On 9 September 2024, Mario Draghi published his report on the future of European competitiveness and exactly two years later, the European Commission tabled its proposed Public Procurement Act, which it says responds to the recommendations of both the Draghi and Letta reports.
Procurement is not the main subject of the Draghi report, it appears instead as a tool that recurs across several policy areas, from defence and clean technology to cloud services and energy. It is good to note that one point of status matters from the outset, Ursula von der Leyen asked Draghi to prepare the report in September 2023, and the Commission describes it as his personal vision. The report itself states that it should not be treated as the Commission’s official position.
The argument in brief
Draghi’s central concern is productivity as he attributes around 70% of the EU’s per capita GDP gap with the US, in purchasing power terms, to lower productivity. With the workforce projected to shrink by close to 2 million people a year by 2040, population growth will no longer support the economy as it once did.
The report sets out three areas for action:
• Closing the innovation gap with the US and China, particularly in advanced technologies.
• A joint plan for decarbonisation and competitiveness, against a backdrop of electricity prices two to three times those in the US and gas prices four to five times higher.
• Increasing security and reducing dependencies, including on critical raw materials and imported digital technology.
Funding runs through all three, to digitalise, decarbonise and strengthen defence, Draghi estimates that the EU’s investment share would need to rise by around 5 percentage points of GDP. He compares this with the Marshall Plan, whose additional investment amounted to around 1-2% of GDP a year. The report also identifies three obstacles: a lack of focus, the dilution of common resources across national and EU instruments, and weak coordination. Procurement features in the second of these as an example of collective spending power that is not being used collectively.
What it says on procurement
The report also has no chapter solely on the Single Market, because it relies on the analysis already provided by Enrico Letta. His procurement ideas therefore appear sector by sector, and they fall into four main themes.
Defence: This is the report’s sharpest procurement argument. Collaborative purchasing made up less than a fifth of defence equipment procurement spending in 2022. Between mid-2022 and mid-2023, 78% of procurement spending went to non-EU suppliers, with 63% of that going to the US. Draghi’s complaint is that the EU neither pools its demand nor favours competitive European companies. He also lists defence procurement among the public goods that could justify common funding, if the political and institutional conditions are met.
Clean technology: lWhere there is a strategic case for domestic capacity, Draghi supports a minimum quota for local production of selected products and components. This would apply in public procurement and in contract-for-difference auctions, and could be backed by joint ventures or cooperation agreements. It is among the report’s most debated ideas, since it moves away from the EU’s traditional stance on local content.
Digital: Fewer national rules, more common standards and the report says that differing national procurement rules create high ongoing costs for cloud providers, and that only larger companies, often non-EU ones, can readily absorb the burden of regulation. It recommends mandatory EU standards for public sector procurement, to level the playing field for European companies in the market for sovereign cloud services.
Energy and raw materials: The report also proposes joint approaches in the EU’s gas strategy, along with a dedicated EU platform for critical raw materials. In both cases, the aim is to use collective market leverage to strengthen Europe’s position with suppliers.
From report to proposal
The report’s influence reached procurement policy in stages, the Competitiveness Compass of January 2025 placed the review of the procurement directives among its flagship initiatives, linking it to technological security and domestic supply chains. The Clean Industrial Deal then said the revision would allow sustainability, resilience and European preference criteria in strategic sectors.
In September 2025, the European Parliament adopted a resolution by 432 votes to 95, with 124 abstentions. It asked the Commission to assess Draghi’s recommendation on minimum quotas, under which contracting authorities could choose, where appropriate and feasible, to set an explicit minimum for selected goods produced locally. A quota of this kind would require a set share of the relevant products or components in a public contract to be made locally, rather than treating origin as just one factor in the evaluation.
This matters because a version of the idea is now in the Public Procurement Act proposal before the Parliament and the Council. Public buyers could require goods, services or works to originate, in full or to a specified degree, in the EU or a covered country. They could also reject tenders in which EU or covered content accounts for less than 50% of the estimated value.
European preference would generally be a choice for each public buyer, although the Commission could make it compulsory through delegated acts where this is in the Union’s interest. Buyers could also set it aside in defined cases, such as an emergency, a lack of suitable suppliers or disproportionate cost.
“Covered” is the other key word as it refers to operators and products from countries with relevant commitments under the WTO Government Procurement Agreement or EU trade agreements, and the Commission could remove that status in certain circumstances. European preference in this proposal is therefore not simply a matter of EU versus non-EU.
