Public procurement or purchasing means the expenditure by public authorities and executive agencies on goods and services (that is, excluding wages and salaries). It makes up an estimated 16% of the EU’s GDP, a sum of some €1,500 billion per year (€3,000 per head of the population). The major part of this is disbursed by authorities at local level.
Public expenditure is under constant pressure, owing in particular to increased demands on health and care services caused by advances in medical technology and consequent higher longevity. At the same time, the stability of the tax base is threatened by the ease with which many industrial processes can be outsourced to lower-cost countries. Finding ways of delivering higher quality public services while containing the costs is therefore an important political issue.
In order to take advantage of the efficiency savings offered by the European Union’s single market, the EU's [[[Public Procurement Directive]]] provides that public contracts over a certain threshold value (c. €200,000) should be advertised and opened to all bidders on an international basis under relatively strict conditions.
Social enterprises and public procurement
There are two policy drivers of the desire to see social enterprises more involved in providing public services:
- improving social inclusion:
This objective is typically served by the major category of social enterprises which have labour market inclusion as their objective ("social firms")
- improving public service delivery:
A large range of social enterprises or community services might serve this objective: among them are care co-ops (employee-owned firms providing care at home to elderly and handicapped people, or childcare in nurseries); community transport organisations (which are typically owned by members of a geographical community and provide for disabled people, and sometimes run ordinary bus services); waste recycling enterprises (which are often owned by their employee and/or environmental activists and carry out jobs such as collecting and sorting used clothes and furniture and renovating it for use by poor people). There is also a large new sector of environmental enterprises in the business of recycling electronic waste.
Opening up public procurement to social enterprises can offer opportunities to improve value for money because it is often possible to combine several benefits at the same time (so-called 'joined-up policy making'). For instance a business that employs unskilled and unemployed people to collect old furniture and renovate it for sale to poor people simultaneously provides the following benefits:
- a step on the ladder to inclusion for previously unemployed people
- skills training among the staff who renovate the furniture, supported by public funds for training
- waste removal and reduction of volume of material that has to go to landfill
- alleviation of poverty among the recipients of the recycled furniture
To take another example, employee-owned homecare companies such as those promoted by CASA  incentivise the (mainly) women who are its members by giving them a share of its ownership and hence its profits. This reduces staff turnover, and hence raises continuity, a very important factor in the way users perceive the quality of service.