The modernisation of EU public procurement policy. The point of view of social economy actors. Cofinanced by ERDF

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1 The modernisation of EU public procurement policy The point of view of social economy actors Cofinanced by ERDF

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3 Introduction In the context of the EU 2020 strategy, the European Commission (EC) called for a revision and modernization of public procurement laws to foster demand for environmentally sustainable, socially responsible and innovative goods, services and works. As the EC said, public procurement represents 17% of the GDP of EU Member States and in this sense it may be used in a way to steer the market in a more socially responsible direction and thus contribute more generally to sustainable development. The EU 2020 strategy for smart, sustainable and inclusive growth 1 sets out a vision of Europe's competitive social market economy over the next decade that rests on three interlocking and mutually reinforcing priorities: developing an economy based on knowledge and innovation; promoting a low-carbon, resource-efficient and competitive economy; and fostering a high-employment economy delivering social and territorial cohesion. In this context, Public procurement plays a key role as one of the market-based instruments that should be used to improve framework conditions for business to innovate, making full use of demand side policy, support the shift towards a resource efficient and low-carbon economy (e.g. by encouraging wider use of green public procurement), and improve the business environment, especially for innovative SMEs. This issue is also stressed in the context of the recent EC Communication on Single Market Reform 2. In particular, public procurement is considered as a lever for developing a greener, more social and more supportive Single Market. In this sense, a revision of public procurement laws is envisaged with the aim to foster demand for environmentally sustainable, socially responsible and innovative goods, services and works. EC proposal Based on this goal, on January 27th the European Commission published the Green paper on the modernisation of EU public procurement policy and launched a public consultation open to all citizens and organisations 3. The Green Paper identifies a number of key areas for possible reform. The most relevant issues covered are: The simplification of the current procedure; The exceptions to the EU public procurement rules; To guarantee an efficient competition; The access of European undertakings to third country public procurement markets; To provide an easier access for companies, especially SMEs ; To give to the EU public procurement discipline a social dimension. In particular, the latter point focuses on possible modifications of the EU public procurement rules in order to take into account other policy objectives such as promotion of innovation or environmental or social considerations. 1 See Communication from the Commission of 3 March COM(2010) Communication from the commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - Single Market Act of 14 April 2011, COM(2011) 206/4. 3 See the Green Paper on the modernisation of EU public procurement policy Towards a more efficient European Procurement Market of 27 January COM(2011) 15 final. 3

4 The Consultation on the Green paper shows how some stakeholders claim for an adaptation of the current rules in order to take better account of the specificities of social services. There are in particular calls for higher thresholds for such services. Furthermore, the criterion according to which contracts should be awarded to the provider offering the lowest price is questioned by the EC as well as the use of the price criterion and the weight which contracting authorities can give to the price. Introducing a third award criterion in addition to the lowest price and the economically most advantageous offer is mentioned as a possible option. In the Green Paper the Commission stated that public authorities can make an important contribution to the achievement of the Europe 2020 strategic goals, by using their purchasing power to procure goods and services with higher "societal" value in terms of fostering innovation, respecting the environment and fighting climate change, reducing energy consumption, improving employment, public health and social conditions, and promoting equality while improving inclusion of disadvantaged groups. It also underlined that addressing societal challenges should not decrease the efficiency of public procurement. Taking into account policy related considerations in public procurement should be done in a way so as to avoid creating disproportionate additional administrative burdens for contracting authorities or distorting competition in procurement markets. In this sense, EC proposes two possible ways to use public procurement in order to achieve the Europe 2020 policy objectives: Provide contracting authorities with the wherewithal to take into account those objectives under procedural public procurement rules ("how to buy"); Impose mandatory requirements on contracting authorities or provide for incentives to steer their decisions as to which goods and services should be procured ("what to buy"). The public Consultation As announced in the Single Market Act, on the basis of the public consultation the European Commission will make legislative proposals by the end of 2011, for a revised and modernised public procurement legislative framework so as to make the award of contracts more flexible and enable public contracts to better support other policies, such as environmental and social policies. The public consultation ended on April 18 th and the contributions were published after the conference held on June 30 th in Brussels. Through the public consultation, the European Commission asked for stakeholders' views on options for legislative changes With regard to the questions related to a strategic use of public procurement to achieve the overall societal goals of the Europe 2020 strategy, stakeholders opinions are mixed. Many stakeholders, especially businesses, show in general reluctance to the idea of using public procurement in support of other policy objectives, and oppose most of the ideas to foster for instance green or social procurement. They believe that the current rules on technical specifications are sufficient to introduce considerations related to societal policy objectives. On the contrary, other stakeholders, notably civil society organisations consider these rules insufficient and are strongly in favour of such strategic use and advocate radical changes to the very principles of EU public procurement policy. We decided to summarize the points of view of the most important actors in the social economy arena, that were presented during the public consultation. 4

