BFSE position on procurement

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BFSE - European Learning Network for Better Future of Social Economy

The Network comprises the ESF Managing Authorities/Intermediary Bodies and social economy experts from Belgium-Flanders, Czech Republic, Finland, Italy-Lombardy, Poland, Sweden and United Kingdom

Common position on the modernisation of EU public procurement policy

(Sent to on 18 April 2011.)

In line with the main priorities set by the Europe 2020 strategy, future European economy should be based on multi-directional, complementary approach with the aim to promote both competitive, innovative market instruments as well as environmental and social market initiatives. Consequently, developing a knowledge-based, resource-efficient and low-carbon economy interrelates delivering social and territorial cohesion and fostering high, inclusive employment.

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, in the opinion of the Network for better future of social economy (BFSE), the EU should reinforce the solutions which allow to take 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. This so-called holistic approach strives for exposing the interrelation between different policies that can be involved when awarding public contracts and encourages public procurers to consider also the other than only financial standards. Yet, addressing social purposes should not decrease the efficiency of public procurement by unfair treatment or unnecessary, additional administrative burdens. The modernisation of public procurement policy should guarantee better access to contract opportunities for all economic operators in particular for the benefit of smaller bidders such as SMEs and majority of social economy enterprises.

We believe that especially 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 EU-facilitated 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.

As the European learning network on social economy we would like to refer these consultation questions which particularly concern the strategic use of public procurement in response to new challenges (part 4) and other social issues in public procurement.

4. Strategic use of public procurement in response to new challenges

When it comes to the social dimension in strategic use of public procurement it should be noted that the social clauses introduced by the Directives which could be applied on the voluntarily basis by the national and regional contracting public authorities have been the main instrument so far in making public procurement socially responsible. Yet, using social clauses supported by establishing an effective and longer lasting cooperation between public and social sector proved to be rarely used in most of the Member States. Public awareness of the real, socio-economic value of social organizations, including the social economy entities is still insufficient. Apart from some exceptional countries where social organizations or social cooperatives have been traditionally operating, 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. Moreover, smaller social economy entities lack the financial and organizational capacity to become active bidders. Therefore, we believe that the EU should continue to launch the activities aiming at producing incentives and particularly more detailed technical guides on “how to buy social”.

Q 62: Do you consider that the rules on technical specifications make sufficient allowance for the introduction of considerations related to other policy objectives?

Although the rules on technical specifications can include some social considerations which refer to the process and production methods of the product, they should be definitely not the only one measure to support social policy objectives.

Q 63: Do you share the view that the possibility of defining technical specifications in terms of performance or functional requirements might enable contracting authorities to achieve their policy needs better than defining them in terms of strict detailed technical requirements? If so, would you advocate making performance or functional requirements mandatory under certain conditions?

It seems that defining technical specifications in terms of performance or functional requirements better corresponds with achieving other policy objectives like social inclusion focused on the disabled. The performance of functional requirements could be made mandatory for the contracting authorities if their development community or region strategies indicate explicitly the main social barriers concerning particular defavourised groups to be tackled.

Q 65. Do you think some of the procurement provided under the current Directives (such as competitive dialogue, design contests) are particularly suitable for taking into account environmental, social, accessibility and innovation policies?

It seems that the such procedures can contribute to the implementation of social policy. Nevertheless, another measures exceeding the regulatory framework of the Public Procurement Directives should be introduced to make the strategic approach towards public procurement more effective in the context of the whole policy planning process.

As far as social services are concerned, area Plans (a sub-region level), are a kind of tool for public-private cooperation applied in Italy setting an example of a successful practice to programme the whole range of social services to be delivered or outsourced by public authorities via partnership. Local governments work together on the sub-regional level to plan the implementation of social services pursuing common goals of social policy. In practice, this system requires the existence of an administrative unit responsible for coordination and management process. There are also structures needed to be responsible for performing a need analysis, analysis on the social services sector and local/regional providers in the context of the services to be supplied.

Q 66. What changes would you suggest to the procedures provided under the current Directives to give the fullest possible consideration to above policy objectives, whilst safeguarding the respect of the principles of non-discrimination and transparency ensuring a level playing field for the European undertakings? Could the use of innovative information and communication technologies specially help procurers in pursuing Europe 2020 objectives?

There is no need to change all the procedures significantly when it comes to meeting social policy objectives. The possible application of EU regulation for social purposes has been recently described in the Buying Social Guide published by EC.

Yet, the ‘awarding criteria’ for social and sustainable/environmental aspects are not specified enough in the current EU regulation. Their actual usage may be then limited. In the case of the social and sustainable aspects of the ‘award criteria’ the EU regulation (public procurement directives) should be more detailed and this requires changing the procedures themselves.

