Dutch Public Procurement Act

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The Dutch Public Procurement Act of 2012 provides the regulatory framework that governs public procurement in the Netherlands. The act mandates that contracting authorities must strive to achieve maximum social impact.
What are the main aims and objectives?

The main purpose of the Dutch Public Procurement Act 2012 is to ensure the implementation of the EU Public Procurement Directives and to regulate public procurement in the Netherlands. The act aims to give self-employed people, freelancers and SMEs better opportunities to obtain public contracts. Other goals include increased competition (as more entrepreneurs can compete for a public contract), less administrative burden, more consistency in procurement, better compliance, better use of taxpayers’ money and easier handling of complaints.

How does the program work?

The Dutch Public Procurement Act (Nieuwe Aanbestedingswet 2012) requires that, wherever possible, large tenders be split up into several smaller contracts, thereby enabling collective bidding by several SMEs working together. It provides for dividing big tenders into smaller lots, collective bidding by SMEs and central and joint purchasing by the government. Some of the main features of the Dutch Public Procurement Act include:

  1. Transparency: The act promotes transparency in public procurement by requiring authorities to publish information about procurement opportunities, including contract notices, tender documents, and award notices.
  2. Equal treatment: The act ensures that all suppliers have equal access to procurement opportunities and are treated fairly and without discrimination.
  3. Non-discrimination: The act prohibits discrimination based on nationality, ensuring that suppliers from other EU member states are not unfairly excluded from participating in Dutch public procurement.
  4. Proportionality: The act requires authorities to ensure that procurement procedures are proportionate to the nature and value of the contract being awarded. This means that the level of complexity and administrative burden should be appropriate for the contract size.
  5. Competitive bidding: The act promotes competition by requiring authorities to use open, transparent, and non-discriminatory procedures to award contracts. This includes publicizing procurement opportunities, inviting bids from qualified suppliers, and evaluating bids based on objective criteria.
  6. Sustainability: The act encourages the inclusion of social, environmental, and innovative criteria in procurement procedures. Authorities are encouraged to consider factors such as energy efficiency, environmental impact, and social responsibility when awarding contracts.
  7. Remedies: The act provides a framework for suppliers to challenge procurement decisions that they believe to be unfair or in violation of the rules. It establishes a system of review and remedies, including the right to complain to the Dutch Authority for Consumers & Markets (ACM) or to initiate legal proceedings.
What is the overall cost?

There are no direct costs associated with the legislation.

How was it implemented?

The 2012 Procurement Law entered into force on April 1, 2013. Since the implementation of the law, the Dutch government has worked with SMEs to develop the Better Public Procurement project. This projects was launched in 2016 and encourages SMEs to work with contracting authorities to identify constraints and develop actions to improve practices impacting SMEs.

Timeline

The 2012 Procurement Law entered into force on April 1, 2013. 

What impact has been measured?

A report by the European Commission found that the Act had resulted in significant effort being put towards reviewing and improving public procurement practices. This included evaluations of SME participation and administrative burdens which resulted in the Better Public Procurement project. However, research by the Dutch government found that the number of public contracts awarded to SMEs was virtually unchanged in the years following the implementation of the act. This level has been maintained at around two thirds of all contracts going to SMEs since 2012.

What lessons can be learned?

According to one estimate, the Dutch government procures around €73 billion worth of work, services and supplies from companies every year. With two thirds of this heading to SMEs it makes it a powerful tool at their disposal to stimulate startups and SMEs. Undoubtedly, procurement contracts can make a huge difference to small firms. Yet despite efforts to ease the burden on SMEs and open up the process to a wider pool of companies, the rate of contracts awarded to SMEs has remained stubbornly consistent since 2012.

Notes + Additional Context

About public procurement programs (excerpt from Nesta's ‘Idea Bank’ for Local Policymakers):

According to one estimate, within the EU around 19% of GDP is spent on public procurement, making it one of the most powerful tools that governments have at their disposal to stimulate startups and SMEs. Undoubtedly, procurement contracts can make a huge difference to small firms.

Unfortunately, procuring from public entities is often a long, cumbersome and painful process, especially for small businesses with more limited expertise and resources. As a consequence, these processes tend to favour incumbents, lower the level of competition and increase market inefficiencies. On their side, public bodies may also find procuring from startups to be more challenging than from established businesses, potentially involving higher risk and lower levels of certification and awareness. However, startups can often bring innovative solutions to the table, widely improving value for citizens and employees. Making procurement processes more accessible can therefore benefit both sides.

This can be accomplished by a variety of means, including: creating procurer networks, ‘meet the market’ events and easier points of contact, to help small suppliers find buyers; educating procurement officers about the benefits of smaller suppliers and the need to avoid over-specifying contracts (thus allowing for innovative solutions); increasing transparency of the organisation’s needs (thus allowing potential suppliers to be aware of supply possibilities before formal calls); encouraging subdivision of big contracts into smaller pieces; simplifying the qualification process; resisting demands for ISO certification for smaller suppliers; educating potential suppliers about the process; and allocating a portion of overall procurement budget to be spent with smaller companies.

CURATED BY

Chris Haley

Head of Research
United Kingdom