5 The view of social economy actors SOCIAL ECONOMY EUROPE Social Economy Europe (the umbrella organisation of European social economy SEE) believes that this revision of EU public procurement law is a unique opportunity to promote socially and environmentally responsible public procurement. By purchasing wisely, public authorities can provide employment opportunities, decent work, social inclusion, accessibility, design for all, ethical trade and see to achieve wider compliance with social standards. SEE considers that more negotiation in public procurement procedures should be allowed in order to match outcomes expectations with the object of the contract Rules on technical specifications should be reviewed in order to introduce considerations related to environmental, social, accessibility and innovation policies objectives. Long-term societal strategy should be favoured. Concerning the provision of social services, technical specifications should include social and, when relevant, environmental considerations. Furthermore, the whole production processes must be taken into account. The organisation believes that some of the procedures provided under the current Directives (such as the competitive dialogue, design contests) are suitable for taking into account environmental, social, accessibility and innovation policies. Nevertheless, a clarification on environmental, social, accessibility and innovation aspects under provision of art and Title IV is needed. SEE is strongly convinced that the criterion of the lowest price should be eliminated, as it is not aligned with the reality of the 21st century and the social and environmental challenges that our society is facing. When it comes to social services, the social criteria should outweigh the economic criteria. Those companies that have integrated the social angle in their business strategy and operations, as it is the case with social economy enterprises, should somehow be rewarded. SEE is in favour of the introduction of a third possibility of award criteria in addition to the lowest price and the economically most advantageous offer. In particular, it is in favour of any new possibilities that combine economic, social and environmental considerations in a balanced way. Product or service s life circle cost assessments and social return on investments analysis should be introduced. This would help promoting long-term perspectives. Quality should also be taken into account. SEE shares the view that contract performance clauses are the most appropriate stage of the procedure at which to include social considerations relating to the employment and labour conditions of the workers involved in the execution of the contract. In order to take into account social, environmental and energy efficiency considerations, SEE thinks that it should be considered as appropriate contract performance clauses: a) Enterprise s mode of governance (level of workers participation; use of essential surpluses to carry out sustainable development objectives, services of interest to members or of general interest as opposed to shareholders interest); b) contracting of disfavoured groups (e.g. people with disabilities, long-term unemployed, etc.) for the execution/performance of the contract. Certain general contract performance clauses should be already specified at EU level, in particular those relating to employment and labour conditions of the workers involved in the execution of the contract. However, the opportunity should be given to Member States to include additional clauses, as long as they are in line with those suggested at EU level. Under certain conditions SEE agrees with the suggestion of softening or even dropping the condition that requirements imposed by the contracting authority 5

6 must be linked to the subject matter of the contract. In order to attain EU policy goals (innovation, social, environmental, etc.), the loosening of the subject matter should happen in all phases of the public contracting, but particularly in the case of the selection/awarding phase. The organisation considers that EU public procurement legislation should allow contracting authorities to apply selection criteria based on characteristics of undertakings that are not linked to the subject of the contract (e.g. requiring tenderers to have a gender equal employment policy in place, or a general policy of employing certain quotas of specific categories of people, such as jobseekers, persons with disabilities, etc.). This flexibilisation should happen in all phases of the public contracting, but it has to be particularly the case in the selection/awarding phase. In order to foster the innovation capacity of SMEs and to monitor progress and impact of innovative public procurement, SEE suggest the following: Promoting alternatives to public procurement when contracting out social services; Including a percentage of obligatory quality criteria / principles in bids; Ensuring that public authorities contract out also small contracts to facilitate the participation of smaller Social Economy enterprises; Simplifying the rules to ensure a SMEs friendly public procurement. Social considerations should prevail over price considerations. The nature of the providers (non-profit vs. for profit), should be taken into account when evaluating the bids. Concerning social services, SEE believes that specific features of social services should be taken more fully into account in EU public procurement legislation. However, public procurement should not be considered has the best way to ensure the provision of SSIGs and alternative mechanisms such as mandating should be promoted. The criterion of lowest price for the award of the contract should be prohibited. Innovative methods should be developed in order to take into account the quality of the services provided, workers compensation, the benefit produced for the society in general, the continuity in the provision of the services, the impact on local development in term of sustainable development as well as to employment levels, the level of involvement of stakeholders. These methods could be based on the inclusion of processes that focuses on quality rather than price. REVES (European Network of Regions and Cities for the Social Economy) REVES shares the idea that public procurement plays a key role in the Europe 2020 strategy as one of the market based instruments that should be used to achieve these objectives. In its contribution to the public consultation, REVES stressed the importance to re-think the procurement procedures along with the setting up of a process allowing for better knowledge of the matter at the local level. The present procedures do not seem to take into full account other than monetary cost-effectiveness, thus leaving small room for other concerns, like for instance: a) social and environmental cost-effectiveness; b) life-cycle costs effectiveness and c) transversal indirect impact on other policies. The insertion of additional concerns should be made without increasing administrative burdens but, at the same time, without weakening controls over both the executor of the procurement and the purchased product or service. The organisation believes that negotiation procedures could prove to be useful in order to allow better consistency between purchasing needs and public policies. Such procedures should allow the expression of specific stakeholders point of view 6

