Describes how major projects are secured and financed. Explains activities of the multilateral development banks in and other aid-funded projects.
Selling to the Government
The procedure state agencies and state-controlled companies follow for purchases is prescribed by the Public Procurement Act. Public tenders are the most frequently used form of procurement. In most cases, foreign and domestic bidders have the same rights. In public tenders funded by EU funds, the requirement usually mandates only EU origin goods or services. However, U.S.-owned companies can qualify if they have a representative office somewhere in the EU.
The public procurement process in Slovenia can be a frustrating experience for American and other foreign companies. The most frequent complaints include insufficient time to prepare bids, extremely strict language requirements, lack of transparency as to the decision-making authority on tenders, dismissal of bids as non-compliant on grounds not substantive to a company’s ability to provide goods or perform services, and an appeal process insufficiently protected from political influence or even corruption.
As a NATO member, Slovenia has committed to a goal of spending two percent of GDP for military expenditure but has yet to meet this goal. The previous government has confirmed spending an additional EUR 780 million on defense modernization and capacity building over the next six years, taking steps to bring Slovenia into compliance with its NATO obligations by 2030. For more information on foreign military sales opportunities, please contact the Office of Defense Cooperation (ODC) at the U.S. Embassy in Ljubljana.
The EU public procurement market, including EU institutions and member states, constitutes approximately 16 percent of its GDP. This market is regulated by three Directives:
- Directive 2004/18 on Coordination of Procedures for the Award of Public Works, Services and Supplies Contracts;
- Directive 2004/17 on Coordination of Procedures of Entities Operating in the Utilities Sector, which covers the following sectors: water, energy, transport and postal services; and
- Directive 2009/81 on Coordination of Procedures for the Award of Certain Works, Supply and Service Contracts by contracting authorities in the fields of defense and security.
Remedies directives cover legal means for companies who face discriminatory public procurement practices. These directives are implemented in the national procurement legislation of the 27 EU member states.
The U.S. and the EU are signatories to the World Trade Organization’s (WTO) Government Procurement Agreement (GPA), which grants access to most public supplies and services and some work contracts published by national procurement authorities of the countries that are parties to the Agreement. In practice, this means that U.S.-based companies are eligible to bid on supplies and services contracts from European public contracting authorities above the agreed thresholds.
However, U.S. suppliers are subject to restrictions in the EU utilities sector, both in the EU Utilities Directive and in the EU coverage of the GPA. The Utilities Directive allows EU contracting authorities in these sectors to either reject non-EU bids where the proportion of goods originating in non-EU countries exceeds 50 percent of the total value of the goods constituting the tender or apply a three percent price difference to non-EU bids in order to give preference to the EU bid. These restrictions are applied when no reciprocal access for EU companies in the U.S. market is offered. Those restrictions, however, were waived for the electricity sector.
For more information, please visit the U.S. Commercial Service at the U.S. Mission to the European Union website dedicated to EU public procurement. This site is free of charge and also includes a database of all European public procurement tenders open to U.S.-based firms by virtue of the GPA.
Many EU member state governments finance public works projects through borrowing from the Multilateral Development Banks. Please refer to “Project Financing” Section for more information.
U.S. companies bidding on government tenders may also qualify for U.S. government advocacy. A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies. The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government. Consult Advocacy for Foreign Government Contracts for additional information.
Financing of Projects
Private capital investment in public infrastructure projects is rare, and project financing as a means of financing larger scale (mostly construction) projects is developing slowly in Slovenia, which lags behind the EU average in terms of project financing for public infrastructure projects. Public infrastructure projects are generally accompanied by state financial guarantees to the contractors, which in part helps explain Slovenia’s underdeveloped project financing system. Slovenia’s lack of public private partnerships, traditional drivers of project financing in other countries, also hinders the development of project financing for public infrastructure projects.
Project financing for the private sector is somewhat more evolved, with Slovenian banks routinely offering project financing services for construction and development projects. Under such financing, banks generally offer up to 70 percent financing, with 30 percent of the project cost typically required from the investor’s own sources. Banks also offer, and in some cases require, advisory services pertaining to Slovenian regulations on building and real estate sales as well as ownership transfers of mortgaged real estate. To ensure transparency, banks often require that investors establish a separate company and bank account to manage the project, through which all cash flows pertaining to the project are funneled. As collateral, banks usually require a mortgage on any real estate under development.