Besides, what has been indicated as ‘lacking’ by both contracting officials and potential bidders are additional, detailed instructions clarifying the use of social clauses, including available exemplary specifications which could be treated as a manual rather than only a good practice source. Even if the officials know the EU legal background like described in the Buying Social Guide, they are lacking access to the examples of real public procurement documentation where social clauses were successfully used. These types of information could be widely disseminated between the above-mentioned parts of public procurement process (public officials and potential bidders) via ICT: e.g. public procurement/social economy online platforms or by the cheapest e-learning way. Currently, many social economy entities are excluded from awarding contracts, because of the shortages of knowledge or confidence in applying social clauses by the public contractors.

Moreover, in order to fully respect the principles of non-discrimination and transparency towards the potential European bidders, public procurement procedures should be implemented electronically to the most extent.

Q. 68. Do you think that allowing the use of the negotiated procedure with prior publication as a standard procedure could help in taking better account of policy-related considerations, such as environmental, social, innovation, etc.? Or would the risk of discrimination and restrictive competition be too high?

First the discussion/ negotiation procedures between public, business and social partners should be used more broadly – first on the long term by establishing a sort of national/regional targets to be achieved by the public procurement process and on the short term within the negotiated procedure with the prior publication concerning the performance of particular contract. Because the use of negotiated procedure is rather time consuming, but certainly better adjusted to the needs of the contractor.

Q 69. What would you suggest as useful examples of technical competence or other selection criteria aimed at fostering the achievement of objectives such as protection of environment, promotion of social inclusion, improving accessibility for disabled people and enhancing innovation?

It would be good to refer not only to the technical competence and selection criteria of the particular public procurement, but to take the process of public procurement planning as a whole. This so called holistic approach has been already signalised before. The example of such overall approach could be Flemish Action Plan for sustainable public procurement which in great detail specifies the rules for the implementation of sustainable public procurement on the regional level. This common detailed action plan includes different sectors` plans and entities involved in the implementation of its individual components as well as detailed schedule, tasks, subtasks, and institutions co-operating. It also comprises an initial analysis of the problems and the solutions proposed, which in the following parts of the document are decomposed into the stages, executors, cost and time.

Q 70. The criterion of the most economically advantageous tender seems to be best suited for pursuing other policy objectives. Do you think that, in order to take best account of such policy objectives, it would be useful to change the existing rules (for certain types of contracts/ some specific sectors/ in certain circumstances)?

As far as existing criteria are concerned, MEAT criterion is in fact best fitted for taking into account the other policy objectives. Some changes to the types of the contracts, specific sectors or circumstances could be introduced by the EU regulation, however, there is a need to make an overview of the whole process of public procurement on the national levels first (see action plans mentioned above).

Q 70.1.3. to introduce a third possibility of award criteria in addition to the lowest price and the economically most advantageous offer? If so, which alternative criterion would you propose that would make it possible to both pursue other policy objectives more effectively and guarantee a level playing field and fair competition between European undertakings?

For contracts awarded by regional/ local authorities, e.g. the criterion of compliance with the local/regional development strategy

Q 71. Do you think that in any event the score attributed to environmental, social or innovative criteria, for example, should be limited to a set maximum, so that the criterion does not become more important than the performance or cost criteria?

No, it is not the case. Public authorities are usually unwilling while applying a sort of ‘soft’ criteria which cannot be simply referred to the price/cost of works, goods and services. Therefore, establishing a set maximum seems unnecessary provision.

Q 72. Do you think that the possibility of including environmental or social criteria in the award phase is understood and used? Should it in your view be better spelt out in the Directive?

Including 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 a pro-development undertakings.

Q 73. In your view, should it be mandatory to take life-cycle costs into account when determining the economically most advantageous offer, especially in the case of big projects? In this case, would you consider it necessary/appropriate for the Commission services to develop a methodology for life-cycle costing?

According with the sustainable public procurement concept, 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. 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.

While awarding contracts on the basis of the economically most advantageous offer, the definition of value should be broadened respecting the social advantages to be achieved in the long term. This could be developed and disseminated if tools for measuring social added value are to be elaborated and popularized. The existing tools for measuring social added value are not commonly used, partly because of their complexity (the case of SROI) and adjustment to a limited number of countries` characteristics. The simplification of tools for measuring social added value as well as encouraging for adaptation of such tools to the national or regional needs seems crucial. In the situation when the public purse is shrinking, the attention of both public authorities and private/social economy should be drawn to the long term results including social standards.

