The Executive Brief: Boosting EU Competitiveness through Public Sector Digital Transformation

“Europe cannot regulate its way into being competitive. We must create the conditions for Europe to compete by reducing administrative burdens in the Single Market, using public procurement to reward innovation, resilience and security, and accelerate the deployment of the digital infrastructure Europe needs. We have world-class companies, strong public sectors and the technological capability to lead. But leadership only matters if we turn ambition into execution and make Europe a place where technology is not just regulated, but built, deployed and scaled.” – André Rogaczewski, CEO and Co-Founder of Netcompany and Chair of DIGITALEUROPE’s Public Sector Executive Council 

At a time when Europe is seeking to boost competitiveness, strengthen resilience and scale critical technologies, modernising the public sector has become a strategic priority. Public procurement remains Europe’s most powerful yet underused innovation policy tool, accounting for 14% of EU GDP. However, administrative fragmentation, slow procedures and outdated procurement and permitting frameworks remain structural barriers. For businesses, particularly SMEs, administrative friction acts as a de facto internal tariff of up to 110%, undermining the Single Market and Europe’s competitiveness. European Commission estimates show that a 1% efficiency gain could save €20 billion per year. 

As the EU rolls out its Tech Sovereignty Package, DIGITALEUROPE calls on policymakers to prioritise demand aggregation, investment and deployment by scaling joint public procurement, accelerating permitting, and minimising regulatory burden. These actions can help expand Europe’s critical technologies while boosting competitiveness, in line with key asks in this Executive Brief: 

Key Recommendations 

DIGITALEUROPE’s Public Sector Executive Brief identifies four policy recommendations to boost EU competitiveness through public sector digital transformation:  

• Scale demand via pan-EU joint procurement.  

The EU should enable voluntary joint procurement procedures based on harmonised criteria, building on the Public Procurement Directives (PPD) and the proposed Cloud & AI Development Act (CADA). Today, only 11% of EU procurement procedures are conducted through cooperative procurement. By 2030, 50% of public procurement in critical infrastructure and critical technologies should be carried out jointly amongst Member States.  

• Incentivise beyond price.  

Public procurement should reward innovation, sustainability, security and resilience, not default to the lowest-price option only. Today, 55% of procurement procedures still award contracts exclusively on the basis of lowest price. By 2030, 75% of public procurement procedures should use award criteria where non-price factors account for at least 65% of the evaluation weight 

• Simplify, digitalise and professionalise government procurement processes.  

Procurement should be genuinely digital by default, with standardised processes, full implementation of the “once-only” principle and stronger capacity-building for public buyers. The European Business Wallets (EBW) should be fully adopted by all Member States by 2028, supported by appropriate deployment funding and incentives for both the industry and Member States. We propose establishing a 1bn € fund to support industry uptake, as well as a dedicated government fund within the next MFF 2028-2034.  

• Build resilient and secure digital infrastructure.  

Europe cannot deliver on AI, cloud, data and secure connectivity without faster authorisation processes. Contract award procedures currently take an average of 96.4 days, slowing down critical projects. By 2030, average public procurement decision times should be cut by 50%, alongside faster permitting for data centres and other critical digital infrastructure. 

Turning Ambition into Execution 

European industry is ready to invest and scale in Europe. Over 78 European CEOs have signed DIGITALEUROPE’s AI & Tech CEO Declaration, pledging to invest and scale if policymakers act on investment, procurement and regulatory simplification. 

This Executive Brief shows that Europe’s public sector can become a driver of digital competitiveness – but only if policymakers reduce fragmentation, reward innovation and deploy critical digital infrastructure at speed.