EU Cohesion Expenditure – Issues from inadequate procurement

The European Court of Auditors has released a special report to look at whether or not the European Commission and member states were taking all measures necessary to address the issues that stem from inadequate procurement processes. Specifically within the implementation of cohesion policy initiatives, the European Court of Auditors has found errors in the public procurement process to be a significant source of the constant errors that occur within the EU cohesions expenditure.

With a total of 349 billion euros (£395 billion) allocated between 2007-2013 to cohesion policy through European Regional Development Fund (ERDF), European Social Fund (ESF), and the Cohesion Fund (CF). This puts into focus how important proper public procurement processes are when it is the procurement process that is identified by the European Court of Auditors as a major source of the errors within EU cohesion expenditure.

It is a point to note that the report did not propose that public procurement does not have a natural level of errors developed, but it drew into doubt whether or not these errors were being appropriately addressed in order to prevent future issues.

For the compilation of this report the European Court of Auditors examined 1400 plus transactions that occurred between 2009-2013. 40% of the projects within these transactions contained errors in public procurement procedures. Within this 40% of projects unjustifiable direct awards, misconstrued selection criteria, and bias treatment to select tenders constitutes the majority of errors. When this is drilled down, the underlying causes of these errors are the lack of administrative or systematic capacity, the incorrect transposition of EU directives by member states, local interpretation of legislation and insufficient planning.

As made note of previously, the report focus is on what the commission and member states are doing to account for, address, and prevent procurement errors. As such one of the major finding was that there is an insufficient effort made by the Commission or member states to conduct regular and systematic analysis of public procurement. Without such regular process transparency and analysis, in addition to being without detailed data on the process, the errors will continue into the foreseeable future. Legislative changes have commenced, but devoid of analysis and long term data collection, such legislative changes are unlikely to address the full extent of the problems.

This report further emphasises the importance in establishing a full understanding of inadequate procurement, as these processes can have a profound impact upon the efficiencies within public projects. These are the reasons underlying ACE”s Procurement Landscape, focused on the UK, and ACE”s continued pursuit of more efficient procurement processes.

Read ACE”s Procurement Landscape here.

You can read the entirety of this special report by the European Court of Auditors here.

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