Mapping the road ahead for EU public procurement reform

In February, the European Commission published a roadmap for reforming the EU’s procurement framework, focusing on two main courses of action: the extension and simplification of binding non-pricing criteria in public procurement, and the use of joint procurement to build up strategic stockpiles of critical raw materials. This will be done through an Industrial Decarbonisation Accelerator Act, a revision of public procurement directives and the creation of an EU Critical Raw Materials Centre.

These proposals come at a time when the EU is prioritising increased action on defence and climate. Procurement is viewed as a policy tool. The proposals expand and complement a wide range of actions and policies, including the Net Zero Industry Act (NZIA), ecodesign rules, the proposed Security Action for Europe (SAFE) and the carbon border adjustment mechanism (CBAM). However, these various procurement reforms are unlikely to produce tangible results before the end of the decade (Figure 1). This will delay the impact on climate action and scaling up of European industries, but could also offer businesses time to adapt.

The first arm of the proposed reform is the integration of non-price criteria into public procurement. Traditionally, EU procurement rules have privileged the ‘most economically advantageous’ (typically lowest price) offers, to ensure value-for-money and competition. Non-pricing criteria have been largely voluntary and left to purchasing authorities. 

The Commission now aims to incorporate sustainability, resilience and EU content criteria into procurement decisions, even if this leads to higher prices. ‘Buy European’ and non-pricing criteria are controversial, since they could lead to increased costs for the public, stimulate inflation, and lock cheaper green goods from abroad out of the market. However, the Commission considers these an essential component of its strategy to create ‘lead markets’.

Energy-intensive sectors will be the first to feel the impact of these reforms. The Industrial Decarbonisation Accelerator Act, expected in autumn 2025, will introduce resilience and sustainability criteria into procurement processes in those sectors. These criteria will likely be voluntary at first, accompanied by a labelling system for low-carbon industrial products, starting with steel. The current proposal suggests a label-based CBAM methodology, indicating a focus on emissions. The Commission likely sees steel and metals as ‘trial products’ (after energy products under the NZIA) to test the approach before scaling it up. It remains to be seen whether steel-related criteria will apply to defence products too. 

The revision of public procurement directives will be proposed in late 2026. This will aim to mainstream non-price criteria and simplify the currently fragmented legal landscape. Simplified and centralised labelling will likely play a central role, although it is unclear whether the Commission will choose a product-centred approach (as the initial focus on steel suggests) or a company-based approach with the allocation of sustainability passports inspired by the existing Digital Product Passports but applied at company level. Sustainability passports could ensure that more eligible companies enter procurement calls, increasing supply and helping keep costs low, but may create barriers to establishing lead markets.

The second arm of the new approach to procurement is the strengthening and institutionalisation of joint procurement mechanisms and aggregation of demand. These mechanisms, enabling multiple EU actors to engage in collective purchasing, are seen as a means to offset rising costs associated with strategic investments. This is especially true in sectors where supply is constrained or where first-mover disadvantage exists. Furthermore, joint procurement can offset some of the rise in costs that introducing non-pricing criteria might produce. It offers economies of scale and better negotiating power, and also plays a role in upholding single market integrity and avoiding intra-EU competition and subsidy races. 

The Commission proposes to apply these mechanisms to critical raw materials under the Clean Industrial Deal. This includes the establishment of an EU Critical Raw Materials Centre by the end of 2026, which will coordinate joint purchases and manage strategic stockpiles. A similar strategy will be applied in defence: under the proposed SAFE regulation, joint procurement for defence will be expanded and streamlined from the end of 2025 – a more ambitious timeline, given the external pressures on scaling up defence.

The growing importance of joint procurement in defence and raw materials reflects a broader shift in the EU’s policy approach, from regulation to capacity-building and strategic coordination. The EU has powerful tools: an ability to set standards and create lead markets by leveraging the single market, and to increase public spending efficiency through joint procurement. Used together, these can offset some of their respective limitations, including by containing some of the expected cost increases.

I am grateful to Hans Geeroms, Niclas Poitiers, Simone Tagliapietra and Marie-Sophie Lappe for comments received on earlier drafts.