The Complete Guide to Public Procurement

Public procurement plays a critical role in how governments deliver services, build infrastructure, and drive innovation. 

Across Europe and beyond, public sector organizations purchase everything from IT systems and construction projects to school meals and cleaning services. 

In fact, public procurement represents over 14% of EU GDP, making it one of the largest and most reliable markets in the economy.

And yet, for many businesses - especially small and medium-sized enterprises - the world of public procurement remains confusing, bureaucratic, or out of reach.

This guide is here to change that.

Whether you’re a supplier looking to enter the public market, a buyer aiming to improve procurement outcomes, or simply someone curious about how public contracts are awarded, this guide will give you a comprehensive understanding of how public procurement works - and how to succeed within it.

We’ll walk through the key processes, players, contract types, and compliance rules you need to know - plus real-world tips for navigating tenders, frameworks, and more.

What Is Public Procurement?

Public procurement is the process by which government bodies and publicly funded organizations purchase goods, services, and works from external suppliers. 

It ensures that public money is spent transparently, efficiently, and in a way that delivers value to citizens.

This includes everything from routine services like waste collection or catering, to large-scale infrastructure projects like rail networks or hospitals, and even consultancy, IT, or medical equipment.

In most countries, public procurement is governed by strict rules to ensure fair competition, prevent corruption, and support social and economic policy goals - such as sustainability, innovation, and support for SMEs.

Core Objectives of Public Procurement:

• Transparency: Ensuring all qualified suppliers have equal access to opportunities
  
  

• Value for Money: Achieving the best combination of quality, cost, and sustainability
  
  

• Accountability: Making sure public funds are used properly and ethically
  
  

• Competition: Encouraging innovation and preventing monopolies

Who Uses Public Procurement?

Public procurement is used by:

• Central and local governments
  
  

• Healthcare providers (e.g., hospitals, clinics)
  
  

• Educational institutions
  
  

• Infrastructure agencies (transport, housing, energy)
  
  

• Defense and emergency services

The contracts can range from €10,000 cleaning services to multi-billion euro infrastructure frameworks. For businesses, it represents a massive opportunity - if they understand how to participate effectively.

Who Buys - and Why It Matters

Public procurement isn’t limited to national governments. In fact, the vast majority of contracts come from a wide and diverse group of contracting authorities - all of whom rely on private suppliers to deliver essential goods, services, and infrastructure.

Key Public Buyers

• Central Government Departments
  Ministries and national agencies procure large-scale infrastructure, policy-driven programs, and national services.
  
  

• Local and Regional Authorities
  City councils, municipalities, and regional governments handle education, local infrastructure, transport, and housing.
  
  

• Public Utilities and Infrastructure Bodies
  Energy, water, and transport authorities often run large, long-term tenders - often under separate utility procurement rules.
  
  

• Health and Social Care Providers
  Public hospitals, clinics, and care networks contract suppliers for equipment, staffing, IT, and operational services.
  
  

• Educational Institutions
  Schools, universities, and training providers procure catering, cleaning, software, and facilities management.

Why It Matters to Suppliers

Understanding who the buyers are helps you:

• Target the right contracts based on your service area and delivery capacity
  
  

• Adapt your proposals to align with buyer goals, values, and priorities
  
  

• Build relationships with recurring buyers (e.g., councils or health trusts with ongoing needs)
  
  

• Strategically focus on buyers that use frameworks or run regular mini-competitions

Mercell makes this easier by mapping buyers across Europe, helping suppliers identify which ones publish the most relevant tenders - and when.

Pro tip: Some buyers issue tenders on behalf of many others (e.g., consortiums, group purchasing bodies). Winning with them can unlock access to dozens of downstream opportunities.

Key Procurement Processes

Public buyers don’t all buy the same way.

Depending on the value, urgency, complexity, and legal requirements of a contract, they use different procurement procedures to select suppliers. Understanding these processes helps you decide which tenders to pursue - and how to respond effectively.

Here are the most common procurement procedures used across Europe (especially under EU procurement law):

1. Open Procedure

This is the most straightforward process.

Any supplier can submit a full tender in response to the notice - there’s no pre-qualification stage.

• Used for: Most standard, above-threshold contracts
  
  

• Pros: Transparent, widely accessible
  
  

• Cons: High competition; can be resource-intensive for suppliers

2. Restricted Procedure

In this two-stage process, suppliers first submit a selection questionnaire (SQ or ESPD). Only shortlisted suppliers are then invited to submit a full bid.

• Used for: More complex or high-risk projects
  
  

• Pros: Fewer bidders reach the final round
  
  

• Cons: You must pass pre-qualification to proceed

3. Competitive Procedure with Negotiation

Buyers invite a shortlist of pre-qualified suppliers to submit initial tenders, then enter into negotiations to refine offers before awarding.

