On Thursday, 14 August 2025, a press conference was held at which Minister of Finance Arvils Ašeradens, Advisor on Policy Issues to the Minister of Finance Sanda Liepiņa, Head of the Procurement Monitoring Bureau (PMB) Artis Lapiņš, and Council Member of the State Audit Office of Latvia Gatis Litvins presented the structural reform developed by the public procurement working group to make the public procurement system more effective. Its aim is to ensure the maximum value of the state budget investment, while increasing competition in procurement, reducing bureaucracy, promoting transparency and effectiveness of processes, as well as developing the centralisation of procurement and introducing modern digital solutions in public procurement management simultaneously.
“After several rounds of discussions and detailed analysis together with the parties involved in the public procurement process, we have agreed and developed a structural reform of public procurement. It will free the public procurement system from unnecessary administrative processes, make the process faster, ensure greater competition and promote the maximum return on each taxpayer's euro to the public. The calculations of the Ministry of Finance show that we will reduce the procedures regulated by law by 70% and shorten the duration of procurement procedures by a quarter if the reform is successfully implemented while opening a potential for savings of 2% to 4% in public sector expenditure,” stated Minister of Finance Arvils Ašeradens.
Public procurement is an essential element of the single market, through which the government, local and regional governments provide essential services to the population and develop infrastructure. In 2024, more than 11 thousand procurements were announced in Latvia, resulting in more than 21 thousand contracts for a total amount of 5.45 billion euros [1], which accounts for approximately 13% of Latvia’s gross domestic product. In its turn, when more than 182 thousand companies operated in Latvia, the number of unique participants winning procurements was 4,321 in 2024, which accounts for approximately 2.4% of the total number of companies.
“Over the past decade, attempts have been made to achieve many different European Union (EU) and Latvian national goals through public procurement, including combating the shadow economy. These goals are good and necessary. The other side of the coin is that all these measures have made public procurement significantly more complicated by creating additional administrative burdens for all involved. It is currently essential to find the best way to reduce the red tape and speed up the procurement process by eliminating excess, maintaining the basic objectives of procurement and ensuring the sustainability of procurement,” indicated Head of the Procurement Monitoring Bureau Artis Lapiņš.
The supported scenario for the development of the public procurement system focuses on providing customers with maximum flexibility in conducting public procurement, focusing on the main objectives of procurement, outlining the application of sustainability principles and providing for compliance with only the mandatory additional requirements included in EU laws and regulations. Over time, this focus has been lost, therefore, the complexity of procurement procedures in Latvia and the number of additional requirements intended for the implementation of sectoral policies limit the achievement of the main objectives of public procurement significantly. The practical experience of the stakeholders also reveals that procurement processes are often characterised by excessive bureaucracy, lengthy procedures and insufficient competition. Often, only one bidder participates in procurements or a limited number of bids are received.
“The audit of the public procurement system has clearly showed shortcomings, the elimination of which requires significant legislative changes, procurement management and planning of the entire system, including the introduction of a clear results-oriented policy. The proposal of the Ministry of Finance is bold and ambitious in a positive sense, also intending to solve several problems identified in the audit. These changes must be implemented as a single, interconnected set of measures because each change requires appropriate risk-mitigating measures,” emphasised Council Member of the State Audit Office of Latvia Gatis Litvins.
In March 2025, the Minister of Finance Arvils Ašeradens established a broad-based working group, which included representatives from state and municipal institutions, regulatory authorities, industry professionals and business organisations. The working group focused on two areas, including increasing the economic efficiency or “maximum value for money” of public procurement. Accordingly, existing practices and examples of best practice were analysed by identifying opportunities to safeguard significant savings while maintaining the quality of procurement and ensuring that procurement met actual needs and requirements in full. In its turn, the second area was an assessment of the effectiveness of public procurement, which included the issue of contract price thresholds applicable in public procurement, rules for the exclusion of candidates and tenderers, possibilities for centralising procurement and other procedural issues.
