EU Enlargement and the Emboldening of Institutional Integrity in Central and Eastern Europe: The ‘Tough Test’ of Public Procurement

• Date: 01 March 2011
• DOI: http://doi.org/10.1111/j.1468-0386.2010.00546.x
• Author: Kjell Engelbrekt
• Published date: 01 March 2011

eulj_546230..251

EU Enlargement and the Emboldening of

Institutional Integrity in Central and

Eastern Europe: The ‘Tough Test’ of

Public Procurement

Kjell Engelbrekt*

Abstract: EU enlargement and the incorporation of the acquis communautaire are

widely seen as successful and emboldening the integrity of political, administrative and

legal institutions in Central and Eastern Europe (CEE). The analysis reported here

describes the specific problems associated with affirming institutional integrity in the field

of public procurement, which constitutes a ‘tough test’. Public procurement is namely an

area where the acquis swiftly gained pre-eminence in accession states, but whose complex

regulations depend on a well-functioning judiciary, effective administrative supervision

and limited corruption. The experience in Poland and Bulgaria, countries that represent

different stages of institution building in this area, is compared. The results suggest that an

EU-compatible public procurement regime is being consolidated throughout the CEE

region. At the same time, that regime may only work well when boundaries between

institutional subjects, as well as between the spheres of law, politics and economics, are

upheld in post-communist countries.

Introduction

This article analyses enlargement-induced institution building in the field of public

procurement, which operates at the nexus of business interests, public administration

practices, political decision making and complex legal rules. Arguably, a defining

characteristic of public procurement is precisely its strategic location at the intersection

between the realms of politics, economics and law. Another key characteristic is the

constant tension between the letter of the law and the specific circumstances of eco-

nomic sectors, and of geographic regions, as the nature of different industries and

business practices covered by the law often are far apart. To society as a whole in the

EU, the stakes involved are typically high. Public procurement spending on average

accounts for some 16% of expenditures of the EU’s aggregate gross domestic product

(GDP), though varying between 11 and 20% for individual Member States.1

* Department of Political Science, Stockholm University. Research funded by the Swedish Research

Council.

1EU Commission, Public Procurement, available at http://ec.europa.eu/internal_market/publicpr

ocurement/index_en.htm.

European Law Journal, Vol. 17, No. 2, March 2011, pp. 230–251.

© 2011 Blackwell Publishing Ltd., 9600 Garsington Road, Oxford, OX4 2DQ, UK

and 350 Main Street, Malden, MA 02148, USA

The share of government expenditures on public procurement remains lower in the

new Member States, but the latter figure steadily rises as economies grow and an

EU-compatible regime evolves. Some of the problems faced elsewhere—the balancing

of interests of small firms versus large corporations and that of process efficacy versus

bidder litigation rights—are often exacerbated in countries that recently acceded to the

Union. Not infrequently a battle is raging between incoming and outgoing stakehold-

ers, as the latter try to retain the privileged position awarded to them under a less

competitive procurement regime. At the outset, there is an especially uneasy relation-

ship between sceptical bidders, who want to keep transaction costs to a minimum and

avoid revealing trade secrets to their competitors, and inexperienced contracting

authorities, that are required to apply process transparency and are uncertain where to

draw the line. Finally, there is the issue of corruption, which loomed large in predic-

tions about the effects of not implementing—but also of actually implementing—the

relevant Community directives. Overall, the public procurement sector is said to have

‘an enormous potential for corruption’.2

The EU’s general approach to institution building in the Central and Eastern Euro-

pean (CEE) states was forged through the so-called ‘Copenhagen criteria’, adopted by

the European Council in 1993. Subsequent EU summits expanded on the original

formulations and emphasised the notion of ‘administrative capacity’ as a requirement

to accession. One of the most powerful contradictions inherent to EU enlargement

arose as these requirements, on the one hand, needed to be sufficiently vague so as to

accommodate the types of regulations applied in the existing Member States, while, on

the other hand, being specified clearly enough to allow scrutiny of the progress of

aspiring accession states. In most policy areas those vague formulas were interpreted by

the EU Commission in white papers and annual progress reports. In the field of public

procurement additional references were made to standards and guidelines of the United

Nations Commission on International Trade Law (UNCITRAL) and the Organisation

for Economic Cooperation and Development.

Generally applicable to public procurement in the EU are the following norms

associated with the internal market: the prohibition against discrimination on grounds

of nationality; the free movement of goods and the concomitant prohibition of quan-

titative restrictions on imports and exports (and measures having equivalent effect); the

freedom of establishment; and the freedom to provide services.3During the pre-

accession and early accession phases the relevant acquis included six key pieces of

legislation.4Four of these covered contract award procedures, namely Directive 92/50/

EEC concerning public service contracts, Directive 93/36/EEC on public supply con-

tracts, Directive 93/37/EEC on public works contracts, and Directive 93/38/EEC on the

award of contracts in the utilities sector. Another two pieces of legislation, Directive

89/665/EEC and Directive 92/13/EEC, regulated the problem of remedies.5Directives

2004/17/EC and 2004/18/EC, dealing with privatised utilities and the role of procure-

ment entities, respectively, were adopted in 2004 and transposed in the following years.

2Organisation for Economic Cooperation and Development (OECD), ‘Executive Summary’, in Fighting

Corruption and Promoting Integrity in Public Procurement (OECD Publishing, 2005), at 9.

3P. Trepte, Regulating Procurement: Understanding the Ends and Means of Public Procurement Regulation

(Oxford University Press, 2004), at 98.

4Notably, Bulgaria and Romania joined two years and seven months later than the previous seven CEE

countries.

5A. Łazowski, ‘Public Procurement’, in A. Ott and K. Inglis (eds), Handbook on European Enlargement: A

Commentary on the Enlargement Process (T.M.C. Asser, 2002), at 619–630.

March 2011 EU Enlargement and Institutional Integrity

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