Serious errors in the awarding of €349 billion of EU public funds meant that contracts were given to undeserving companies in tendering processes that were not competitive, the European Court of Auditors has said.
It called on the European Commission to suspend payments and impose financial corrections on those member states, which failed to properly follow public procurement rules when disbursing EU cohesion policy money.
The Court of Auditors scrutinises the bloc’s financial management, acting as a watchdog in the interest of EU citizens. “Failure to comply with public procurement rules has been a perennial and significant source of error,” it said in a report published today (15 September).
Auditors analysed the disbursement of €349 billion over 2007-2013. The money was allocated through the European Regional Development Fund, the Cohesion Fund, and the European Social Fund.
The funds are meant to encourage growth in less developed regions and reduce disparities between different EU countries.
New legislation for European Structural and Investment Funds for 2014-2020 introduces pre-conditions that are deemed necessary for the effective use of EU support. Countries must present action plans to show their progress.
The Commission has the power to suspend payment if those conditions are not met by 31 December 2016.
It told auditors it wanted to reduce the risk of having to suspend payments by supporting member states. “But [the Commission] will not refrain from using the tool of suspension if the targets and milestones […] are not met,” the executive said.
At the beginning of 2015, 12 of the 28 EU nations – Bulgaria, Czech Republic, Greece, Croatia, Italy, Latvia, Hungary, Malta, Poland, Romania, Slovenia and Slovakia – had not fulfilled public procurement conditions demanded by EU law.
A “significant part” of the cohesion policy cash is spent through public procurement, with almost half of all projects audited involving one or more tenders.
Proper analysis of the many failures to comply with public procurement rules was very limited, the auditors warned. The lack of coherent, detailed data on the errors made it impossible to analyse why they kept happening.
The Court said the Commission should develop a database to analyse the frequency, seriousness and causes of public procurement errors in cohesion policy.
The audit found that the Commission and member states had started to address the “consistently high level of errors” but there was still a “long way to go” in analysing the problem and taking action.
In its reply to auditors, the Commission said it had been addressing the problem of public procurement errors in cohesion policy for a long time.
This was now being coordinated under the umbrella of a public procurement action plan put in place by the Commission in 2013.