News

A new EU instrument for international procurement (IPI)

July 11, 2022

On 17 June 2022, the Council adopted a regulation on a new instrument for international procurement (“IPI”), following the formal adoption of the IPI at the European Parliament plenary session on 9 June 2022. The general objective of the IPI is to create reciprocity in the access to international public procurement markets by enabling the Commission to undertake investigations and adopt measures to open and improve access to third-country public procurement and concession markets.

The EU public procurement markets, which are among the largest in the world in terms of value, are generally open to competition for companies from all over the world. However, EU companies do not always have equal access to third-country public procurement markets outside of the EU. Today less than 50 % of the public procurement markets worldwide are accessible to EU companies. Adoption of an international procurement instrument has therefore long been considered by the EU in order to improve EU companies’ access to public procurement markets worldwide. The general objective of the IPI is to promote reciprocity in access to public procurement markets by opening third-country public procurement and concession markets and improving market access and business opportunities for EU companies.

Subject matter

The IPI will enable the Commission to undertake investigations and adopt measures with regard to public procurement markets in the interest of the EU. In other words, the IPI adds a tool to the EU trade tool box by which the Commission may undertake investigations to alleged third-country measures or practices against EU companies, goods and services. For example, if the Commission finds that EU companies face serious and recurring limitations in its access to third country public procurement markets which remain after discussions with the third-country concerned, the IPI allows the Commission to impose measures limiting the access of that third country’s companies to European public procurement markets until the third country has ceased with its restrictive practices. Such IPI measures may include e.g. to require contracting authorities or entities to apply penalties in the scoring of tenders submitted by economic operators established in that third-country, or to exclude such tenders from award procedures.

The IPI further obligates successful tenderers in the context of a public procurement procedure to which IPI is applicable (see further below) to comply with certain requirements. For example, it is not allowed to subcontract more than 50 % of the total contract value to an economic operator originating in a third-country that is subject to an IPI measure. For contracts regarding the supply of goods, the goods and services supplied or provided under the contract originating in a third-country subject to an IPI-measure must not exceed 50 % of the total contract value. Upon request from the contracting authority, successful tenderers may have to present adequate evidence of compliance.

Scope of application

The IPI is applicable to tenders regarding works and concessions which are worth at least EUR 15 million and for tenders regarding goods and services which are worth at least EUR 5 million. IPI measures may only be applied to public procurement procedures for goods, services or concessions regarding which the EU has not undertaken market access commitments in an international agreement, or where such agreement does not include reciprocal commitments to open public procurement markets. Existing commitments and bilateral trade agreements undertaken by the EU will hence not be affected by the IPI.

Entry into force

The Regulation was signed on 23 June 2022 and published in the Official Journal of the EU on 30 June 2022. It will enter into force on the 60th day following that of its publication, i.e. on 29 August 2022.

Link to the Regulation in the Official Journal

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