Q 76. Should certain general contract performance clauses, in particular those relating to employment and labour conditions of the workers involved in the execution of the contract, be already specified at EU level?

Yes, 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. Nevertheless, this sort of catalogue should be open, allowing the Member States to adopt flexibly these clauses into their legal public procurement framework and adjust them to the situation on their labour markets.

Q 78. How could contracting authorities best be helped to verify the requirements? Would the development of "standardised" conformity assessment schemes and documentation, as well as labels facilitate their work? When adopting such an approach, what can be done to minimise administrative burdens?

A “standarised” conformity assessment schemes or documentation patterns would indeed facilitate work of contracting authorities.

Q 79. Some stakeholders suggest softening or even dropping the condition that requirements imposed by the contracting authority must be linked to the subject matter of the contract (this could make it possible to require, for instance, that tenderers have a gender-equal employment policy in place or employ a certain quota of specific categories of people, such as jobseekers, persons with disabilities, etc.). Do you agree with this suggestion? In your view, what could be the advantages or disadvantages of loosening or dropping the link with the subject matter?

There is an obvious social advantage if the requirements imposed by the contracting authorities could be linked to the overall capacity of the tenders: e.g. quota employment of groups defavourised on the labour market, gender-equal employment policy. This advantage consist in shaping the behaviour and influencing internal policy of undertakings in the long term. Yet, there are serious doubts if introducing such clauses unrelated to the product or service purchased would allow smaller bidders, both SMEs and social enterprises to fulfill the criteria and apply for contracts. Their financial and human resources potential is significantly limited when it comes to comply with different requirements for every procurement. The certain level of predictability seems crucial for the smaller enterprises to adjust their potential to the tasks given. Instead of loosing the link with the subject matter establishing contract performance clauses taking into account social considerations should be developed.

Q 83. Do you think that EU level obligations on "what to buy" are a good way to achieve other policy objectives? What would be the main advantages and disadvantages of such an approach? For which specific product or service areas or for which specific policies do you think obligations on "what to buy" would be useful? Please explain your choice. Please give examples of Member State procurement practices that could be replicated at EU level.

Centrally, EU - imposed obligations on “what to buy” 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. On the other hand, 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. These could be in form of exchange of good practices, particularly successful technical specifications or sets of award criteria that should be taken into account or other sorts of incentives for the pioneers including financial advantages.

4.4 Social services

Q 97. Do you consider that the specific features of social services should be taken more fully into account in EU public procurement legislation? If so, how should this be done?

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. The contracts in question are rarely of certain cross-border interest and their value in many cases remains below the thresholds for application. Even when centralized and organized multi-regionally by the state with a value going far above the thresholds of the Public Procurement Directives, social services are still addressed and adjusted to single consumers or specific groups. Therefore, 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 the current “B” services and “A” services is going to be eliminated, social services should be excluded and remain a subject just to basic principles of EU law or in case of contracts with a value above the thresholds - a subject to only a few rules of the Directives. At the same time the applicable thresholds for social services should be increased, specially when it does not entail consequences to the international partnership agreements.

Q 97.1. Do you believe that certain aspects concerning the procurement of social services should be regulated to a greater extent at EU level with the aim of further enhancing the quality of these services? In particular:

“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.

Q 97.1.1. Should the Directives prohibit the criterion of lowest price for the award of contracts/ limit the use of the price criterion / limit the weight which contracting authorities can give to the price / introduce a third possibility of award criteria in addition to the lowest price and the economically most advantageous offer?

Regarding the quality and continuity of the services, 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.

Q 97.1.2. Should the Directives allow the possibility of reserving contracts involving social services to non-profit organizations/ should there be other privileges for such organizations in the context of the award of social services contracts?

The Directives should allow at least a certain percentage of contracts for social services to be legally reserved to non-profit, non-for-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. The public authorities should still enjoy a wide discretion of choosing the best regime for outsourcing their social services via public contracts (public procurement regime) or by grant contests. The reason for complementation of the EU rules by the national or regional regulations derives from different traditions of delivering social services to the citizens and different recognition of non-profit organizations` role in the community.

Q 97.1.3. Loosening the award criteria or reserving contracts to certain types of organizations could prejudice the ability of procurement procedures to ensure acquisition of such services "at least cost to the community" and thus carry the risk of the resulting contracts involving State aid. Do you share these concerns?

To be yet discussed by the Network BFSE working group on State aid and social services of general interest.

Q 97.2. Do you believe that other aspects of the procurement of social services should be less regulated (for instance through higher thresholds or de minimis type rules for such services)? What would be the justification for such special treatment of social services?

See the answer to question Q 97.