7 as a basic criterion for negotiations. Nevertheless, appropriate provisions should accompany an increase in the use of such a procedure in order to stop illegal or unfair competitors at an early stage. Public procurement can have an important impact on market structures for a more fair competitive market. At the EU level, rules could support the development of fair pro-competitive markets by introducing, for instance, the possibility to award advantages for socially innovative bids or by introducing more flexible criteria for evaluating (social and economic) performances of bidders. This could come out in a more dynamic and responsible approach of the whole market. According to Reves view, competitive dialogue, design contests and negotiated procedures could be useful in order to take into account environmental, social, accessibility and innovation policies. Nevertheless it will be necessary to better specify the environmental, social, accessibility and innovation aspects under provisions of articles 28, 29, 30, 31 and title IV in order to keep a proper level of legal certainty, transparency and fairness. With regard to the award criteria, Reves considers that the criterion of lowest price should be withdrawn as well as the use of price criterion shall be limited. Furthermore, there is no evidence that the most economically advantageous tender is best suited for pursuing other policy objectives. So, alternative methods shall be sought, starting from a basic concept of life cycle assessment. Social, environmental, accessibility and social innovation shall be added as essential criteria, and the life cycle assessment approach should be mandatory. Moreover, respect of employment laws and labour conditions from a bidder should be considered among the selection criteria, and specific social consideration relating to the specific contract execution shall be kept among the performance clauses. The introduction of many contract performance clauses would be appropriate. The organisation is also in favour of the elimination of the link with the subject matter only with regard to social, environmental or accessibility purposes. This approach will allow a better and more holistic pursuing of several policy objectives at once, in consistency also with EU 2020 objectives. At EU level obligation on what to buy shall be considered a good way to achieve other policy objectives. Its bigger advantage shall be seen in the possibility to keep a high level of coherence between policies. Innovation should not be referred only to technological advances but also to social innovation. It seems appropriate to Reves the submission of Social Services to annex II.B. The problem relates to the limited use of the light procedure foreseen in the directive. The Guide already issued by the EC clarifies several aspects, although it has weak legal value. In this sense, better dissemination would be suitable. The possibility of reserving contracts to non-profit making organizations shall not be seen as a privilege but as consistent with the aims and characteristics of social services. Furthermore, the role of civil society organizations and the access of social economy enterprises to contracts should be supported by introducing proper criteria of evaluation of their social, environmental, cultural and economic performance. CECOP CICOPA (European Confederation of Cooperatives and Workers-owned Enterprises active in Industry and Services) CECOP CICOPA considers that Public Procurement Directives should be applied to all services possibly on the basis of a more flexible standard regime, except for 7

8 social services, which should remain out of the Directives scope, except for already existing provisions and non-derogatory principles of the Treaty. The organisation believes that the thresholds for the application of the EU Directives should be raised moderately, in order to reduce the difficulties for small contracting authorities (high costs and administrative burdens). Proportionality between thresholds and procedural costs has to be ensured. The criterion of the economically most advantageous offer should prevail over the criterion of the lowest price in order to limit anti-competitive behaviours and dumping, especially in the labour intensive sectors. Public administrations should also be encouraged to integrate more often social considerations in public procurements. In this sense, stronger measures should be put in place by the European Commission. Directives should allow the possibility of reserving contracts to non-for-profit actors (like cooperatives and other social economy actors) providing social services. However, the reason for it should be in as much as services provided by those entities are often more in compliance with service user s needs. When it comes to social services, the criterion of lowest price should be prohibited and the economically most advantageous offer criterion should be applied. The criterion of the economically most advantageous offer is the most appropriate because it helps to take into account social and environmental aspects of the offer. This criterion should take into consideration the following characteristics that are consubstantiate with the interests of citizens: - Geographical accessibility of the service and its affordability; - Its capacity to last over the long term; - The involvement of the stakeholders (service beneficiaries, employees/service providers, in some cases public authorities) in the monitoring of the entire process of service provision; - The democratic ownership of the stakeholders over the service provided. COOPERATIVES EUROPE Cooperatives Europe (the European region of the International Co-operative Alliance) stress on how public purchasing contributes to the achievement of overall societal goals (innovation, fighting climate change and promoting social inclusion). In its contribution to the public consultation it says that, in the context of EU 2020, authorities should be encouraged to integrate social, environmental or innovative criteria in public procurement (within the award phase). In this sense, assuming that social and environmental sustainability is not perceived the same way according to sectors, authorities or stakeholders, a communication on socially responsible public procurement could deliver some guidelines on what these criteria mean, and spread a political message to Member States. Furthermore, with regard to social services and EU public procurement policy, The organisation recognises that contracting authorities should consider, among essential criteria as accessibility of the service (in terms of geographical coverage), its durability in time and affordability, the following characteristics: - The involvement of the stakeholders (service beneficiaries, employees/service providers, in some cases public authorities) in the monitoring of the entire process of service provision; - If the service provider is partly or totally under the democratic ownership of the stakeholders. 8

9 The participatory component - in the way that members/stakeholders have the control on the enterprise - is a guarantee that the service provider exercises its missions of general interest in the best possible way. This is even reinforced when those for whom the services are delivered are members. Cooperatives Europe also explains how in some sectors, such as food or agriculture, a low price is no guarantee of better value. The price criteria should be balanced with sustainability criteria, linked for example with quality of the service or product delivered. ENSIE (European Network of Social Integration Enterprises) For ENSIE, the promotion of social inclusion could be enhanced through a technical requirement to engage a percentage of unemployed persons in the delivery of the contract proportionally relevant to the size of the contract and local the unemployment ratio. ENSIE is in favour the elimination of the criterion of the lowest price in public procurements because this practice favours a narrow vision of the cost that does not take into account, for example, the profitability and the cost of use. For similar reasons, ENSIE is in favour of limitating the weight of the price regarding the other criterion. In this sense, the contracting authorities should give weight to: 1. A set of representative criteria for the cost: price, use cost, profitability; 2. A set of quality and performance criteria: quality, technical value, deadlines, after sales service, etc.; 3. A set of criteria taking into account EU political objectives: innovative character, performance in social inclusion (example: in the calculations formula of the award criterion, adding a criterion, the C factor which would take into account the social capacity according to indicators like quality of integration of disadvantaged persons, mid-long term, pedagogical support, capacity building, skills strengthening), protecting the environment, etc. Furthermore, the award criterion of the Sustainably Most Advantageous Rated Tender (SMART concept) could drive the markets to provide more sustainable products at social, economic and environmental levels. It would also be advantageous to take life-cycle costs into account. This methodology should however be determined at national level. For ENSIE the introduction of social inclusion criterion solely to the level of contract performance clauses is not sufficient. It needs at the minimum to be doubled by taking into account these considerations at the level of the award phase, otherwise the contracting authority will not be able to judge the performance of the award in the matter of inclusion of persons far from employment. To reach this goal, different solutions can be adopted: 1) the political objectives should be systematically taken into account by the contracting authority from the definition of the subject-matter, which would allow to avoid any juridical risk and to guarantee the quality of the corresponding provisions; 2) to ask bidders to define in the award stage how they intend to include the local labour market policies or local policies on environment in their delivery. These policies should be made available to the bidders. The integration of the possibility to include environmental or social criteria in procurements often requires a work of awareness, in particular with the small contracting authorities. But their implementation at the territory level depends a lot on the existence of a political will or the existence of facilitators, like in France, ensuring the interface between the different stakeholders. The organisation is convinced that public authorities have a fundamental exemplary role to play in the purchase of goods and services respectful of the social and natural environment. 9