EU financial assistance programs offer a wide array of grants, loans, loan guarantees, and co-financing for feasibility studies and infrastructure projects in a number of key sectors, including environmental, transportation, energy, telecommunications, tourism, and public health. From a commercial perspective, these initiatives represent significant market opportunities for U.S. businesses, U.S.-based suppliers, and subcontractors.
The EU itself also supports projects within its member states, as well as EU-wide “economic integration” projects that cross both internal and external EU borders. In addition, the EU provides project financing to accession countries in Eastern and Southern Europe, Iceland, and Turkey, as well as some of the former Soviet republics.
The European Union provides project financing through grants from the European Commission and loans from the European Investment Bank. Structural Fund grants are distributed through the member states’ national and regional authorities and are available only for projects in the 27 EU member states. All grants for projects in non-EU countries are managed through the EuropeAid Cooperation agency in conjunction with various departments, called “Directorates-General.”
The CSEU Tenders Database
The European Union offers a website to help companies identify European public procurement opportunities. The database features all current public procurement tenders issued by all national and regional public authorities in the EU’s 27 member states, as well as four other European countries open to U.S.-based firms under the terms of the 1995 Government Procurement Agreement (GPA). The database is updated twice weekly and features a range of search options, including approximately 20 industry sectors. The database also includes tenders for public procurement contracts relating to structural funds.
EU Structural Funds
The EU Structural Funds, including the European Regional Development Fund, were created in 1975 to assist economically depressed regions of the European Union with industrial restructuring. In addition to funding economic development projects proposed by member states or local authorities, EU Structural Funds also support specialized projects promoting EU socioeconomic objectives. Member states negotiate regional and “sectoral” programs with officials from the regional policy Directorate-General. In the multiannual financial framework for 2021-2027, Slovenia received EUR 1.6 billion for agriculture and rural area development. For Slovenia, EUR 253.3 million of additional resources were approved in July 2021 to mainly support healthcare and long-term care and the green and digital transition, for instance by strengthening the health infrastructure for the management of the coronavirus pandemic and investing in ICT equipment to enable distance teaching and learning.
Member state officials are the key decision-makers for projects financed through EU Structural Funds. These officials assess their countries’ needs, investigate proposed projects, evaluate bids, and award contracts. To become familiar with the available EU member state financial support programs, would-be contractors are advised to meet with local officials to discuss local needs.
Tenders issued by member states’ public contracting authorities for projects supported by EU grants are subject to EU public procurement legislation if they meet the EU minimum contract value requirement for the eligible sector. Below this threshold, tender procedures are subject to national procurement legislation. There are no overt prohibitions against participation by U.S. companies in such tenders, as either developers or concessionaires of projects supported partially by the Structural Funds or as bidders on subsequent public tenders related to such projects, but it is advisable to team up with a local partner. All Structural Fund projects are co-financed by national authorities, and many also qualify for loans from the European Investment Bank. The private sector is also involved in project financing. Additional information on these programs is available through the market research section on the U.S. Mission to the EU website.
The Cohesion Fund
The Cohesion Fund supports investments in the environment and transport infrastructure. These projects are generally co-financed by national authorities, the European Investment Bank, and the private sector. The multiannual financial framework for 2021-2027 allocated EUR 2.9 billion for cohesion projects in Slovenia.
The Recovery and Resilience Facility
The Recovery and Resilience Facility (RRF) makes EUR 672.5 billion in loans and grants available to support reforms and investments undertaken by EU Member States. The aim is to mitigate the economic and social impact of the coronavirus pandemic and make European economies and societies more sustainable, resilient, and better prepared for the challenges and opportunities of the green and digital transitions. The RRF entered into force on 19 February 2021. It will finance reforms and investments in Member States until 31 December 2026.
Slovenia’s National Recovery and Resilience Plan was approved by the EU in July 2021. The plan earmarks 43.5 percent of requested funds for meeting climate goals and 20 percent for digital transition goals, meeting the minimum EU requirement for both areas. The implementation of the plan will begin in the second half of 2022. The Ministry of Finance will coordinate the implementation of the plan.
