Femcities Conferences
The text below is a paraphrased version of Kerstin Ahlberg's contribution at the FemCities Conference 2010.
Kerstin Ahlberg (Institute for Social Private Law, Department of Law, Stockholm University, Sweden) concludes her article Advancement of women in public procurement – legal options for municipalities and cities in Europe: “The advancement of women can be promoted in public procurement. However, the conditions must be elaborated with care and with consideration to all circumstances of the case in question, and at all stages, the criteria applied must be transparent, non-discriminatory and proportionate.” But first:
Public procurement consist of state authorities and public local authorities buying goods and services of the right quality and for the right price. Here the questions arise: What is the right quality? And what is the right price? – not necessarily the lowest price. At the same time, public procurement is about giving all competing suppliers fair chances to be selected.
Within this realm, there are two different approaches:
The first approach, favored by many procurement specialists, consists of the procuring authority deciding from whom to buy goods or services. The authority restricts itself to solely taking the price and the quality of the goods or service into consideration, thus making purely economic decisions.
The second approach bases the decision of what and from whom to buy on other public interests, besides economic considerations, such as environmental protection or adequate labor conditions for those providing the goods and services the public authority wants to offer.
These are both political approaches.
Supporters of the first approach argue that due to the complicated nature of procurement, only purely economic considerations linked very closely to the object of the contract are to be taken into consideration. For them the specific legislations regulating environmental protection, fair labour rights, etc. are sufficient.
However, specific legislations, such as equal rights and equal opportunities, are not always sufficiently effective on their own.
Thus, the second approach understands public procurement as an additional instrument to promote the respect of specific legislations. The possibility to receive a public contract is a strong incentive for potential suppliers to follow legislations on, for example, equal opportunities. Additionally, it is possible to link more effective sanctions to a public contract than the sanctions linked to the special regulations on equal opportunities because you could link sanctions like a heavy fine for suppliers that break the contract. Finally, if public purchasers do not reward the suppliers who follow legislations, then they give a competitive advantage to suppliers who do not, which potentially undermines the fairness of public procurement processes.
A central question remains: how can municipalities and cities use their procurement to promote good labour conditions, including the advancement of gender equality?
Specialists on public procurement tend to argue that there is no room to integrate social considerations into public procurement, as it goes against EU law.. In certain cases, the current EU regulations seem to be used as scapegoat in order to prevent changes. Consequently, EU law needs to get addressed.
More often perhaps, the reason behind public procurement experts not including social considerations in procurement is due to the law often appearing unclear. In order not to risk public procurement practices, which might be contrary to EU or national law, the conclusion often means not trying at all. An extreme principle of precaution is applied here since procurement is a very complicated procedure, that takes a long time and, in the case of dissatisfaction on the side of the tenderers might lead to a court trial and having to start the whole process anew. Thus, rather than taking a risk, experts often prefer to “forget about gender mainstreaming”, or anything else that might actually be permissible.
While it is true that procurement legislation is complicated, and EU law sets certain limitations, it is equally true that there is a scope for integrating social considerations into public procurement. I want to encourage public procurement specialists to ensure that the integration of social considerations is secured. The law is not that unclear, the scope is not that small, and it is not that complicated!
There is limited space to make you fully-fledged procurement experts, but I will try to give you a short overview that may provide you with some arguments that you can use the next time experts claim that it is not possible:
Numerous public contracts are of great interest to the internal market. Therefore, there is quite a comprehensive body of EU legislation on public procurement. The objective of this legislation is to remove both the obstacles, which could prevent the functioning of the internal market as well as the risk that foreign suppliers of goods and services are discriminated against. The aim is not to tell member states what they are to spend their money on, but rather to secure, that once member states decide on what to spend their money on, these decisions are not discriminating against foreign providers of goods or services.
Two directives are the central legislation on EU level:
They only apply to contracts above certain thresholds. Contracts below the threshold values are not covered by these legislations. Certain “non-prioritized services” are covered by the directives, yet in practice they remain exempted from most of these rules. Many of these services, such as education, health services and the like, are typically provided by local authorities, meaning that they tend to be exempt from most provisions of the directives, even when the contract is above the threshold.
This does not mean that as a public procurer you can do whatever you want. You still have the responsibility to respect the general principles of EU law: non-discrimination and transparency. That is at least if the contracts are of interest for the internal market. This suggests that if you deem that a certain contract – even if the directive does not or only partly cover it – could be of interest for suppliers in another member states, you have to ensure that the general principles of EU law are respected.
The directives only regulate the procurement procedure. They do not impose any obligations on member states as to what they are to buy. By regulating the procedure, they want to assure that no irrelevant considerations affect the choice of a given contractor, meaning that suppliers from all member states should have a fair chance to compete and obtain a contract. Therefore, the directives regulate what type of conditions apply during different stages of the procurement procedure.
As stated previously, these directives only regulate the procedure. Thus, in principle there is no restriction on what states decide to buy - unless, of course, you say that you are to buy goods of a certain brand that is produced in your own country. This is not possible within the common market of the EU. For example, when you buy work equipment which will be used to produce the services provided, you can specify that the equipment must be designed so that it can be used not only by people who are of the same size and the same strength as an average man, but instead that it can be used by anyone.
