Breaking down procurement barriers for small businesses

The European Commission (the Commission) has released for consultation its latest proposals for a European "Small Businesses Act" which it hopes will enable small and medium sized enterprises achieve their full potential.

26th February 2008

The European Commission (the Commission) has released for consultation its latest proposals for a European "Small Businesses Act" which it hopes will enable small and medium sized enterprises achieve their full potential.

SMEs
SMEs have been afforded particular attention in the European arena following their incorporation in the Lisbon Partnership for Growth through the 2005 EU SME policy.  A number of measures have since been introduced in order to improve SME access to the resources vital for their development, including streamlining the process for company registration with the introduction of a "one-stop-shop" process.

Despite these developments, in 2007 the Commission acknowledged the need to take these measures a step further and intensify the current focus on small businesses.  As a part of this, the concept of a Small Businesses Act, which aims to set principles and concrete measures to improve the framework conditions for European SMEs, while taking full account of their diversity, was welcomed by the European Council in December.

Consultation
On 1 February 2008, the Commission launched a consultation on the content of such a Small Businesses Act which focuses on six main areas:

  • Better regulation for the benefit of SMEs;
  • Putting SMEs at the forefront of society;
  • SMEs access to markets;
  • SMEs access to finance, skills and innovation;
  • Turning the environmental challenge into opportunities for SMEs; and
  • Enhancing the implementation of EU SME policy principles.

However, the Commission has stressed that this is just a starting point which will allow any ancillary issues to come to the surface.  Most notably, the Commission hopes that this new legislation will enhance access to public procurement for SMEs and will remove any unnecessary regulatory burdens.  The proposals for the Act have been likened to the American model, which ensures that a 23% share of public procurement contracts is reserved for SMEs. 

Paper tiger?
UEAPME, the European SME organisation, has been particularly dismissive of the proposals, claiming that they are a mere "paper tiger" which will have no material effect on businesses and have instead demanded a "solid, legally binding document".  However, EU Commissioner for Enterprise and Industry, Günter Verheugen, has responded by insisting that, while the promotion of SMEs is at the forefront of EU policy, the implementation of the policies should be reserved for national authorities. Following on from the Public Hearing, which took place at the beginning of February, the Commission hopes to propose the Small Businesses Act in June later this year.