10 About social inclusion criteria, it notices that the development of their use in public procurement has difficulties across Europe, on the one hand, due to a lack of political will and, on the other, due to the public procurements being tackled under a strictly technical angle. It should also be taken into account in the European strategy, that the social inclusion dimension should be considered in the same way as the concern about handicap, without any confusion between the two issues. ENSIE is thus in favour at the European level, of any kind of incitement or accompaniment of the political authorities to develop and systematize the integration of political objectives in the public commission to be promoted, candidate enterprises and integration networks. To this end, ENSIE recommends the generalization of «facilitating» services which play the role of interface between the public purchasers and the enterprises in the implementation of social inclusion clauses. BFSE (European Learning Network for Better Future of Social Economy) BFSE, the European learning Network for Better Future of Social Economy, considers that public procurement plays a key role as one of the market-based instruments allowing public authorities to meet the objectives of the Europe 2020 strategy by strategic location of public spending and the most efficient use of public funds. Therefore, for BFSE the EU should adopt a holistic approach and reinforce the solutions, which allow taking into account the broader context of public purchasing while establishing best value for money ratio. For instance public authorities could use their purchasing capacity to produce goods and services with higher than usual social value, particularly in terms of improving employment rates and improving inclusion of disadvantaged groups in accordance with Article 9 TFEU. BFSE believes that regional and local public authorities should be provided with simplified and flexible measures while planning the whole public procurement process so that they could achieve the best outcomes for the least possible investment of money and time spent. Such measures could be reinforced by EUfacilitated initiatives of another kind aiming at the stimulation of public private/social partnerships that could allow public officials first to recognize and then to meet the actual citizens needs while planning public procurement. BFSE notes that in most of the Member States the use of social clauses supported by establishing an effective and longer lasting cooperation between public and social sector is modest. Furthermore, it is noted that there are a lot of stereotypes, mental barriers and a deep lack of knowledge or practice preventing both public and social sectors to benefit form the use of social clauses. For these reasons BFSE believes that the EU should continue to launch the activities aiming at producing incentives and particularly more detailed technical guides on how to buy social. For BFSE there is no need to change all the procedures significantly when it comes to meeting social policy objectives. Nevertheless, the awarding criteria for social and sustainable/environmental aspects are not specified enough in the current EU regulation. In the case of the social and sustainable aspects of the award criteria the EU directives should be more detailed and this requires changing the procedures themselves. BFSE is in favour of a broadly use of the negotiated procedure between public, business and social partners. As for the criterion of the most economically advantageous tender, BFSE believes that it is the best fitted criterion for taking into account the other policy objectives. Regarding a third possibility of award criteria in addition to the lowest price and the economically most advantageous offer, BFSE proposes as example the criterion of 10

11 compliance with the local/regional development strategy for contracts awarded by regional/ local authorities. For BFSE the inclusion of social/environmental criteria in the award phase (not only in technical specifications or as contract performance conditions) seems to give the public authorities more latitude to pursue their strategic goals and play a more active role to promote pro-development undertakings. Concerning the possibility of taking life-cycle costs into account, BFSE considers that apart from the life-tackle costs analysis some kind of social accounting should be taken into account, while awarding contracts, especially for big or long lasting projects. In this sense, it could be up to the Member States if their public authorities are ready to introduce such tools for the socio-economic analysis, but they should be provided with some incentives to do it. With regard to the possibility of specifying at EU level certain general contract performance clauses, in particular those relating to employment and labour conditions of the workers involved in the execution of the contract, BFSE considers that the EU should create a general catalogue of recommended contract performance clauses relating to employment and labour conditions of the workers involved in the execution of the contract. This catalogue should be open, allowing Member States to adopt flexibly these clauses into their legal public procurement framework and adjust them to the situation on their labour markets. BFSE also believes that the development of standarised conformity assessment schemes or documentation patterns would indeed facilitate work of contracting authorities. Concerning the possibility of softening or even dropping the condition that requirements imposed by the contracting authority must be linked to the subject matter of the contract, BFSE considers that there is a social advantage if the requirements imposed by the contracting authorities could be linked to the overall capacity of the tenders: shaping the behaviour and influencing internal policy of undertakings in the long term. So, instead of loosing the link with the subject matter establishing contract performance clauses, taking into account social considerations should be developed. As for the obligations on "what to buy" at EU level as a good way to achieve other policy objectives, BFSE consider that it could contribute to the reduction of the significance of the planning process performed by national, regional and local authorities and may in fact reduce their partnership initiatives towards the private and social sector. At the same time, there is a great need for better targeted investments and contracts triggering off the environmental and social innovation. Therefore, such solutions as incentives for the procurement of certain types of goods or services should be particularly welcome. Concerning social services, BFSE considers that EU public procurement legislation should recognize that the majority of social services are regionally or locally rooted meeting the particular citizens needs at the possibly lowest level. These contracts are rarely of certain cross-border interest and their value in many cases remains below the thresholds for application. For BFSE all the public authorities should be provided with considerable latitude and flexibility with regard to procedures and additional contract requirements to be followed. Even if the distinction between A and B services is going to be eliminated, social services should be excluded and remain subjected just to basic principles of EU law or, in case of contracts with a value above the thresholds, subjected to only a few rules of the Directives. At the same time the applicable thresholds for social services should be increased, 11

