Environmental Aspects in EU Procurement Law. Lecturer: Dr. Ohad Graber-Soudry
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1 Environmental Aspects in EU Procurement Law Lecturer: Dr. Ohad Graber-Soudry
2 Lecture overview (1) Legal framework (2) The EU procurement Directives Scope and structure Procedures Qualification and award criteria Technical specifications Contract conditions (3) Environmental and social aspects in procurement
3 Introduction
4 What is public procurement? The activity through which the state, or one of its subdivisions, acquires operationally required goods, services or works through the market Takes place through contractual arrangements Generally divided into 3 categories: supplies, services and works
5 What is regulated? The regulation of public procurement concerns the relationship between the suppliers and the purchasers of such goods, services or works In the EU, it concerns the process leading up to the award and conclusion of the contract (but not contract management).
6 Significance of procurement in the EU In the EU, Public procurement represents spending of around Euro 1.8 trillion each year, equivalent to 14% of the EU s GDP Strategic procurement: by using their purchasing power to choose certain goods, services and works, public authorities can contribute towards the EU social, environmental and innovation policies
7 EU environmental policies Article 11 TFEU: Environmental protection requirements must be integrated into the definition and implementation of the Union's policies and activities, in particular with a view to promoting sustainable development Article 37 Charter of Fundamental Rights of the EU: A high level of environmental protection and the improvement of the quality of the environment must be integrated into the policies of the Union and ensured in accordance with the principle of sustainable development The Circular Economy Action Plan (December 2015)
8 Examples of green contracts Energy efficiency computers Low energy buildings Recycled paper Electricity from renewable energy sources Cleaning services using ecologically sound products Electric or hybrid vehicles
9 Legal framework
10 Legislative Framework The Treaty on the Functioning of the European Union (TFEU) General principles of EU law The EU Directives on public procurement National law implementing the EU Directives International agreements (in particular the WTO Government Procurement Agreement)
11 The Treaty on the Functioning of the European Union (TFEU) Discrimination on grounds of nationality (Art. 18) Within the scope of application of the Treaties, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited
12 The Treaty on the Functioning of the European Union (TFEU) Free movement of goods (Art. 34) Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States
13 The Treaty on the Functioning of the European Union (TFEU) equivalent effect Case 8/74 Dassonville : All trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra- Community trade Case 21/88 Du Pont de Nemours (distinctly applicable) Case 45/87 Dundalk (Indistinctly applicable)
14 The Treaty on the Functioning of the European Union (TFEU) Freedom to provide services (Art. 56) Case C-360/89 Commission v. Italy Case C-3/88 Re Data Processing Case C-234/03 Contse
15 The Treaty on the Functioning of the European Union (TFEU) Freedom of establishment (Art. 49) restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be prohibited shall also apply to restrictions on the setting-up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member State
16 The Treaty on the Functioning of the European Union (TFEU) Derogations Article 36 ( public morality, public policy the protection of health and life of humans, animals or plants ) Article 52 (in relation to freedom of establishment) Article 62 (in relation to freedom to provide services) General interest requirements recognized by the CJEU (e.g. environmental protection)
17 General principles of EU law Equality of treatment Case C-243/89 Storebaelt Transparency Case C-324/98 Telaustria Mutual recognition Proportionality
18 The EU Directives on Public Procurement Public Sector Directive - Directive 2014/24/EU Utilities Directive - Directive 2014/25/EU Concessions Directive - Directive 2014/23/EU Defence Procurement - Directive 2009/81/EC Remedies Directive - Directive 89/665/EEC - Directive 92/12/EEC - Directive 2007/66/EC
19 The Public Procurement Directives
20 The EU Directives: History The Treaty does not include any explicit provisions relating to public procurement The General Programmes (1960 s) Liberalisation Directives (early 1970 s) Co-ordination Directives (on works and supplies, 1970 s) Directives following the 1985 White paper and the Single European Act (1990 s) The Consolidated Directives (2004) The new Directives (2014)
21 The EU Directives Protecting the interests of traders established in one Member State who wish to offer goods or services to contracting authorities established in another Member State Case C-360/96 Gemeente Arnhem, Gemeente Rbeden v BFI Holding [1998] ECR I-6821, paragraph 41
22 The EU Directives: basic principles Community-wide advertisement of potential contracts (OJEU notices); The banning of technical specification that result in discrimination; The award of contracts on the basis of objective and relevant criteria only.
