Public procurement represents one of Europe's most powerful yet underutilized tools for driving the circular economy transition. With public authorities across the EU spending approximately €2 trillion annually on supplies, services, and works - roughly 14% of the EU's GDP [1] - the potential to reshape markets and accelerate sustainable innovation is immense.
Beyond the Lowest Price: Rethinking Value in Public Spending
Currently, around 55 % [2] of public procurement procedures rely solely on the lowest price as the award criterion. This approach, while seemingly cost-effective, often overlooks the broader value that sustainable and circular solutions can deliver over their entire lifecycle. The challenge lies not just in changing procurement practices, but in transforming how we define value itself.
Green Public Procurement (GPP) offers a pathway beyond this narrow focus. By incorporating environmental and social criteria into tender evaluations, public authorities can create demand for innovative, circular solutions while achieving better long-term outcomes. This shift requires moving from traditional cost considerations to Life Cycle Costing (LCC) approaches that account for a product's entire journey—from production through end-of-life and beyond.
The European Circular Innovation Valley: Regional Innovation Through Strategic Procurement
Within the European Circular Innovation Valley (ECIV) framework, public procurement takes on even greater significance. As ECIV connects 17 regions across nine countries in Europe's largest circular economy innovation ecosystem, procurement becomes a bridge between public sector needs and regional innovation capabilities.
The project's mission-oriented approach aligns perfectly with strategic procurement principles. When public authorities in ECIV regions procure with circularity in mind, they're not just buying products or services - they're investing in local innovation ecosystems, supporting SMEs and start-ups, and creating market demand for the experimental and deep-tech solutions that ECIV champions.
From Barriers to Solutions: A Strategic Framework for Change
Despite its potential, circular procurement faces several interconnected challenges:
Legal Uncertainty: Many contracting authorities remain unclear about how to integrate environmental and social criteria without compromising fair competition principles. This uncertainty often leads to vague award criteria that fail to drive meaningful innovation.
Administrative Complexity: Extensive documentation requirements and complex procedures can discourage participation, particularly from smaller innovative companies that might offer the most circular solutions.
Cross-Border Limitations: Less than 5% of public contracts are awarded across borders, limiting access to innovative solutions and underutilizing the EU single market's potential.
Local vs. Global Tensions: While equal treatment principles prevent prioritizing local suppliers, this can result in procurement from distant sources, contradicting circular economy principles of regional value chains.
A strategic framework should address these challenges directly through five key pillars:
1. Best value for money
Implementing mandatory price-quality ratio in procurement decisions, requiring justification when lowest price is selected.
2. Mandatory Sustainability Standards
Introducing mandatory GPP criteria and targets, with a goal of 100% of public contracts incorporating at least one environmental or social clause by 2030.
3. Cross-Border Innovation & Local Supply Chain Support
Fostering cross-border procurement to connect regional innovation ecosystems and ensure consistent application of EU rules across member states At the same time balancing fair competition with environmental benefits by exploring exceptions that support sub-national local needs while maintaining competitive integrity.
4. Simplification and Modernization
Streamlining procurement procedures to reduce administrative burden for both contracting authorities and businesses, simplifying innovation partnerships and negotiation procedures, to enhance accessibility for SMEs and start-ups.
5. Capacity Building and Support
Providing technical and financial support to help contracting authorities implement sustainable procurement practices, including training on LCC tools and environmental criteria integration. A concrete example of this approach is the CE PRINCE project, which aims to support the transition to a Circular Economy in Central Europe by leveraging Circular and Green Public Procurement (CGPP). Drawing on the findings from the initial assessment of CGPP implementation at both public and private levels, the project has developed a Transnational Strategy for Circular and Green Public Procurement. This strategy serves as a foundation for targeted capacity building efforts, providing tailored training programs and the development of practical toolkits to advance circular procurement practices across Central Europe.
Looking Forward: Procurement as Innovation Driver
The ongoing revision of EU Public Procurement Directives presents a critical opportunity to embed circularity into the heart of public spending. For ECIV regions, this represents more than regulatory compliance—it's about creating the market conditions necessary for circular innovation to flourish.
As ECIV moves forward with its substantial funding opportunities and open innovation approach, strategic procurement will play a vital role in ensuring that public investment drives genuine transformation. By connecting public sector needs with regional innovation capabilities, procurement becomes not just a buying process, but a catalyst for the systemic change that the circular economy requires.
The path forward requires collaboration between the quadruple helix actors that ECIV brings together—public authorities who procure strategically, industries that respond with innovative solutions, research institutions that provide the knowledge base, and citizens who ultimately benefit from more sustainable and resilient communities.