After several rounds of discussions and detailed analysis, the working group proposed two potential development scenarios: improvement of the existing system or structural reforms in the field of public procurement, which received unanimous support from the working group members. Structural reforms envisage raising the thresholds for public procurement to the contract price limits set by the EU significantly, namely, from the current 10,000 euros to 143,000 euros in the procurement of goods and services and from 20,000 euros to 5,538,000 euros in the procurement of works. Substantial changes would also affect the operating principles of the system by focusing on maximum flexibility, the key objectives of procurement and data-based management. Thus, procurement can become a strategic tool in the development of the country, rather than a bureaucratic obstacle.
The reform envisages extending the procurement regulation only to transactions above the EU-set contract price limits by moving to ex-post monitoring in nationally regulated procurement and introducing an obligation to publish information on procurement plans, concluded contracts and actual use also below the thresholds. On the other hand, monitoring is planned to be strengthened with performance indicators (KPIs), reference prices and analytic solutions. Accordingly, the practice of contracting authorities will be monitored taking into account the performance indicators of contracting authorities against procurement indicators, as well as taking the average and best performance as a reference point in a comparative manner. For instance, the level of competition in procurement, the speed of decision-making and the effectiveness of procurement, which are indicators of the procurement system used in the EU as a whole.
The reform also includes changes in institutional governance, as a result of which the Procurement Monitoring Bureau will become the central management authority and will maintain the Electronic Procurement System and the Publications Management System, while the work of the State Digital Development Agency will be focused on ICT procurement. Local and regional governments will manage the procurement system centrally while maintaining freedom of choice in determining the most appropriate management model. The range of goods and services that can be purchased centrally will also be expanded, including insurance, transport and mobile communications.
To reduce the bureaucratic burden, the reform is intended to focus on the basic objectives of procurement, that is, openness, transparency and free competition by observing only the mandatory requirements set out in EU regulatory enactments. At the same time, one will also focus on the implementation of sustainable procurement by strengthening the level of regulatory principles and providing for the possibility of creating competence centres in certain areas to implement the principles of sustainability as well as developing the standardisation and centralisation of procurement.
When implementing the reform, benefits are forecasted at all levels: contracting authorities will have the ability to act, businesses will be provided with opportunities and transparency will be safeguarded for the public. Thus, the administrative burden will be reduced, for example, 2 mandatory exclusion rules for candidates and tenderers are set instead of the previous 12 rules. The duration of the procurement procedure will also be reduced by approximately 25%. One should note that, according to studies by the Organisation for Economic Co-operation and Development (OECD), rationalisation of the procurement system can provide significant cost savings across the public sector, namely, around 7% depending on the specific approach of country concerned and the extent of the reform. In Latvia, as a result of structural reform, national savings in public sector spending will potentially range from 2% to 4%.
The working group on public procurement also compiled recommendations for best practice, which include conducting market survey and planning procurements in a timely manner. Informing suppliers about planned and announced procurements is also essential. The need to set proportionate requirements in procurements and contracts is emphasised. Joint and centralised procurements, high-quality management of procurement teams, and continuous professional capacity building of procurement specialists are also recommended to improve effectiveness. The selection of procedures and contract types that promote competition are also important prerequisites for an effective process. Thorough analysis of the terms and conditions of procurement contracts is required in cases where competition has been insufficient.
The planned changes to the public procurement system under the reform would gradually come into effect from 2026. Until then, approving the development scenario of the public procurement system in the Cabinet of Ministers and adoption of amendments to the Public Procurement Law of Latvia and other laws in the field of public procurement in the Saeima (Parliament of Latvia), as well as developing and approving the relevant amendments to the Cabinet Regulations are needed accordingly.
[1] Except the contract signed by “Eiropas dzelzceļa līnijas” Ltd (European Railway Lines) for “Rail Baltica main line construction works in Latvia” for 3,698,833,521 euros.
Additional information for media representatives:
Communications Department, Ministry of Finance
Ph: 67095405 | E-mail: info@fm.gov.lv
Head of Communication Division of the State Audit Office of Latvia
Ph: 23282332 | E-mail: gunta.krevica@lrvk.gov.lv