Strategic Public Procurement and Professionalisation Initiatives in Estonia

Executive summary

Public procurement accounted for 15.3% of GDP and 34.9% of total general government expenditures in Estonia in 2023. Although public procurement is widely recognised in Estonia as a strategic tool to support the green and digital transitions and social sustainability, the uptake of strategic public procurement remains limited.

This diagnostic report provides a comprehensive analysis of the use of strategic public procurement and public procurement professionalisation initiatives in Estonia.

Key findings and recommendations

Legal and regulatory enablers

• While Estonia’s legal framework for public procurement allows for the strategic use of public procurement, a lack of legal clarity remains a barrier. Estonia could ensure that contracting authorities have full confidence in what is legally permissible in terms of strategic procurement. In addition, Estonia could provide contracting authorities with further practical guidance on provisions that enable strategic public procurement (e.g. prior market consultations, implementation of selection and award criteria, etc.) to alleviate legal uncertainties.

• Some public procurement officials see the lack of long-term budget visibility as hampering the use of strategic procurement, particularly innovation procurement and the use of life-cycle costing (LCC). Estonia could consider providing increased budget visibility to facilitate the use of strategic procurement.

Monitoring implementation and compliance

• Estonia is well advanced in monitoring the strategic use of public procurement, but there is room for improvement in obtaining more accurate data. The monitoring of strategic procurement may be limited by the current e-procurement system, which implemented e-forms in the summer of 2024, where the public buyers need to indicate the strategic aspect of the public procurement process manually. There is thus a risk of undercounting, as some buyers may not label some procurement procedures as strategic (i.e. green, social or innovative) in the system. Estonia could enhance the monitoring system of strategic procurement by:

  • improving the definitions of green public procurement (GPP), socially responsible public procurement (SRPP) and innovation procurement and clearly communicating them to contracting authorities to ensure accurate measurement of strategic public procurement.

  • developing tools or standard templates to help procurers automate the monitoring the implementation of strategic procurement; and

  • measuring the impacts of strategic public procurement, for example, through regular surveys to assess the performance of strategic procurement.

• The lack of compliance with mandatory GPP criteria remains a challenge in Estonia. Estonia could improve the monitoring of compliance with the existing GPP criteria and set up ways to address lack of compliance by:

  • increasing transparency around compliance, such as benchmarking, identifying frontrunners, and ‘naming and shaming’.

  • introducing incentives to go beyond the mandatory requirements.

Raising awareness and ensuring buy-in

• Although most contracting authorities (88%) are aware of the Public Procurement Strategic Principles adopted by the Government in 2023, lower levels of awareness were observed in the private sector. Estonia could raise awareness of the Strategic Principles, particularly in the private sector.

• The buy-in for strategic public procurement amongst senior leaders of Estonian public entities is highly mixed and the notion that strategic procurement could lead to higher purchasing prices is still prevalent. Estonia could raise awareness among leaders and practitioners of the benefits of strategic public procurement, notably highlighting how it can be used to support existing government policies (including national security) by:

  • developing case studies in partnership with universities and research institutions to demonstrate the added value of green procurement, such as increasing Estonia’s competitiveness in green industries, and comparing the cost of green procurement versus non-green procurement, etc. and

  • sharing success stories based on good practices.

• Estonian businesses are generally willing to participate in strategic public procurement procedures and have an overall positive view of the attractiveness of public procurement markets. However, businesses, especially small and medium-sized enterprises (SMEs), face many barriers to participation in strategic public procurement, particularly during tender preparation. Estonia could obtain more buy-in from the private sector by:

  • improving contracting authorities’ practices regarding the use of most economically advantageous tender (MEAT) criteria, market engagement, ensuring sufficient time for bid preparation, and time taken to evaluate bids.

  • introducing sector dialogues, taking inspiration from evolutions in the information and communications technology (ICT) industry, to focus on quality in tender development.

Professionalisation

• Estonia does not have a stand-alone policy to professionalise the public procurement workforce but recognises the relevance of doing so. Estonia could consider developing a stand-alone public procurement professionalisation strategy, including actions such as establishing a certification framework, introducing incentive mechanisms and collaborating with knowledge centres.

• Estonia developed a competency model for the public procurement workforce, but no typical job profiles related to public procurement have been specified. To reap the full benefits of the competency model, Estonia could consider specifying typical job profiles related to public procurement and match them with the required proficiency levels of each competence in the model.

Capability building

• Estonia could consider designing tailored capacity-building initiatives for the identified top-priority competences such as innovation procurement, socially responsible public procurement, risk management, green public procurement and market consultation. In particular, Estonia could consider developing training programmes for topics that:

  • are currently unavailable (e.g. market consultation, needs assessment, procurement strategy, contract management) or;

  • need updating (e.g. more comprehensive coverage of LCC for GPP, actual cases for socially responsible public procurement and innovation procurement)

• When publishing the competency model, a portal or document should be created to ensure the training and materials for each competence are freely and easily available.

• While Estonia has collaborative programmes with knowledge centres in the context of academic theses and occasional internship opportunities, there is great potential to enhance collaboration. Estonia could further promote collaborative approaches with knowledge centres such as developing procurement courses and degree programmes.