SMEs in Denmark represents 99.7% of all businesses in the “non-financial business economy”. They contribute to approximately two-thirds of total employment and of the value added.
SMEs in Public Procurement
Practices and Strategies for Shared Benefits
OECD Public Governance Reviews
12. Denmark
12.1. SMEs in the national economy
Table 12.1. Basic figures of the non-financial business economy of Denmark, 2015
Note: These are estimates for 2015 produced by DIW Econ, based on 2008-13 figures from the Structural Business Statistics Database (Eurostat). The non-financial business economy includes industry, construction, trade and services (NACE Rev. 2 sections B to J, L, M and N), but not enterprises in agriculture, forestry or fisheries, or the largely non-market service sectors such as education and health. The advantage of using Eurostat data is that the statistics are harmonised and comparable across countries. The disadvantage is that for some countries the data may be different from those published by national authorities.
Source: (European Commission, 2017[1]).
12.2. National policy framework to support SMEs in public procurement
The Strategy for Intelligent Public Procurement (2013) and the new Public Procurement Act of 2016 establish the objective of supporting SMEs in that process. In particular, the latter implements the EU directive on public procurement (EU Directive 2014/24) into Danish law and includes policies to make public procurement more accessible to SMEs. While the public procurement policies focus on facilitating SMEs’ access to doing business with governments, some business policies provide SME-specific support. Some of the initiatives that target SMEs include the following:
“Growth houses” – five regional foundations – were established in 2007 to advise entrepreneurs and small businesses on how to expand and grow.
The Market Development Fund works to promote methods of innovative public demand in order to spur job creation and growth in Danish companies.
The Innovation Foundation was established in 2014 and provides grants to SMEs to conduct innovative projects.
The Business Partnership for Advanced Production was established in 2016 to provide grants to SMEs to support automation and digitalisation of production.
The measures that Denmark has implemented do not solely target SMEs but are meant to facilitate access to public procurement activities for all suppliers. Some of the measures include lenient demands for documentation in using the European Single Procurement Document; use of e-procurement systems – in particular, mandatory e-tendering from 2018, and the use of e-catalogues for e-purchasing in many framework agreements; and proportionate qualification criteria. Furthermore, the obligation to advertise has been removed for smaller-value purchases – under approximately DKK 5 million for the state-level contracting authorities and DKK 1.5 million for the municipal- and regional-level contracting authorities – and these purchases must be made on market terms.
In Denmark, there are two main central purchasing bodies (CPBs) that manage framework agreements. A unit in the Agency for Modernisation under the Ministry of Finance manages the central procurement programme: it awards and manages framework agreements that are mandatory for contracting authorities at the central level, but accessible on a voluntary basis to entities at the regional and municipal level. The National Procurement Ltd. Denmark (SKI) awards and manages framework agreements that are used by entities at central, regional and municipal level. The two CPBs always conduct a market analysis before initialising a new tender. A key area of this exercise consists of studying the market characteristics and identifying supplier distribution, especially in terms of their sizes, in the market. Thus, via market analysis, CPBs consider SMEs and their positions in the markets when designing the tender process. Furthermore, CPBs always engage in dialogue with business organisations and representatives of the suppliers.
12.3. Implementation mechanisms
The Danish Competition and Consumer Authority provides informational videos and online guides on its website (bedreudbud.dk) for contracting authorities on the procurement process and how to make it more flexible and innovative. Following enactment of Public Procurement Act of 2016, training sessions have been organised for government employees on its implementation. Information and guidelines are also provided to suppliers through the websites udbud.dk and bedreudbud.dk, run by the Danish Competition and Consumer Authority.
Stakeholder consultation is a common practice in Denmark for political strategies and legislative activities, including those to support SME access to the public procurement market. The Danish Competition and Consumer Authority consults stakeholders in the issuance of guidelines, and annually assesses the state of competition in public tenders and SMEs’ participation. The following are specific examples of stakeholder engagement. In 2013, a Council for Public-Private Cooperation was formed of different stakeholders to gather knowledge on barriers to public-private co-operation infrastructure projects. Additionally, stakeholders and business associations were consulted in the development of the Public Procurement Act of 2016.
12.4. Monitoring performance
The overall number of SMEs participating in SKI framework agreements is monitored and made public in SKI annual reports. In 2016, 74% of the economic operators participating in SKI framework agreements were SMEs (Figure 6.4).
Figure 12.1. Characteristics of suppliers to SKI’s framework agreements, 2017
Source: Country response to the 2017 OECD survey on strategic use of public procurement to support SMEs.
Reference
[1] European Commission (2017), SBA Fact Sheets 2016, http://ec.europa.eu/DocsRoom/documents/22382.