Regulaton & Policy
EU Procurement Directives Encourage ‘Buying Social’

Public procurement directives currently being adopted across the EU will offer social enterprises access to the government contacts market, according to an article on the European Venture Philanthropy Association (EVPA) website.

A Green Paper published by the European Commission in January of 2011 sparked a debate – “the Modernisation of EU Public Procurement Policy” – about EU rules to ensure equal access and fair competition for public procurement contracts. One of the concerns raised was a need to include more social or environmental criteria in public procurement legislation.

Two major EU procurement directives were revised in December 2011, in sectors such as water, energy, transport and postal services, as well as public works, supply and service contracts. A directive regarding concession contracts was also adopted. These directives were voted by the European Parliament and adopted by the council early last year. EU member states have until April 2016 to transpose new rules into national law, and some have already started. For legislation regarding eProcurement, states have a deadline of September 2018.

The reform offers opportunities for member states to “buy social,” making it simpler for social enterprises to access a procurement market worth approximately €425 billion or roughly 3.4 percent of the EU’s GDP. One measure means that public contracts can now be reserved for sheltered employment undertakings whose aim is to bring employment to disabled or disadvantaged persons (including long-term unemployed or members of disadvantaged minorities), where this category of employee makes up over 30 percent of the staff. For certain health, social and cultural services, contracts of a maximum length of three years can be reserved for non-profit undertakings pursuing a public service mission.

In the past we’ve written about the EU’s shift towards more sustainable, greener procurement under current directives. For example, earlier this year a group named Healthcare Without Harm Europe published a factsheet outlining SPP opportunities for health authorities under current directives. ICLEI also developed a set of online tools last year to provide guidance on implementing sustainable procurement. The directives allow authorities to select a bid based on broader parameters, such as total lifecycle cost of goods or services. Lifecycle costs might include carbon footprint, cost of pollution, and climate change mitigation costs. Authorities are encouraged – but not required – to select the most economically advantageous tender (MEAT). While it may not be the cheapest option initially, the tender may require less maintenance and have a longer life span, and therefore be more economical. A determining factor for authorities when selecting a bid could be an ‘ethical’ production process for goods and services, such as employment of disadvantaged people or use of eco-friendly materials

The reform also allows for a greater focus on the quality of social services including health and education. Contracts may be awarded to firms that meet qualitative criteria such as accessibility, continuity or the needs of the end user. Under the current directives, any abnormally low bid will be rejected if it fails to observe social, labour law or environmental protection obligations

The opportunities offered by the reform are a great starting point for social enterprises to get better access to public contracts, according to EVPA. Companies, in particular SMEs, will find it easier to bid for public contracts. However it remains to be seen if this will continue when directives are transposed into member states’ national law.