• Used for: High-value or technically complex contracts
  
  

• Pros: Allows dialogue and custom solutions
  
  

• Cons: Takes longer and requires more bid sophistication

4. Competitive Dialogue

Similar to negotiation, but used when the buyer cannot clearly define the solution up front. Suppliers and buyers work together to define the requirements before final bidding.

• Used for: Innovative or bespoke projects
  
  

• Pros: Collaborative; promotes creative solutions
  
  

• Cons: High time/resource commitment; usually for large contracts

5. Innovation Partnership

A unique process where a supplier helps the buyer develop a new solution, and then becomes the provider if successful.

• Used for: Cutting-edge R&D or new technologies
  
  

• Pros: Encourages innovation
  
  

• Cons: Competitive, niche, and long-term

6. Dynamic Purchasing System (DPS)

An entirely electronic, open procurement system where suppliers can join at any time and bid for specific call-offs as they arise.

• Used for: Common-use goods/services with changing demand
  
  

• Pros: Flexible; great for SMEs
  
  

• Cons: Requires quick responses to ongoing mini-competitions

7. Framework Agreement

A long-term agreement with pre-selected suppliers for future call-offs - either via direct award or mini-competition.

• Used for: Repeatable services or products over several years
  
  

• Pros: Predictable work; pre-approved status
  
  

• Cons: Fixed entry window; no guaranteed spend

Understanding these procedures helps you:

• Prepare the right kind of bid (full tender vs. qualification)
  
  

• Manage resources (some processes take months; others days)
  
  

• Choose the right tenders for your experience and delivery capacity

Types of Public Contracts

Public procurement isn’t one-size-fits-all. Depending on the need, timeline, and purchasing strategy, buyers use different types of contracts to engage suppliers. Understanding these contract types helps you focus your efforts, plan your bid calendar, and tailor your approach to win.

Here are the main categories of public contracts:

1. Individual (One-Off) Tenders

These are standalone contracts awarded through open or restricted procedures. Once awarded, the contract runs its course and does not repeat unless re-tendered.

• Example: Supplying laptops to a municipal school board
  
  

• Contract duration: Typically fixed (e.g., 12 or 24 months)
  
  

• Strategy: Bid competitively and deliver strong value, as this is a single opportunity

2. Framework Agreements

A framework agreement is a long-term arrangement between one or more suppliers and one or more buyers. It sets the terms - pricing, quality, delivery - for future purchases over a set period (typically 2–4 years).

• No guaranteed volume of business
  
  

• Often used for recurring needs (e.g., IT support, consulting, construction)
  
  

• Contracts are awarded via mini-competitions or direct awards

Tip: Getting onto a framework is highly competitive but opens doors to multiple projects with less effort once you're in.

3. Dynamic Purchasing Systems (DPS)

A DPS is a fully electronic procurement system where suppliers can join at any time - unlike a framework, which is closed after initial award. Buyers issue mini-competitions for each purchase, and only suppliers in the DPS can respond.

• Ideal for commoditized or fast-turnaround services (e.g., security, temp staffing)
  
  

• More accessible for SMEs
  
  

• Requires agile bidding teams or tools

4. Lots Within Contracts

Large contracts - especially frameworks - are often divided into “lots”. These can be based on:

• Service type (e.g., cleaning vs. catering)
  
  

• Geographic area (e.g., North vs. South region)
  
  

• Buyer type (e.g., schools vs. hospitals)

Suppliers can bid for one or several lots depending on their capacity and expertise. Lots make public contracts more inclusive and manageable - especially for smaller or regional businesses.

5. Below-Threshold Contracts

These are lower-value contracts that fall below the legal thresholds for regulated procurement. While they’re not always published on national portals, they still require competition and transparency - and are often available through tools like Mercell.

• Great entry point for new suppliers
  
  

• Faster procurement cycles
  
  

• May lead to recurring work or longer-term contracts

The Legal and Compliance Landscape

Public procurement is highly regulated - for good reason. Governments are spending public funds, so they must ensure fairness, transparency, and accountability in every contract awarded. 

This means suppliers must meet legal requirements not just when bidding, but throughout the delivery of the contract.

Understanding the legal landscape helps suppliers avoid disqualification, build trust with buyers, and reduce risk.

Key Legal Frameworks in Europe

Public procurement across the EU and EEA is governed by a set of EU Procurement Directives, which are transposed into national law by each member state. These directives define the procedures, thresholds, timelines, and principles that buyers and suppliers must follow.

The three main directives are:

• Directive 2014/24/EU on public sector procurement
  
  

• Directive 2014/25/EU on utilities contracts (e.g., water, energy, transport)
  
  

• Directive 2014/23/EU on concession contracts

Post-Brexit, the UK now follows the Public Procurement Regulations 2015 and is transitioning to a new regime under the Procurement Act 2023.

