The European Commission is moving a step closer to making it easier for companies, in particular Small and Medium Sized Enterprises (SMEs), to bid for public sector contracts anywhere in the EU; a crucial step towards achieving the Single European Market. The Commission will co-finance a pilot project, driven by eight European countries that will create the conditions to link existing national electronic public procurement (e-procurement) systems.

Several Member States have already realised the high impact of e-procurement, generating savings on administrative and transaction costs by eliminating invoices and orders by fax or email, the reduction of data entered manually and the time businesses spend queuing, filling out forms and sorting out paper work. While e-procurement is paving the way for simpler, more open and transparent public procurement at national level, the cross-border challenge remains.

Government contracts amount to more than 16% of the EU’s gross domestic product (GDP), but many European companies, especially SMEs, miss out on this substantial business because of the extensive paperwork required for bidding for government contracts, particularly across borders.

The European Commission is working with Austria, Denmark, Finland, France, Germany, Hungary and Italy as well as Norway (as a member of the European Economic Area) to enable companies from one country to respond to public procurement tenders in another. The project will not replace but rather build on existing national e-procurement systems using information and communication technologies to enable them to communicate with each other. This would allow, for instance, a Czech or Swedish company to bid for a Spanish or Hungarian government contract as easily as for a contract in their home country.

The results go beyond saving taxpayers' money and having leaner procedures: by levelling the playing field for SMEs, the backbone of Europe's economy, cross border e-procurement can boost competitiveness by providing tools for businesses to access the entire European market for public services. At present, SMEs account for 67% of employees in the business sector and 58% of turnover in the EU, but only win 42% of government contracts.

The project will invest more than € 19 million over three years, € 9.8 million of which will come from the European Commission's Competitiveness and Innovation Programme. Simplifying cross-border electronic procurement will generate savings on administrative and transaction costs and will benefit taxpayers who ultimately pay for public purchases.