12 specially when it does not entail consequences to the international partnership agreements. For BFSE Social services is not a term that is clearly defined or commonly used in some Member States. Hence, the open catalogue of services labelled social could be included in the Directives. Besides the enumeration of general types of requirements concerning the quality of social services that can be introduced by procurers, the EU could prepare a list of recommendations on specific considerations concerning the quality of social services and the stakeholders or beneficiaries involvement in the service provision, monitoring and evaluation. As for the lowest price criterion, BFSE considers that the Directives should either limit the weight which contracting authorities can give to the price or introduce a third possibility of award criteria apart from the lowest price and the economically most advantageous offer. With regard to the possibility of reserving contracts involving social services to nonprofit organizations BFSE believes that the Directives should allow at least a certain percentage of contracts for social services to be legally reserved to non-profit, notfor-profit organizations and social economy entities or alternatively allow the public authorities to establish a target percentage of contracts that are planned to be awarded to such organizations. SOCIAL PLATFORM The Social Platform (SP), alliance of 46 European civil society organisations active in the social sector, limited its responses to the questions on which its members have specific expertise. Their main recommendations to the Commission are: - To take the opportunity of the revision of public procurement legislation to make public procurement a tool to support the achievement of overall societal goals, in particular the promotion of fundamental rights, social inclusion and sustainable development. Public procurement rules should be used to deliver on the social targets of the Europe 2020 strategy; - To amend the existing rules in order to recognise in law the specific characteristics of social services of general interest. Procurement rules should be designed to fit with the specific characteristics of social services such as service user choice, quality, sustainability, continuity, personalisation, integration of services, users involvement and empowerment, partnership with communities and other actors; - To adopt a consistent approach with the one shown in the recent Communication Reform of the EU state aid rules on Services of General Economic Interest. Even if they consider difficult to indicate a specific threshold common to all Member States, they are in favour of raising the thresholds, especially for contracts for the delivery of social services. The Social Platform is also in favour of allowing more negotiation in public procurement procedures and/or generalizing the use of the negotiated procedure in social services. The necessity of a prior publication is firmly stressed. The Social Platform considers that there is room for improvement of the current rules on technical specifications to better promote the achievement of other EU policy objectives, like: the objective of a social market economy (art. 3.3 TEU) and the objective of sustainable development of Europe. In particular the new rules on technical specifications should clearly allow including social considerations. 12

13 For SP the area of social services is a key example where a restriction to local or regional suppliers could be justified by legitimate and objective reasons that are not based on purely economic considerations. Regarding possible restrictions to local or regional suppliers could be justified by legitimate and objective reasons that are not based on purely economic considerations, Social Platform considers that the area of social services is a key example where a restriction to local or regional suppliers could be justified. For Social Platform, social criteria should play a greater role in the selection process and assessment of the quality of a tender. The organisation considers that the criterion of the most economically advantageous tender seems to be the best suited for pursuing other policy objectives, but cannot be enough. In the specific area of social services, the criterion of the lowest price only has to be abolished. Public procurement rules set out at EU level should take into account that quality is an essential in the provision of social services and should therefore be designed to encourage and motivate public authorities to set up tendering procedures that ensure that high-quality social services are delivered across Europe. Therefore, while tendering for social services, when the award is made to the most economically advantageous tender, the criterion of quality has to be compulsory and should be given a mandatory weight which is higher than the one that is given to the other criteria. Furthermore, in some cases, also in the area of social services, it would be worth promoting a lifecycle approach while assessing cost-effectiveness of different services, in order to better guarantee the sustainability of services. In fact, with some services, it s important to look at the life cycle instead of initial costs, because certain initiatives might be more expensive at the beginning but in the long run they make more savings to the community. SP is in favour of the inclusion of social considerations throughout the whole public procurement procedure. More flexibility should be ensured to this respect. In the area of social services, social considerations relating to the employment and labour conditions of the workers can be included in the selection criteria to evaluate the technical capacity of the bidder, by requiring a particular professional experience or staff qualifications. They can also be included while setting out the technical specifications. As for the link with the subject matter of the contract, the Social Platform considers that it should be softened or dropped at the award stage in order to take other policy considerations into account. In particular, this choice would ensure a more efficient and transparent way in which public procurement achieves other policy objectives, that are the most appropriate to contribute to the achievement of the social targets of the Europe 2020 Strategy by fostering the mainstreaming of social inclusion within all the 3 pillars of this Strategy. So, SP suggests that EU public procurement legislation should allow contracting authorities to apply selection criteria based on characteristics of providers that are not strictly speaking linked with the subject of the contract (e.g. requiring bidders to have a gender-equal employment policy or to employ certain quotas of jobseekers, persons with disabilities or belonging to a specific minority, etc.). In order to achieve other policy objectives, the Social Platform suggests improving the obligations on what to buy at EU level. Moreover, further obligations could be imposed under general EU public procurement legislation to ensure a coordinated approach for the contracting authorities in all the EU Member States on what to buy so as to fully deliver on the headline targets of the Europe 2020 Strategy. 13

