Austria wants to tighten EU procurement law in favor of smaller companies

WIFO expert Klaus Friesenbichler sees a structural imbalance in the currently applicable rules. In his assessment, predominantly large, often non-European providers benefit from the procedures, while domestic SMEs often fail at formal hurdles. The study therefore recommends adjusting the criteria — for example, through simpler documentation requirements and greater consideration of regional value-added.

Competitive pressure from the USA and China

The Austrian government ties the call for reform to a broader industrial-policy line. It points to growing competitive pressure from providers in the USA and China, who are increasingly present in European procurement procedures. In the government's view, stronger SME support should also bolster European competitiveness and security of supply.

The Austrian Trade Union Federation (ÖGB) also supports the initiative. From the unions' perspective, public contracts awarded to local and medium-sized businesses safeguard employment and collective bargaining standards. The ÖGB argues that a concentration on large companies tends to lead to wage pressure and the loss of business locations.

Support from the ÖGB

In the political debate, the question of how procurement procedures can be made fairer without violating EU law plays a role. Adjustments to lot awards, suitability criteria, and the assessment of sustainability and regional value chains would be conceivable. Austria wants to champion this in the responsible EU bodies.

It remains to be seen how far the other member states will support the Austrian proposals. Procurement law is generally adopted at the EU level by unanimity or qualified majority, which requires careful coordination with partners. The initiative is therefore seen as the start of a longer negotiating phase.

Outlook on the EU negotiations

The economic significance of the reform extends beyond procurement statistics. A successful realignment could noticeably increase the market shares of domestic SMEs in public procurement while also intensifying competitive pressure on established large providers. Observers also see this as a signal to the domestic economy that the public sector will increasingly rely on domestic value-added.