Introduction

On 8 November 2022, our lead researcher Professor Martin Trybus was invited as one of three speakers to present about SMEs in public procurement at an online seminar on “Invigorating SMEs & Start-ups through Public Procurement Markets” organised by the World Bank.The event aimed to discuss the impediments SMEs face in public procurement and possible approaches to eliminate these barriers based on practices in different countries. The speakers were from both practical and academic backgrounds, providing diverse insights on how to empower SMEs through public procurement.

Main takeaways

After opening remarks by Arturo Herrera, Global Director at the World Bank, Tania Ghossein, of the International Finance Corporation of the World Bank Group addressed the audience on why the public procurement market is important for SMEs. SMEs’ contribution to the national economy and job creation is considerable in both developed and developing countries. Overall, there is evidence showing that engaging with SMEs through public procurement has proven beneficial to these companies and beneficial to governments and the local economy by boosting jobs and productivity. However, there are impediments that prevent SMEs from participating in public procurement. The most frequently mentioned barriers are access to information and financial constraints, including access to finance, bid security deposits, performance guarantees, and payment delays. Apart from these objective difficulties, cultural and negative perceptions of contracting authorities make the situation even worse, especially for women-led SMEs. The presentation ended with case studies of successfully addressing these challenges in Brazil and Peru, which proved that training programs, accelerating payments, increased transparency, and access to information facilitated SMEs’ participation.

Finally, our lead researcher Professor Martin Trybus presented the four techniques in the 2014 EU procurement Directives aimed at facilitating SME participation in public procurement: (1) division into lots; (2) minimum turnover requirement of twice the contract value; (3) the European Single Procurement Document; and (4) direct payments to subcontractors. He also critically evaluated the limits and impact of these techniques and explained why other techniques such as reserved contracts or margins of preference cannot be introduced in the EU. The main challenge for Member States is how to facilitate SMEs without compromising the Internal Market. The Core Treaty regimes on the free movement of goods and services require market access to the procurement markets of other Member States. The emphasis on non-discrimination and equal treatment limits the measures that Member States can take to promote SMEs in public procurement. Under the 2014 procurement Directives, the division into lots became the default approach for contracting authorities. The presentation ended with empirical evidence of division into lots in France. From the data, the impacts of this measure on SME participation are not significant. Hiba Tahboub and Diomedes Berroa, Procurement Practice Managers at the World Bank acted as discussants leading to a Q&A session completing the event.

Martin Trybus

Director of Training and lead supervisor for ESR 1 and ESR 11

Martin Trybus is Professor of European Law and Policy and Director of the Institute of European Law at the University of Birmingham (Birmingham Law School), United Kingdom.