million annually.

The European Parliament and all 27 EU governments must now negotiate the proposal. Those talks will determine how strongly the final rules favour European production and how much freedom authorities retain when balancing price, quality and security.