The overlap between these files cuts both ways, parallel measures can strengthen the overall framework if they complement one another, but they also create a risk of regulatory asymmetry. For instance, the Industrial Accelerator Act could be adopted while a change in the political environment leads to European preference or sovereignty clauses being dropped or heavily watered down in the procurement Regulation. The result would be a regulatory dog leg, with rules pointing in different directions, and it could leave Europe weaker rather than stronger.
The real debate around it
Draghi made his position on procurement clearer one year later, at a Commission conference in September 2025, he called it a more powerful way than regulation to create markets. Public procurement was equal to 14% of EU GDP, he said, so directing even a small share to European industry would provide stable demand. His examples included an EU share in defence chip procurement, support for European cloud and vertical AI, and quotas for products such as green steel and aluminium.
He also attached a condition, that without harmonisation across Member States, he warned, procurement could slide into national protectionism and fail to deliver scale. That is an important qualification, because preference and fragmentation can pull in opposite directions.
The report’s critics raise several concerns:
• Trade and openness: Some commentators have argued that local content requirements resemble practices the EU has long objected to elsewhere, and could sit uneasily with its support for the multilateral trading system. Draghi has responded that a more contested global economy requires a more active industrial policy.
• Sustainability: Some procurement scholars have argued that “strategic” procurement in the Letta and Draghi agenda now means supply security and autonomy more than environmental objectives.
• Feasibility: The report’s size and lack of a clear order of priorities have drawn criticism, as has the political difficulty of common borrowing. Germany’s finance minister at the time rejected joint borrowing shortly after publication.
The Commission points to progress, saying in September 2025 that 90% of the Compass’s flagship initiatives were directly inspired by the report. Draghi’s own assessment that month was less positive: he said each of the original challenges had become more acute, and that citizens and companies were frustrated by how slowly the EU was moving.
What it means for procurement teams
It is important to note that nothing changes legally yet, the Draghi report has no legal force, the Public Procurement Act is still a proposal, and the 2014 directives and national transposing laws continue to apply. Parliament and the Council can still amend the text substantially.
Even so, it is useful to watch four points as negotiations progress:
• How far European preference goes: The key questions are whether it stays voluntary by default and how far the Commission’s power to make it mandatory survives.
• Origin and supply chains: Suppliers may need better evidence of where operators, goods and components originate, while buyers may need to understand who counts as “covered” for each contract.
• Sector-specific rules: Requirements may arrive through separate legislation as well as the Act, so teams in strategic sectors should follow both.
• Capacity to use the new discretion: More choice on quality and preference criteria also means more decisions for public buyers to justify and document.
The Commission’s public feedback period on the proposal is reported to run until 16 November 2026, and the reported aim is to reach agreement by the end of 2027. Once adopted, the Regulation would apply two years later. Draghi did not write the procurement reform, and the proposal draws on other sources as well, including the Letta report and the European Court of Auditors’ findings on declining competition. His report did however, add weight to the case for treating procurement as a question of industrial and economic security as well as compliance and market access. Whether the final law reflects that shift, and how strongly, is now for the co-legislators to decide.
Background Reading and Additional Sources:
• Mario Draghi, The future of European competitiveness, Part A: https://commission.europa.eu/document/download/97e481fd-2dc3-412d-be4c-f152a8232961_en
• Mario Draghi, The future of European competitiveness, Part B: https://commission.europa.eu/document/download/ec1409c1-d4b4-4882-8bdd-3519f86bbb92_en
• European Commission, The Draghi report: https://commission.europa.eu/topics/competitiveness/draghi-report_en
• European Commission, The Draghi report: one year on: https://commission.europa.eu/topics/competitiveness/draghi-report/one-year-after_en
• Mario Draghi, keynote speech, High Level Conference, September 2025: https://commission.europa.eu/document/download/0951a4ff-cd1a-4ea3-bc1d-f603decc1ed9_en
• European Commission press release IP/26/1817, 9 September 2026: https://ec.europa.eu/commission/presscorner/api/files/document/print/en/ip_26_1817/IP_26_1817_EN.pdf
• European Parliament Legislative Observatory, summary of resolution 2024/2103(INI): https://oeil.europarl.europa.eu/oeil/en/document-summary?id=1841304