Once you have decided what to buy, the scope for social considerations varies between different cases of procurement and during different stages of the procurement procedure. As for procurements that are not covered by the directive (since the contract does not reach the threshold) or those that are only partly covered (such as education and health and social services), even the European Commission admits that the scope is very wide. A Communication from the European Commission (Interpretative communication of the Commission on the Community law applicable to public procurement and the possibilities for integrating social considerations into public procurement COM/2001/0566 final / à https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX:52001DC0566) states that “public purchasers are free to pursue social objectives in respect of public procurement contracts not covered by the public procurement directives, within the limits laid down by the general rules and principles of the EC Treaty. It is for Member States to determine whether contracting authorities may, or must, pursue such objectives in their public procurement.”
As mentioned previously, if the procurement is covered by the directives, the scope varies according to the different stages of the procedure:
The qualification criteria are criteria that decide which suppliers are able to participate in a particular tender. For example, they must have a certain financial and technical capacity, in order to be able to fulfil the contract in question with the required quality. Of course, this is mostly regarding the suppliers’ financial and professional qualifications, their previous experience of similar services etc. Yet there can be room for social considerations as well. For example, the procuring authority can require that, in order to qualify, the tenderers must hand in a written risk assessment for the work in question in order to show that they are competent to manage health and safety issues during the work. Otherwise, they have to show a documented equality action plan, which demonstrates that they are able to fulfil the requirements of the equal treatment legislation.
Suppliers who have been found guilty of grave professional misconduct can of course be excluded from even competing for the contract. A grave professional misconduct includes for example breaches of labour legislation.
After the procuring authority has sorted out the qualified tenderers, separated those who are qualified from those who are not, the next step consists of valuing the tenders from all the qualified tenderers. This means to weigh the quality of the services or the goods they offer against the price they charge and find economically most advantageous tender. This must be done according to the award criteria, which the procuring authority announces before.
The central consideration lays with the quality of goods or services the authority is buying. Here comes the debate about the width of the scope for including social considerations. The main award criteria are related to the object of the contract. Yet, there is room to apply additional award criteria concerning social considerations, for example, “How will the tenderer take equality aspects into account during the performance of the contract?”, “What measures will they take in order to facilitate a combination of work and family life during the performance of the contract?”
When the public purchaser has decided which of the tenderers the contract will be awarded to, then the performance of the contracts starts. At this stage, there is a comparably wide scope for including social considerations since the contractor has already been chosen, hopefully without discrimination. The possibility to discriminate against foreign providers is hence nonexistent.
Contract performance conditions are conditions that all tenderers must accept in case they are awarded the contract. Therefore, these conditions have to be stated in the call for tenders, to inform the tenderers previous to accepting the contract.. A typical example is that the contractor will have to employ at least two long-term unemployed people to perform the work comprised by the contract. Another example is that during the performance of the contract, the contractor must show what they do to facilitate conciliation of work and family life for those workers who work on the contract during the period.
It is important, however, that the contract performance conditions are solely linked to the performance of the contract. You cannot say, “If you are going to have this contract, you must see that in all your company’s activities you facilitate to combine work and family life.” It can only relate to the work that the contract is about.
A colleague and I made a study in which we compared how six EU member states had implemented the Directives and how they had used this scope for integrating social considerations into their legislations. One of the countries we studied was Germany (unfortunately not Austria).
The central clause in Germany’s federal legislation on public procurement says that “contracts are given to competent, efficient as well as law-abiding and reliable companies. For the contract performance additional requirements may be posed on the contractor, especially concerning social aspects” („Aufträge werden an fachkundige, leistungsfähige sowie gesetzestreue und zuverlässige Unternehmen vergeben und für die Auftragsausführung können zusätzliche Anforderungen an Auftragnehmer gestellt werden, die insbesondere soziale Aspekte betreffen.“ 97 § Gesetz gegen Wettbewerbsbeschränkungen). In the preparatory work, the German Federal Government specifies what it means by “law-abiding” and “reliable”. These terms are constituent elements of the German legal order which everyone must comply with in order to be able to compete for contracts, for example, generally binding collective agreements, the principle of equal pay and the ILO core Conventions which include the Convention on Non-Discrimination (C111 Discrimination (Employment and Occupation) Convention, 1958).
Each of the “Länder” in Germany have their own procurement legislation, determining the extent to which they relate to social considerations, thus providing even more room for the latter. The federal law also mentions “additional requirements for contract execution”, these are “contract performance conditions”.
The Federal Government specifically mentions requirements that serve the interest of promoting equal rights and equal pay for women and men who work with the performance of the contract. So, Germany has its Federal Government’s own word that it is perfectly permissible and even recommendable to include gender equality in procurement procedures.
Thus, to sum up, the advancement of women can be promoted in public procurement. However, the conditions must be elaborated with care and with consideration to all circumstances of the case in question, and at all stages, the criteria applied must be transparent, non-discriminatory and proportionate.
Ahlberg, Kerstin & Bruun, Niklas: Upphandling och arbete i EU, Swedish Institute for European Policy Studies 2010:3, Stockholm 2010
Dr. Kerstin Ahlberg, Institute for Social Private Law at Stockholm University. Her research mainly focuses on European Union Labour Law and Industrial Relations. Recently, she published a study on Public Procurement and Labour in the European Union. Dr. Ahlberg will present the promotion of women by means of public procurement. She will give an overview of the legal framework set by the European Union and answer the question whether the inclusion of gender equality considerations in the procurement process is compatible with European Union and national laws.
You can contact Kerstin Ahlberg: Kerstin.Ahlberg@juridicum.su.se