Core Principles Suppliers Must Respect

Regardless of geography, public procurement is built around several key legal principles:

• Transparency – All tender opportunities and award decisions must be open and well-documented.
  
  

• Equal treatment – All suppliers must be assessed using the same criteria.
  
  

• Non-discrimination – No supplier can be excluded due to nationality or company size.
  
  

• Proportionality – Requirements must be appropriate and not overly burdensome.
  
  

• Accountability – All decisions must be auditable and based on published evaluation criteria.

What Compliance Means for Suppliers

To participate in public tenders, suppliers must typically provide:

• Company registration and financial accounts
  
  

• Insurance certificates (e.g., liability, professional indemnity)
  
  

• Tax and legal compliance declarations
  
  

• Environmental and social responsibility policies
  
  

• Relevant accreditations or certifications (e.g., ISO, Cyber Essentials)
  
  

• Proof of past performance or references

Failure to provide accurate, up-to-date documentation can result in automatic disqualification - even for strong bids.

How Mercell Helps

Mercell helps suppliers manage compliance with built-in document checklists, submission reminders, and secure storage of your credentials. You can also receive alerts about buyer requirements and automate parts of your bid preparation to stay ahead of the rules.

How Suppliers Can Enter the Public Market

Public procurement may seem complex from the outside - but it’s more accessible than many suppliers realize. Whether you're a startup, SME, or established business new to government contracts, there are clear steps you can take to enter the public market and start bidding with confidence.

1. Register on the Right Portals

The first step is visibility. Most countries require suppliers to register on specific procurement platforms where tenders are published.

Examples include:

• TED (Tenders Electronic Daily) for EU-wide notices
  
  

• Mercell for consolidated national, regional, and EU-level tenders
  
  

• National portals like Doffin, Mercell, or Udbud.dk

Mercell simplifies this process by centralizing tenders across countries, so you don’t have to juggle multiple systems.

2. Build a Bid-Ready Profile

Before you submit any bids, make sure your documents and policies are in order. This includes:

• Financial records and insurance certificates
  
  

• Legal declarations (e.g., non-collusion, tax compliance)
  
  

• References or case studies from similar contracts
  
  

• ESG, quality, or cyber security certifications

Mercell lets you store and reuse this documentation securely across multiple bids.

3. Start with Smaller or Below-Threshold Contracts

Many SMEs make the mistake of going after large tenders too soon. A smarter route is to target below-threshold opportunities or tenders issued by local authorities. These contracts are often:

• Less complex
  
  

• Easier to deliver
  
  

• More suited to newer suppliers

Winning small, local projects builds your public track record and opens doors to larger opportunities later.

4. Identify Relevant Frameworks and DPS

Frameworks and Dynamic Purchasing Systems (DPS) offer long-term opportunity pipelines for suppliers. Getting onto one can mean access to dozens of buyers over several years - but the competition is tough.

Use Mercell to track open frameworks in your sector and prepare early - especially for expiring frameworks that will soon be re-tendered.

5. Learn How Buyers Think

Public buyers care about more than price. They’re looking for reliability, value, compliance, and increasingly - social impact. To stand out:

• Align with buyer goals and terminology
  
  

• Provide detailed delivery plans and risk management strategies
  
  

• Highlight how your business contributes to sustainability or inclusion

Mercell Academy and bid resources can help you craft stronger, buyer-focused proposals.

6. Use Tools That Simplify the Process

Don’t try to manage tenders in spreadsheets or email threads. Platforms like Mercell Bidding streamline bid management with:

• Deadline tracking
  
  

• Role assignment
  
  

• Document storage
  
  

• Evaluation scorecards

This lets you scale your public sector efforts without scaling your overhead.

Entering the public market isn’t just about bidding - it’s about building a long-term strategy. Start small, build credibility, and use tools that make the process easier and more consistent.

Common Challenges - and How to Overcome Them

Public procurement offers real opportunity, but it’s not without its frustrations. Many suppliers - even experienced ones - face recurring challenges that limit their success. The good news? Most of these hurdles can be addressed with the right strategy, preparation, or tools.

Here are the most common issues suppliers face - and how to get ahead of them:

1. Struggling to Find the Right Opportunities

With tenders spread across multiple platforms, it’s easy to miss relevant opportunities - or waste time reviewing ones that don’t fit. Manual searches are time-consuming and often incomplete.

In fact, in some regions, up to 1 in 5 tenders receive just a single valid bid. That means many contracts are awarded without real competition - often because suppliers simply didn’t see the opportunity or didn’t have time to respond.

