Organization of public procurement in Estonia among average in Europe

TALLINN – The organization of public procurement in Estonia is among average along with 12 other countries out of 30 on the Single Market Scoreboard published by the European Commission; in the past, Estonia has remained at the highest level on the scoreboard.

The average result this year indicates that there are shortcomings in important indicators -- the lowest price criterion and procedures without announcement are used too much in procurements and too many public procurements have only one tenderer participating, the Ministry of Finance said.

At the same time, Estonia is much better than the EU average in terms of the speed of decisions, the share of procurements divided into parts and the share of small and medium-sized enterprises (SMEs).

Germany, Lithuania and the Netherlands, for example, are on the same level as Estonia. Nine countries have worse indicators than Estonia and eight have better ones.

"The increase in the share of public procurement without announcement in 2020 was caused by the unexpected need to procure extremely quickly and in an emergency situation to combat the coronavirus. As the virus can no longer be considered unexpected and the contracting authorities have been able to better plan their activities in the changed circumstances, we can see that the share of procedures without announcement will decrease in the coming years," Minister of Public Administration Jaak Aab said.

The minister emphasized that it is still necessary to adhere to the core principles of public procurement -- openness to competition and the market, and transparency.

 Kristel Mesilane, head of the department for public procurements and state aid at the Ministry of Finance, said that the share of procurements with one tenderer in Estonia has also been higher than expected in previous years. This is influenced by the concentration of the Estonian market, the small business environment and the relative small number of potential bidders compared to the EU average.

Mesilane said that according to the indicators of the European Union, contracting authorities should increase the number of tenderers in public procurement with poor competition. "In order to increase the number of tenderers, the contracting authority can divide a larger public procurement into parts, conduct an international procurement procedure even if the cost of the procurement does not require it, and ensure that the conditions of the procurement are not too restrictive," she added.

There is still room for growth in the use of different evaluation criteria in procurement. "The use of quality criteria gives the contracting authority the opportunity to consider other criteria describing the procurement object or service in addition to the offered price in order to choose the most suitable thing, service or work based on important parameters or conditions, that is to find the best price-quality ratio," Mesilane said.

At the same time, Estonia has the best indicators in Europe among several organizational indicators of public procurement. For example, SMEs participate in Estonian procurement considerably more than in other European countries. This is a sign of their competitiveness and easy access to the public procurement market for SMEs.

In addition to the above indicators, the European Single Market Scoreboard measures the ratio of the value of public procurement to national GDP published in the Official Journal of the European Union, the share of joint procurement, the share of contracts with SMEs and incomplete information submitted upon publication of the procurement notice and the absence of registry codes of the contracting authority or tenderer.