There is something quietly paradoxical about EU public procurement. On paper, it is one of the Union’s most powerful economic tools. Every year, public authorities spend close to €2.5 trillion, or roughly 14–15% of the EU’s GDP, on goods, services, and infrastructure. That is not just a market. It is a policy lever capable of shaping industrial strategy, accelerating the green transition, and driving innovation at scale. Yet, for many companies (particularly SMEs),it remains a market in which participation feels theoretical rather than real.
As the Commission prepares its long-awaited Public Procurement Act, expected in the coming months, the question is no longer whether reform is needed. That debate has already been settled by the Commission’s own evaluation, the European Court of Auditors, and a broad coalition of stakeholders. The real question is whether the EU is about to fix the problem or entrench it.
The illusion of access
For over a decade, EU procurement policy has operated on a simple premise: if the rules are right, the market will open itself. The 2014 directives were designed with this logic in mind. They introduced tools explicitly aimed at SMEs, e.g. division into lots, turnover caps, simplified documentation, and digital procedures. In theory, these changes should have lowered barriers and broadened participation. In practice, the results tell a different story. SMEs still account for around 99% of European businesses and employ roughly two-thirds of the workforce. But when it comes to public procurement, they capture only about 29% of the value of above-threshold contracts. That gap is not a statistical anomaly, but it reflects a structural imbalance. Large contracts continue to dominate the market, and with them, large contractors. Even where SMEs win tenders, they often do so at the margins, with e.g. smaller lots, subcontracting roles, or lower-value segments. The core of the market remains concentrated. What emerges is not a lack of opportunity, but a mismatch between how procurement is designed and how SMEs actually operate.
Complexity as a barrier and not a feature
Ask most SMEs why they do not bid for public contracts, and the answer is rarely about capability. It is about cost. Not financial cost, but administrative cost. The time required to navigate tender documentation, the legal uncertainty around selection criteria, and the duplication of paperwork across jurisdictions. These are not marginal inconveniences for smaller companies; they are decisive barriers. The irony is that procurement reform has, over time, layered solutions onto this problem without addressing its root cause. Each new objective, whether that is related to sustainability, innovation or social criteria, has been added as an additional requirement rather than integrated into a simpler system. Individually, these objectives are defensible. Collectively, they create a system that is increasingly difficult to navigate. The Commission’s own evaluation acknowledged that the current framework has not improved legal clarity.
The strategic turn and its unintended consequences
What makes the current reform moment particularly complex is that it is not happening in a vacuum. Public procurement is no longer just about marketaccess. It has become a central instrument of Europe’s geopolitical and industrial ambitions. The push for “Buy European” provisions, the introduction of European content requirements in strategic sectors, such as batteries, electric vehicles, solar panels and wind turbines, and the increasing role of procurement in defence and resilience policy all point in the same direction: procurement is being repurposed as a strategic tool. This shift is understandable. In a world of supply chain vulnerabilities and global competition, governments want to use public spending to strengthen domestic industry. But there is a tension here that policymakers have not yet fully resolved. Strategic procurement tends to favour scale. It rewards firms that can manage complex supply chains, demonstrate compliance across multiple criteria, and absorb administrative overhead. In other words, it favours the very actors that already dominate the market. Without careful design, the shift towards strategic procurement risks reinforcing the structural disadvantages that SMEs already face. The result could be a paradox: a policy intended to strengthen Europe’s industrial base that, in practice, narrows participation.
A tale of two procurements
If policymakers are looking for proof that procurement design shapes outcomes, they need only look at recent EU experience. These two examples were not ‘pure’ public procurement in the traditional sense, but a form of joint procurement adapted to the urgency of the moment. During the COVID-19 pandemic, the EU effectively centralised procurement of vaccines and treatments. Through advance purchase agreements and joint procurement mechanisms, the Commission negotiated on behalf of Member States, secured supply at scale, and ensured relatively equal access across the Union. At its peak, the EU had secured billions of vaccine doses and created a system that prioritised speed, risk-sharing, and collective bargaining power. This was not “pure” procurement in the traditional sense. It was strategic, political, and crucially simplified for the purpose at hand. The rules were adapted to the objective. Now compare this to what is emerging in defence. Here too, the EU is moving towards joint procurement. Instruments such as EDIRPA and the European Defence Industry Programme are designed to incentivise Member States to buy military equipment together, strengthen the European industrial base, and reduce fragmentation. But the logic is fundamentally different. Defence procurement remains heavily fragmented, governed by a separate directive, and shaped by national security considerations that often override competition. Participation typically requires scale, long-term capacity, and integration into complex supply chains, conditions that structurally favour large prime contractors. The comparison is instructive. In health, the EU adapted procurement to achieve access and speed, even if it meant bending traditional approaches. In defence, procurement is being used to achieve strategic autonomy, but through systems that risk reinforcing concentration and complexity. The lesson is clear: procurement is not neutral. The way it is designed determines who participates and who does not.
