ContextOpening speech at an OECD event in Paris with trade officials; the OECD promotes better policies for well-being, and its main challenge is stretched public finances.
Why it mattersIt makes the case that open public procurement markets save public money, at a time when government debt in advanced economies has climbed.
- Competition in public procurement is weakening, so governments lose the ability to compare offers and challenge prices.
- Poor visibility of future demand and oversized contracts keep many firms from bidding.
- Frequent rule changes, badly explained, discourage firms from learning procurement systems.
- Publish procurement plans early and keep engaging with suppliers.
- Invest in skilled public buyers and in practical training for businesses.
- Read procurement indicators together with market data on concentration, entry and exit.
Read the speech summary
1. Why procurement competition matters
Opening an event in Paris, Mathias Cormann stresses that public buying is worth roughly 13% of output and 30% of government spending, so governments effectively are the market in health, defence and infrastructure. With public debt in advanced economies up from about 73% of output in 2007 to over 110% in 2024, and rising interest and defence bills, competitive tendering is a direct way to stretch budgets. Competition can cut prices by 2.5 to 10%, while collusion adds around 20%.
2. Weakening competition
In the European Union single-bid tenders climbed from 23.5% to 41.8% between 2011 and 2021, and the typical number of competing bidders dropped from nearly six to just over three. Governments also ask procurement to deliver resilience, innovation, regional growth and sustainability, goals that fail if few firms can enter.
3. What keeps firms out
The OECD brief launched at the event finds many small obstacles rather than one big one: costly registration and paperwork, domestic preferences, poor visibility of future demand, oversized contracts, brand-specific specifications, short deadlines, late payments, no feedback for losers and constantly changing rules, with 36 of 40 surveyed countries reforming within five years. Small firms, which are 99% of businesses, suffer most.
4. Four priorities
Design tenders from the supplier's view, with proportionate requirements, outcome-based specifications, lots and enough time. Plan and engage early, publish pipelines, spread tenders through the year, pay promptly and debrief unsuccessful bidders. Train both public buyers and suppliers. Use procurement data to see participation and concentration and to detect collusion, with procurement and competition authorities cooperating, while reading bid counts alongside market indicators before acting.