14 With regard to the possibility of reserving contracts involving social services to nonprofit organisations, SP believes that this option shall be maintained because reserved contracts have been seen to be a useful tool to facilitate the insertion of people with disabilities in the labour market. CEDAG (European council for non-profit organisations) From a general point of view, for CEDAG streamlined procurement procedures can help public procurers to achieve the best procurement outcome and investment of public money. Simplification of measures should be coupled with a strategic vision of the objectives contributing especially to the development of local communities. As procurement is becoming a tool for the implementation of social policy, CEDAG members highlight the move towards a service provision relationship wherein the public authority takes the role of a customer that orders a certain predefined type of service. CEDAG calls on the European Commission to ensure that the needs of the smaller suppliers are taken into account. When answering to public contracts, SSGI providers are often confronted with problems of administrative capacity and they are forced towards standardization. Moreover the application of the criteria of the most economically advantageous tender to award public contracts has often given priority to the cost instead of the quality. This has created a big pressure on the social sector making the innovation more difficult. For CEDAG, the European Commission should acknowledge and promote innovative procedures (as the negotiating procedures) and existing alternatives to public procurement procedures (in house, public private partnership, public-public partnership (such as inter-municipal cooperation, authorization schemes, compensation or subsidy, regulated competition and the user s choice, mandating, etc). In addition, CEDAG supports the inclusion of technical specifications in public tenders such as the use of social clauses. These clauses include social considerations linked to the production and the provision of goods and services purchased. However, it underlines the need, through these clauses, to assess the social impact associated with all the stages of a product's life. More in details, CEDAG is against the distinction between A and B services. Eliminating the distinction and applying the full set of public rules to all contracts would mean to increase the administrative burden especially for small social services providers answering to public tenders. This appears in contrast with the intention of the simplification announced by the European Commission. However, it believes that it would be worthwhile to clarify that the list of B services is not exhaustive, and in particular it believes that SSGI should be kept in this specific framework. With regard to the thresholds for the application of the EU Directives, CEDAG thinks that increasing the thresholds required for the publication of a contact notice might have the effect of reducing administrative costs. The contracts below the fixed threshold would not be published at EU level. In its view it is however necessary to make a distinction between services on the basis of the cross-border character. Furthermore CEDAG believes that EU public procurement rules are not always adapted to the specificities of SSGIs. Negotiating procedures and existing alternatives to public procurement procedures (in house, public private partnership, public-public partnership) are sometimes better suited for the provision of this kind of services. CEDAG is in favour in favour of allowing more negotiation in public procurement procedures with prior publication, but it is extremely important to have maximum transparency in such processes. 14

15 CEDAG is also in favour of a more flexible approach to the sequence of the examination of selection and award criteria. Furthermore, it believes that the Directive should allow the possibility to take into account previous experience with one or several bidders. CEDAG considers that the rules on technical specifications do not sufficiently allow for the introduction of considerations related to other policy objectives. There must be room to procure political result rather than purely technical specifications. As for technical specifications, they should include social considerations. During the assessment of a service or a product on the basis of social consideration it is important to take into account the whole production process. For CEDAG, the criterion of the most economically advantageous tender seems the best suited approach for procuring non standardised services such as social services because it leads to an evaluation of procurement on the basis of a balance between cost and quality. Moreover, when taking into consideration costs, this has to be done in a long-term perspective instead of a short-term one. Considering the life cycle cost, namely the costs associated with all the stages of services, can help developing this long term perspective. CEDAG supports the reassessment of the sole criteria of lowest price in public procurement. Furthermore it is in favour of other criteria considered on an equal footing to simple price, including: Quality; After-sale service; Relevance to EU political objectives including social inclusion and accessibility, environmental respect, and innovation. As for the link with the subject matter of the contract, CEDAG believes that loosening or eliminating such a link in some cases might improve the achievement of other policy objectives especially in the social domain. The adoption of a more flexible approach would therefore allow contracting authorities to apply selection criteria based on characteristics of providers that are not linked with the subject of the contract (e.g. requiring bidders to employ certain quotas of jobseekers, persons with disabilities or belonging to a specific minority, etc.). Concerning Social Services, CEDAG is convinced that EU-rules should better recognize the specificities of social services providers and explore alternative mechanisms for tendering in order to avoid the risk of standardisation of the service. It underlines how in the current application of public procurement rules there is a tendency of giving priority to cost rather than quality. Despite the possibility to use quality criteria when tendering for social services (see Directive 2004/18/EC, article 53 (1) a), cost is often the determining factor. Furthermore, in the specific area of social services, the criterion of the lowest price should be abolished. Therefore, when the award is made to the most economically advantageous tender, the criterion of quality has to be compulsory and should be given a mandatory weight which is higher than the one that is given to the other criteria (recommendation no. 15 of the Third Forum on SSGI suggests a weight of more than 50%). CEDAG is convinced that certain contracts should be reserved to non-profit organisations to support their democratic function and innovation capacity. Social services have specific characteristics compared to other public services. They often build values like social cohesion and inclusion and see themselves not as a part of the market and do not want to or cannot participate in tenders on purely commercial terms. 15