The coming fault line: simplification vs. strategy
The upcoming Public Procurement Act will have to navigate a fundamental trade-off. On one side is the simplification agenda. There is a broad consensus across Member States, institutions, and business groups that procurement needs to become more accessible. Proposals such as mandatory lot division, stricter proportionality in qualification criteria, and the “once only” principle – meaning that companies should not be required to repeatedly submit the same information and documents to different authorities if this data is already available in public systems – are all steps in this direction. On the other side is the strategic agenda. Policymakers want procurement to deliver on climate goals, industrial policy, security of supply, and more. Both agendas are legitimate. But they pull in opposite directions. You cannot continuously add policy objectives to procurement while simultaneously making it simpler. At some point, the system becomes overloaded. The risk is that the reform attempts to do both, simplifying procedures on paper while adding new layers of compliance in practice. If that happens, SMEs will see little real change.
Where the real opportunity lies
This is where the conversation needs to shift. The debate is often framed in binary terms: more rules or fewer rules, more strategy or more openness. But the real opportunity lies in how the system is designed and implemented. There are three areas where the upcoming reform could make a tangible difference:
First, contract structure.
The size and design of contracts are still the single biggest factor determining whether SMEs can participate. When contracts are bundled into large packages, smaller firms are effectively excluded from the outset. Strengthening the current “divide or explain” principle, for example by making the division into lots the default rather than the exception, would not just be a technical fix. It would fundamentally open up access to the market.
Second, proportionality in practice.
Turnover caps and qualification criteria already exist, but their application is inconsistent. Ensuring that these rules are actually enforced across Member States would have more impact than introducing new ones.
Third, usability of the system.
Digital procurement tools have improved transparency, but they have not yet delivered simplicity. For many SMEs, the system remains fragmented and difficult to navigate across borders. Real progress here requires not just digitalisation, but harmonisation. None of these changes are particularly radical. But together, they would address the structural issues that have persisted since the last reform.
Why this matters now
The timing of this reform is not incidental. At a moment when Europe is looking for growth, resilience, and competitiveness, public procurement is one of the few policy areas with an immediate economic impact. A 1% efficiency gain in procurement spending would translate into tens of billions of euros. But efficiency is not just about price. It is about who participates in the market. A procurement system that systematically excludes smaller firms is not just inequitable… it is inefficient. It limits competition, reduces innovation, and concentrates risk. If the EU is serious about strengthening its economic base, procurement cannot remain a closed system in practice.
From policy to positioning
For companies operating in or around public procurement, the coming months will be decisive. The legislative process will define the framework, but the real impact will depend on how the rules are interpreted, implemented, and navigated. This is where the gap between policy and practice becomes critical. Understanding where the political compromises are likely to land, how Member States position themselves, and how specific provisions will translate into operational requirements is not a theoretical exercise. It is a competitive advantage. The companies that succeed in this environment will not simply be the largest. They will be the ones who understand the direction of travel and position themselves accordingly.
A final thought
Public procurement has long been treated as a technical domain, governed by legal detail and administrative procedures. That era is ending. What is emerging is a far more political space, where procurement sits at the intersection of competitiveness, sovereignty, and economic policy. The upcoming reform is not just about rules; it is about who gets access to one of Europe’s largest markets, and who is left out. There is a real opportunity to reset the system. But there is also a very real risk that, once again, reform will promise access while reinforcing complexity. For companies with an interest in public procurement, the cost of staying passive is increasing. This is a moment to be proactive — to understand where the legislation is heading, to anticipatehow it will affect your position in the market, and to ensure that your interests are reflected in the policy debate before decisions are locked in.
At Lykke Advice, this is exactly where we operate. We help clients navigate EU decision-making in real time, identifying pressure points in the legislative process, shaping engagement strategies, and making sure their voice is heard where it matters. Whether you are looking to influence the outcome, prepare for the new framework, or position your business within it, we bring the political insight and network needed to turn policy developments into concrete advantage.
If public procurement is relevant to your business, now is the time to act, and we are ready to support you.
