9 - Addressing purchasing arrangements between public sector entities: what can the WTO learn from the EU's experience?

Summary

Introduction

While public procurement typically involves public sector entities acquiring supplies, works and services from the private sector, public sector entities may themselves become the suppliers in public procurement for various reasons. To give some examples:

• A municipal hospital may acquire maintenance services from the engineering department of the same municipality for convenience, a typical in-house provision;

• Central government ministries may be obliged to procure financial services from the designated state-owned bank which enjoys exclusive statutory right to provide such services;

• Government agencies may be instructed to procure from central purchasing bodies in order to leverage the government's aggregate buying power and simplify procurement of commonly used goods and services;

• As a form of local government reorganization and outsourcing to improve management and governance, a municipality may acquire refuse collection and waste disposal services from a separate public body set up by it individually or jointly with other municipalities to take advantage of economies of scale; or

• A state-run university may want to purchase buses from a state-owned manufacturer simply because it offers better value for money in comparison with private suppliers.

These purchasing arrangements between public sector entities give rise to a number of legal issues that need to be addressed, often collectively, by procurement, competition and state aid rules. The primary concern for procurement regulation is the coverage of such arrangements: whether they fall under the definition of covered procurement in the first place.