16 For social services the criterion of the lowest price should be banned or folded down. On the contrary, award criteria as quality, performance and achievement (policy goals) should be taken into account. SOCIAL ENTERPRISE COALITION (UK) Social Enterprise Coalition (the umbrella organisation of UK social enterprises SEC) firmly believes that public procurement is confronted today with important new challenges including high public deficits and the resulting need for the most efficient use of public money. There is a growing demand that public purchasing contributes to the achievement of overall societal goals such as fostering innovation, fighting climate change and promoting social inclusion. For SEC, the complexity of the full EU rules procurement, including complex documentation, places an enormous administrative burden on social enterprises and SMEs, which often lack the staff capacity to engage properly with the process. Similarly, since many tendering costs are fixed, social enterprises and SMEs in general face disproportionately high costs in comparison with larger enterprises. The Social Enterprise Coalition therefore believes that any review of the distinction between Part A and Part B services must not exacerbate this situation. It is essential that procurement guidelines are cognizant of commissioners role as market shapers and stimulators and as such the guidelines must ensure there are not unnecessary barriers to entry and that commissioning markets support market entry rather than limit it. The organisation believes that social enterprise can make a real and sustained contribution to communities across the EU by applying innovative and efficient approaches to public service delivery. SEC supports the inclusion of social and environmental criteria in all public sector procurement decisions. Requiring all procurement decisions to demonstrate their wider positive social and environmental impact will ensure that the full weight of the public sector s purchasing power is directed at achieving social and environmental change, alongside delivering financial efficiency. They believe this could not only draw greater value from our expenditure but also stimulate greater innovation and widen the market and choice of suppliers. Social and environmental criteria need to be embedded in public sector procurement decisions to ensure the greatest value and performance is achieved from its economic transactions. In its report, SEC insists on the Public Services Bill, which is currently going through the parliament in the UK. This act aims to ensure that the public sector gets the greatest value from its economic transactions. This could be requiring contractors to create local employment opportunities for disadvantaged groups, put something back into the local community, or create a positive environmental impact by reducing waste or carbon emissions. This Bill would allow the added value social enterprises offer to be taken into account, thereby encouraging them to enter the market and increasing choice. It could also stimulate a role for social enterprises as part of a wider supply chain, fostering greater partnerships between private companies and social enterprises as contracts require providers to draw on their combined skills and resources. SEC considers that this Bill provides a legislative model that could be implemented at EU level to enshrine social and environmental criteria within public sector procurement, whilst maintaining local flexibility in determining criteria that best meet the needs of local social, environmental and economic circumstances. 16

17 LEGACOOPSERVIZI (IT) For Legacoopservizi (the federation of service cooperatives belonging to Legacoop) the criterion of the most economically advantageous tender seems to be best suited for pursuing other policy objectives. They consider useful to limit the use of the price criterion or the weight which contracting authorities can give to the price. To this goal, some guidelines should be set at EU level. Legacoopservizi is in favour of the introduction of a third possibility of award criteria in addition to the lowest price and the economically most advantageous offer. For Legacoopservizi, social considerations relating to the employment and labour conditions of the workers involved in the execution of the contract should be included in each stage of the competition. Furthermore, Legacoopservizi is in favour of a specification at EU level of certain general contract performance clauses related to employment and labour conditions of the workers involved in the execution of the contract. Legacoopservizi considers that could be deceptive softening or dropping the condition that requirements imposed by the contracting authority must be linked to the subject matter of the contract. So it is not in favour of this proposal. In general, Legacoopservizi believes that the specific features of social services should be taken more fully into account in EU public procurement legislation. However, social objectives should be also specified in other legislative acts in order to invest all the activities of the enterprises and not only public procurement. For Legacoopservizi the question of reserving contracts involving social services to non-profit organisations or introducing other privileges for such organisations in the context of the award of social services contracts should be better ruled in a specific regulation. CONFCOOPERATIVE (IT) Confcooperative, the Italian largest legally recognised organisation for representing, assisting, protecting and auditing member co-operatives, elaborated its position paper with the support of its federations. Confcooperative is against the unification of A and B services and it believes that social services should remain out of the Directives scope, except for already existing provisions and non-derogatory principles of the Treaty. Concerning the possibility of introducing new procedures, Confcooperative proposes the introduction of an innovative procedure recognising the possibility for the public administration to organise ad hoc committees in relation of the object of the procurement. Confcooperative is in favour of a wider use of the negotiated procedure, which should be particularly applied for health and social services. It is also in favour of allowing procurers to take into account criteria pertaining to the tenderer itself in the award phase such as having a social budget. For Confcooperative, the procedures provided under the current Directives (such as the competitive dialogue, design contests) are suitable for taking into account environmental, social, accessibility and innovation policies, but in the Italian experience these procedures have never been used. 17

18 Confcooperative believes that a restriction to local or regional suppliers is admissible and could be justified by their strong expertise and knowledge of the local economic, social, cultural and environmental context. Concerning the negotiated procedure, Confcooperative believes that its use could help in taking into better account social considerations in public procurement. With regard to the criterion of the most economically advantageous tender, Confcooperative considers that this criterion is the most appropriate because it helps taking into account social and environmental aspects of the offer as well as the specific experience and competence of the tenderers. Concerning the inclusion of environmental or social criteria in the award phase, Confcooperative underlines how this possibility is modestly used in Italy. In its view, to spread their use, they should be better spelt out in the Directive. For Confcooperative contract performance clauses are the most appropriate stage of the procedure to include social considerations relating to employment and labour conditions of the workers involved in the execution of the contract. However, sometimes it is difficult to link social considerations relating to employment and labour conditions to the object of the procurement. These social considerations should be specified in the selection process. As for contract performance clauses, Confcooperative proposes the introduction of social clauses which foresee positive action in order to boost employment of the weakest part of the society and in particular of the disabled. Regarding social services, Confcooperative believes that the criterion of lowest price should be prohibited and the economically most advantageous offer criterion should be applied. Furthermore, directives should allow the possibility of reserving contracts to non-profit actors providing social services, as it is foreseen by the Italian law on the creation of an integrated system of intervention and social services (l. 328/2000, article 5). POUR LA SOLIDARITE (BE) Pour la Solidarité, a Belgian non-profit organization, focused mainly on the access to public procurement markets for social enterprises, often small and unknown. They think the social economy can have a great potential because it can help realizing the European model of social welfare respecting other political goals. The public sector can have a big impact in shaping the economic structure and public procurement is its best arm: it should be used to promote the European values, to set a clear direction in the everyday practice, to support those economic agents that support society. About a possible strategic use of public procurement in response to new challenges, PLS underlined the need for taking into account objectives other than the usual economic one. In this sense, more flexible instruments should be put in place, in order to make it easier for public authorities to take into account the social (and/or environmental) impact of their procurements. PLS is in favour of restrictions to local or regional suppliers justified by objective reasons that are not based on purely economic considerations because local procurement could be a powerful means for the development of disadvantaged regions and towards a more egalitarian Europe. For PLS, the use of the negotiated procedure could help in taking better account of policy related considerations, such as environmental, social, innovation, etc. To 18