How to overcome it:
Use a centralized platform like Mercell to find public tenders across regions and sectors. Set up tailored alerts based on keywords, CPV codes, or buyer types so you never miss a fit-for-you opportunity.

2. Not Enough Time to Prepare Strong Bids

Tenders often have short deadlines, and bid preparation can be resource-heavy - especially when teams are small or stretched thin. This leads to rushed, low-quality submissions.

How to overcome it:
Create internal bid templates and libraries you can reuse. Use collaboration tools to assign roles and track progress. Prioritize opportunities where you already have relevant experience or past performance.

3. Losing on Compliance Technicalities

Some bids are disqualified before they’re even evaluated - due to missing documents, incorrect forms, or outdated declarations. It’s a costly mistake.

How to overcome it:
Maintain a well-organized bid file with all the key documents buyers typically require. Use Mercell’s compliance checklist tools and deadline alerts to ensure nothing falls through the cracks.

4. Low Scores on Social Value or Innovation

Buyers are placing more emphasis on added value - like sustainability, community benefits, or innovation. Suppliers focused solely on price may lose out.

How to overcome it:
Update your bid content to reflect ESG commitments, local hiring, or unique service enhancements. Include evidence, not just promises. Use past results or testimonials to support claims.

5. Lack of Feedback After a Loss

When you don’t win, it’s often hard to know why. Many suppliers feel stuck, unable to improve future bids without clear insight.

Feedback matters. In fact, 70% of suppliers say a lack of feedback is one of the biggest barriers to improving future bids. Without it, it's hard to know what went wrong - or how to do better next time.

How to overcome it:
Always request a debrief, even if optional. Use it to learn how your bid scored against others. Mercell can help you track feedback, score trends, and refine your next submission.

Overcoming these challenges isn’t about working harder - it’s about working smarter. The right systems and support can help you bid more effectively and win more consistently.

How Mercell Supports the Full Procurement Journey

Mercell isn’t just a tender search engine - it’s a full-service procurement platform designed to help suppliers succeed at every stage of the public bidding process. From discovering opportunities to submitting winning bids and managing ongoing contracts, Mercell gives suppliers the tools, insights, and support they need to compete and grow.

Here’s how Mercell fits into your procurement workflow:

1. Discover More Opportunities

Every year, more than 250,000 public tender notices are published across Europe, covering everything from IT support to bridge construction. But without the right tools, even the best-fit opportunities can get lost in the noise.

Mercell consolidates tenders from national, regional, and EU sources into one centralized platform. You get:

• Real-time alerts for new tenders
  
  

• Smart filters based on CPV codes, value, location, and buyer type
  
  

• Visibility into below-threshold and framework-related opportunities

No more hopping between portals. Just relevant, timely tenders delivered to your inbox.

2. Understand the Market

Use Mercell’s analytics tools to:

• See which buyers purchase what you sell
  
  

• Analyze past winners and competitor pricing
  
  

• Track when frameworks or contracts are due for renewal

This data gives you a strategic edge when planning your pipeline or preparing a bid.

3. Bid with Confidence

According to the European Commission, digitally managed procurement can reduce the average cycle time by up to 30% - saving valuable days (or weeks) during the bidding and evaluation process. Platforms like Mercell help suppliers respond faster, with greater accuracy and confidence.

With Mercell Bidding, you can:

• Assign internal roles and manage deadlines
  
  

• Store, reuse, and customize bid templates
  
  

• Track progress and ensure full compliance with buyer requirements
  
  

• Submit clean, consistent, and complete bids - on time, every time

4. Win and Deliver Better

Once you’ve won a contract, Mercell helps you stay organized:

• Manage documentation and buyer communication
  
  

• Stay ahead of framework deadlines and mini-competitions
  
  

• Keep your team aligned on delivery and compliance updates

5. Get Expert Support When You Need It

Whether you're new to public procurement or scaling up, Mercell’s support team and educational resources are here to guide you. From bid writing tips to compliance training, we help you build internal capability as you grow.

Whether you bid once a year or once a week, Mercell adapts to your workflow - so you can win more with less stress.

Your Public Sector Opportunity Starts Here

Public procurement can seem daunting at first glance - filled with complex rules, unfamiliar jargon, and high competition. 

But with the right understanding and strategy, it becomes one of the most predictable, scalable, and rewarding markets your business can enter.

Whether you’re a small business looking to win your first contract or a seasoned supplier aiming to expand across regions or categories, the principles are the same: know your buyer, understand the process, deliver value, and stay compliant.

And most importantly - don’t do it alone.

At Mercell, we help thousands of suppliers across Europe find, bid, and win in public procurement. With smarter tools, deeper insights, and built-in support, we simplify the complex so you can focus on what matters: growing your business.