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March 19, 2026
Public procurement needs to become a strategic policy lever
Every year across the European Union (EU), public buyers spend two trillion Euro (15 percent of the EU’s GDP), purchasing works, goods and services. Translating to 15 percent of the EU’s GDP, public procurement has massive potential to be used as a key tool for the advancement of social, sustainable, circular and innovation policies.
In the current geopolitical context the EU also sees public procurement as a tool that can bolster its resilience, competitiveness and (economic) security. European Commission (EC) president Ursula von der Leyen has called for an ambitious revision of the EU’s public procurement directives to introduce “made in Europe” criteria, with the goal of strengthening and scaling up EU production capabilities in crucial sectors.
From compliance tool to policy instrument
In 2014 the EC developed Public Procurement Directives to simplify procedures, provide more flexibility for contracting authorities, and to promote fair access to all economic operators, including Small and Medium-sized Enterprises (SMEs). Their objective was to enable public authorities to use their buying power to secure the best value for money while improving environmental sustainability, social inclusion and innovation.
Nonetheless, a recent evaluation highlights the limits of the current framework where between 2011 and 2021 the share of awards based solely on lowest price increased, with 55 percent of procurement procedures in the EU using the lowest price as the only award criterion in their contracts.
Strengthening EU competitiveness
Equating ‘value for money’ with the lowest price is a short-sighted practice that hampers innovation, weakens strategic investment, and limits long-term value creation.
As Dominique Sandy, Head of ICLEI Europe’s Sustainable and Innovation Procurement Team, argues: “at a moment when EU budgets are constrained and global competition is intensifying, we cannot let public procurement underperform as a policy instrument. A revised procurement framework that makes sustainable procurement the norm would help translate the Union’s industrial, climate and resilience ambitions into concrete outcomes on the ground.”
Cities as key actors in the EU procurement ecosystem
To work towards these goals effectively cities need to develop capacity, specialised skills, and know-how. Consequently the new framework should support and promote the creation of city-level spend analytics and foresight capabilities that can map where municipal money flows and identify opportunities for more sustainable, innovative and/or resilient options. Public procurement needs to become a core pillar of EU missions and city-focused initiatives such as the Climate Neutral and Smart Cities Mission and the New European Bauhaus.
Within the Big Buyers Working Together project, aiming to support collaboration between public buyers with strong purchasing power and to promote the wider use of public procurement for innovative and sustainable solutions, ICLEI Europe is leading a Community of Practice seeking to integrate the NEB principles within sustainable public procurement. These initiatives help translate political commitments into concrete locally-replicable actions on the ground and support dialogue between cities and industry to ensure that value-based criteria are realistic, innovation-friendly and scalable.
As hubs of economic activity and innovation, cities play a central role in implementing strategic public procurement for the transition to succeed. Their investment potential in sectors such as energy, transport, circular economy and buildings is key to create sustainable, lead markets.
Better leveraging EU funding through procurement
ICLEI Europe proposes that the revised Directives strengthen public procurement as a core delivery mechanism for EU priorities through a number of legislative reforms. These should support cities to fulfil their potential as promoters and implementers of strategic public procurement. They include the introduction of mandatory green criteria in high-impact categories, strengthening of Socially Responsible Public Procurement (SRPP) through reserved contracts for social enterprises, due diligence and mandatory social criteria, and the operationalisation of Life Cycle Costing through standardised EU methodologies.
Reframing “value for money” to include lifecycle performance, resilience, social and environmental value, and ensuring that quality-based criteria are the default in tenders in strategic sectors, would enable procurement to translate EU funding into measurable impact, aligned with the Union’s objectives.
Turning dialogue into delivery
The forthcoming revision of the Public Procurement Directive - expected in June 2026 - represents a key opportunity to strengthen the framework and better align it with the EU’s policy ambitions. In its contribution to the European Commission’s public consultation on the new directives, ICLEI Europe underlines the important role of cities and regions as launch customers, recognising their combined expertise in climate, social policy and innovation, and emphasises how public procurement should be used a tool to translate EU ambitions into locally workable practice.
Through initiatives such as its City-Industry Dialogue series and its Procura+ Network, ICLEI Europe continues to demonstrate how policy reform, market engagement and local delivery can reinforce each other. These activities show that supporting cities in their implementation of strategic procurement practices can help Europe remain competitive while staying transparent, fair and legally secure.
Read ICLEI Europe’s contribution to the EU procurement directive consultation at the ICLEI Europe website here.
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