19 avoid the risk of discrimination and restricting competition they suggest its use in within the limits set by the current Directives. The organisation is also in favour of the elimination of the criterion of the lowest price because it does not fit well the challenges we are going to face in the near future. In this sense, a minimum quality standard should always be set, innovation has to be promoted, environmental issues must be taken into account, social considerations are to be included if we want to defend the European model. In addition to the lowest price and the economically most advantageous offer PLS proposes the introduction of a third criterion to both promote concerns other than price and encourage efficient overall spending. This new criterion (for example the best quality or public benefit) could help the shift towards a more responsible and wise public procurement. The most economically advantageous offer criterion is not fair if we are to take into consideration the potential synergies procurement may have with other policy fields. PLS considers that the current legal framework has to be improved and the possibility of including environmental or social criteria in the award phase should be spelt better in the Directive, but also guidelines (such as Buying Social, recently published by the Commission) should be diffused as much as possible and training encouraged and funded. Furthermore, it should be mandatory to take life-cycle costs into account when determining the economically most advantageous offer, especially in the case of big projects. PLS notes that the EU public procurement legislation should allow contracting authorities to apply selection criteria based on characteristics of undertakings that are not linked to the subject of the contract (e.g. requiring tenderers to have a gender-equal employment policy in place, or a general policy of employing certain quotas of specific categories of people, such as jobseekers, persons with disabilities, etc.). From its view, Corporate Social Responsibility should become a central criterion in public procurement. They also think that it would be useful to eliminate the link with the subject matter of the contract at the award stage in order to take other policy considerations into account. The organisation strongly believes that social services should receive a special treatment. They also propose a step back in the liberalisation of social services, to protect the core mission of social services of general interest, that to serve and assist people. Due to the fact that social economy has generally a better knowledge of the local context, of the population and its social needs, the Directives should allow the possibility of reserving contracts involving social services to non-profit organisations. Social services are important to promote a fairer society and, now more than ever, in a context of crisis, to avoid the diffusion of inequalities and social tensions. SOME CONCLUSIVE REMARKS The consultation on the Green paper on modernisation of EU public procurement legislation received more than 620 contributions by all kinds of actors and stakeholders both at European, national and local level. All the European social economy organisations and most of the national ones participated in the consultation. They all welcomed the Green Paper and the Commission s decision to explore how EU public procurement policy can be modernised and made more efficient. They appreciated the Commission s drive to 19

20 ensure that there is an alignment between EU public spending and EU policies, and that as far as possible the former is put to work for the benefit of the latter. The European Union is presently facing important challenges among which the reduction of public spending, increased efficiency requirements and a growing demand that public purchasing contributes to the achievement of overall societal goals such as fostering innovation, fighting climate change and promoting social inclusion. Social economy enterprises are particularly concerned by the issues raised in this consultation as: - this reform aims at improving access to public procurements to all type of enterprises, including SMEs; - the relationship between public authorities and local operators in the EU Single Market is particularly relevant; - public procurements are increasingly used by public authorities as tools for the implementation of social policies, moving from a partnership approach to a customers/providers relationship. All the contributions of social economy organisations examined in this paper agree on some crucial common points. According to their characteristics and the groups they represents, some organisation focused more on some specific issues (SSIG, role of public authorities, social clauses for work integration, etc.). The following main common points can be retained as shared opinion of social economy organizations in Europe: the criterion of the economically most advantageous offer should prevail over the criterion of the lowest price in order to limit anti-competitive behaviours and dumping, especially in the labour intensive sectors; it is important to include a percentage of obligatory quality criteria / principles in bids; the criterion of the lowest price should be eliminated; the link with the subject matter should be eliminated or at least loosened with regards to social, environmental or accessibility purposes; more negotiation in public procurement procedures should be allowed in order to match outcomes expectations with the object of the contract; alternative procedures such as competitive dialogue, design contexts, public/social partnerships should be promoted, reserved contracts to non-profit making organizations shall not be seen as a privilege but as consistent with the aims and characteristics of social services; rules should be simplified to ensure a SMEs friendly public procurement (SEs are often small or very small) and public authorities should contract out also small contracts to facilitate the participation of smaller Social Economy enterprises; the obligation on what to buy at EU level is considered a good way to achieve other policy objectives; concerning social services, all social economy organisations believe that specific features of social services should be taken more fully into account in EU public procurement legislation, even if there is no consensus of the eventual elimination of the distinction between A and B services. 20

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