Three Seas Initiative Investment Fund
The Three Seas Initiative Investment Fund seeks to finance key infrastructure projects in the Three Seas region, including in Slovenia. The fund focuses on opportunities in transport, energy, and digital infrastructure to offset the differences in the development individual regions of the European Union. In December 2020, Slovenia through its national development and export bank – SID Bank – contributed EUR 23 million to the Three Seas Initiative Investment Fund. The fund will consider priority projects submitted by the governments of the Three Seas countries as well as independently sourced projects from the private sector. The UK-based Amber Infrastructure Group has been appointed the exclusive Investment Adviser to the fund.
Other EU Grants for Member States
Another set of sector-specific grants offers assistance to EU member states in the fields of science, technology, communications, energy, environmental protection, education, training, and research. Tenders related to these grants are posted on the various websites of the directorates-general of the European Commission. Conditions for participation are strict, and participation is usually restricted to EU firms or tied to EU content.
External Assistance Grants
The Directorate-General for International Partnerships is the European Commission agency in charge of managing the EU’s external aid programs. This agency manages the entire project cycle, from identification to evaluation, while the directorates-general in charge of external relations and development are responsible for drafting multi-year programs. The DG International Partnerships website offers extensive information on the range of grant programs available, the kinds of projects that are eligible, as well as manuals to help interested parties understand the relevant contract law. However, participation in calls for tenders for contracts financed by DG International Partnerships is reserved for enterprises located in the EU member states and requires that the projects use products manufactured in the EU or in the aid recipient country. Consultants of U.S. nationality employed by a European firm are allowed to form part of a bidding team. European subsidiaries of U.S. firms are eligible to participate in these calls for tender.
All tenders related to EU-funded programs outside the European Union, including accession countries, are located on the DG International Partnerships website.
European Investment Bank Loans
Headquartered in Luxembourg, the European Investment Bank (EIB) is the European Union’s financing arm. Since its creation in 1958, the EIB has played a key role in building Europe. As the EIB’s lending practices evolved over the years, it became highly competent in assessing, reviewing, and monitoring projects. As a non-profit banking institution, the EIB offers cost-competitive, long-term lending in Europe. Best known for its project financial and economic analysis, the Bank makes loans to both private and public EU-based borrowers for projects in all sectors of the economy, including telecommunications, transport, energy infrastructure, and the environment.
While the EIB mostly funds projects within the EU, it lends outside the EU as well, primarily in Central, Eastern, and Southeastern Europe, Latin America, and Pacific and Caribbean states. The EIB also plays a key role in supporting EU enlargement through loans to finance infrastructure improvements, research, and industrial manufacturing to help those countries prepare for eventual EU membership.
Projects financed by the EIB must contribute to the socioeconomic objectives set out by the European Union, such as fostering the development of less favored regions, improving European transport and telecommunication infrastructure, protecting the environment, supporting the activities of SMEs, assisting in urban renewal, and promoting growth, competitiveness, and employment in Europe. The EIB has posted on its website a list of projects eligible for approval, with invaluable information on upcoming tenders related to EIB-financed projects.
The EIB offers attractive business opportunities to U.S. businesses, often with lending rates lower than most other commercial rates. Like all EIB customers, however, U.S. firms must apply the loan proceeds to a project that contributes to the European objectives cited above.
The U.S. Mission to the European Union in Brussels has developed a database to help U.S.-based companies bid on EIB public procurement contracts in non-EU countries with information on EIB-financed contracts open to U.S.-based companies. On average, the EIB database contains 50 to 100 tenders extracted from the EU’s Official Journal and is updated twice per week.
Multilateral Development Banks and Financing Government Sales.
Price, payment terms, and financing can be a significant factor in winning a government contract. Many governments finance public works projects through borrowing from the Multilateral Development Banks (MDB). A helpful guide for working with the MDBs is the Guide to Doing Business with the Multilateral Development Banks (PDF). The U.S. Department of Commerce’s (USDOC) International Trade Administration (ITA) has a Foreign Commercial Service Officer stationed at each of the five different Multilateral Development Banks (MDBs): the African Development Bank; the Asian Development Bank; the European Bank for Reconstruction and Development; the Inter-American Development Bank; and the World Bank.
Learn more by contacting the:
- Commercial Liaison Office to the European Bank for Reconstruction and Development
- Commercial Liaison Office to the World Bank