The European Commission unveiled its Public Procurement Act (PPA) on 9 September, turning the bloc's €2.5 trillion annual purchasing power into an explicit instrument of industrial policy. Roughly €600 billion of that spending, about a quarter of the total, will fall under the new rules, Industry Commissioner Stéphane Séjourné told reporters in Brussels. The regulation replaces three existing directives and more than two dozen secondary laws, a consolidation the Commission says will save contracting authorities €650 million a year in administrative costs.

Quality weighting replaces lowest-price dominance

For decades EU procurement law has been built around the principle of the most economically advantageous tender, which in practice often defaulted to the lowest price. The PPA changes that calculus. Quality criteria, covering environmental performance, social standards, innovation, security and supply-chain resilience, must now account for at least 30% of the evaluation score. For labour-intensive contracts such as cleaning, catering or care services, the quality weighting can rise to 50%. Authorities may still award on price alone where quality is fully defined by technical specifications, but the burden of proof shifts to the contracting body.

A Commission study cited in the proposal found that green and social criteria are already permitted but applied inconsistently across member states, with many contracting authorities fearing legal challenges if they reject the cheapest bid. The mandatory minimums are intended to remove that hesitation. "Es handelt sich um öffentliches Geld, das auch unseren gemeinsamen Zielen dienen muss," Séjourné said, framing the shift as a duty to spend public money in line with shared EU objectives.

A 50% EU-content threshold and the power to exclude

The most politically charged provision allows contracting authorities to reject any tender where the share of EU-origin goods or services falls below 50% of the contract value. They may also restrict participation in a tender to EU-established companies or impose origin requirements outright. Member-state authorities can go further and bar third-country suppliers entirely from specific procurements. Séjourné illustrated the point with a blunt example: future complaints about a German city buying Chinese buses instead of European ones would be groundless because the regulation explicitly permits such preference.

The move creates an immediate tension with the EU's trade agenda. Brussels is currently negotiating market-access chapters with India, Indonesia and Mercosur that would open their public procurement markets to European firms. Critics argue the PPA undermines the reciprocity argument the Commission has long advanced in those talks. The Commission counters that the World Trade Organization's Government Procurement Agreement (GPA) already allows parties to set aside contracts for domestic suppliers below certain thresholds, and that the EU is merely using flexibility it has always possessed but rarely exercised.

Regulation not directive: centralising control

Despite a majority of member states favouring a directive, which would leave transposition to national parliaments, the Commission chose a regulation. The legal form takes direct effect in all 27 capitals, shrinking the room for divergent implementation. Séjourné called the text an "Akt radikaler Vereinfachung" (act of radical simplification), arguing that a single rulebook will reduce the legal uncertainty that currently fragments the single market for public contracts.

The simplification extends to digital infrastructure. Today 123 separate e-procurement platforms operate across national, regional and local levels. The PPA mandates an interoperable network so that a company in Portugal can bid for a contract in Finland without navigating a different portal. Standardised forms, reduced documentation for repeat bidders and a voluntary ex-ante verification system for large contractors are also included.

Companion Innovation Act targets the commercialisation gap

The same day, Research Commissioner Ekaterina Zaharieva presented the European Innovation Act, designed to turn public buyers into anchor customers for early-stage European technologies. The legislation aims to solve a persistent problem: EU-funded research frequently fails to reach the market because start-ups lack the capital and reference customers to scale. The Innovation Act will create a "strategic procurement" pathway allowing authorities to purchase innovative solutions before they are commercially mature, with adjusted state-aid rules to de-risk the transaction.

Documents seen by Politico indicate the Innovation Act's scope was narrowed after two negative opinions from within the Commission, suggesting internal disagreement over how far public procurement should stretch into industrial subsidy territory. The final text focuses on pre-commercial procurement and public procurement of innovative solutions, stopping short of a broader mandate to preference European intellectual property across all spending.

What the numbers actually mean

The €600 billion figure represents the portion of the €2.5 trillion market that crosses the EU procurement thresholds, roughly €140,000 for goods and services, €5.3 million for works, and is therefore subject to full Treaty transparency and competition rules. Below-threshold spending, which accounts for the bulk of transactions by volume but a minority by value, remains governed by national rules aligned with Treaty principles. The €650 million savings estimate assumes full digitalisation and the elimination of duplicate reporting across the three merged directives; the Commission has not published a detailed cost-benefit annex.

People mentioned

Organisations

European Commission · European Parliament · Council of the European Union