23 Scope of application
24 When do the Directives apply? The contract is awarded by a contracting authority or a utility The contract is for public works, public services or public supplies The contract is for pecuniary interest (in money or money s worth) concluded in writing The contract is above certain thresholds There are exclusions and partial exclusions
25 Contracting authority the State, regional or local authorities, bodies governed by public law, associations formed by one or several of such authorities or one or several of such bodies governed by public law body governed by public law established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character; having legal personality; and financed, for the most part, by the State, regional or local authorities, or other bodies governed by public law; or subject to management supervision by those bodies; or having an administrative, managerial or supervisory board, more than half of whose members are appointed by the State, regional or local authorities, or by other bodies governed by public law.
26 Utility Contracting authorities Public undertakings ( dominant influence by the state), Private entities operating on the basis of special or exclusive rights which substantially affect the ability of other entities to carry out such activity But only in connection to a relevant activity
27 Utility Relevant Activity : (1) in the water, energy, transport and postal sectors; and (2) with the purpose of procuring works, supplies or services in relation to that activity. Activities covered: Gas and heat Electricity Water Transport services Ports and airports Postal services Extraction of oil and gas and exploration for, or extraction of, coal or other solid fuels
28 Contracts falling outside the scope of the EU Directives EU Treaty obligations apply The obligation of transparency entailing a degree of adverting sufficient to enable the services market to be opened up to competition and the impartiality of the procurement process to be reviewed (Case C-324/98 Telaustria ) Only when such contracts are of a certain cross-border interest
29 Contract award procedures
30 Contract award procedures Open procedure Restricted procedure Competitive dialogue Competitive procedure with negotiation Negotiated procedure (without prior publication of a notice in the OJEU) Innovation partnership
31 The Open Procedure OJEU ADVERTISEMENT ISSUING OF TENDER DOCUMENTS RETURN OF TENDERS EVALUATION (AWARD CRITERIA) CONTRACT AWARD
32 The Restricted Procedure OJEU ADVERTISEMENT PRE-QUALIFICATION SELECTION (SELECTION CRITERIA) ISSUING OF TENDER DOCUMENTS RETURN OF TENDERS EVALUATION (AWARD CRITERIA) CONTRACT AWARD
33 The Competitive Dialogue Procedure OJEU ADVERTISEMENT PRE-QUALIFICATION SELECTION INVITATION TO PARTICIPATE IN THE DIALOGUE COMPETITIVE DIALOGUE PHASE RETURN OF TENDERS EVALUATION CONTRACT AWARD
34 The Competitive Procedure with Negotiations OJEU ADVERTISEMENT PRE-QUALIFICATION SELECTION INVITATION TO SUBMIT INITIAL TENDERS NEGOTIATION PHASE FINAL TENDERS EVALUATION CONTRACT AWARD
35 Exclusion, Selection and Award criteria
36 Exclusion criteria Personal situation of the candidate or tenderer Mandatory exclusion criteria: Suppliers must be excluded from the tender process, without any further assessment of their qualifications if convicted of involvement in organised crime, corruption, fraud or money laundering Discretionary exclusion criteria : Suppliers may be excluded from the tender process where certain grounds concerning the supplier's personal position are met (e.g. bankruptcy, professional misconduct, payment of taxes, etc)
37 Selection criteria Applied to determine which economic operators are qualified and able to perform the contract. The Directives provide an exhaustive list of means of evidence that may be used in order to verify tenderers : Suitability to pursue the professional activity Economic and financial standing Technical and professional ability
38 Award criteria Applied to determine which tender meeting the set specifications and requirements should be awarded the contract. Award criteria are used to evaluate the most economically advantageous tender (MEAT). The Directives allow for the following criteria only: Price/cost ( Life-cycle costing ) best price-quality ratio
39 Award criteria (MEAT) Relate to the subject matter of the contract (Concordia case) Aimed at identifying the most economically advantageous tender (Concordia) Measurable/verifiable (EVN case), duty of precision? (Dutch coffee case) May not confer an unrestricted freedom of choice on the contracting authority (SIAC case) Must be disclosed to suppliers in advance (Lianakis case)
40 Rules on technical specifications
41 Technical specifications What is it? Define the required characteristics of a product or a service, or works, in a manner that fulfills the use for which it is intended Describe the contract to the market (potential bidders) Provide measurable requirements against which tenders can be prepared and evaluated May be formulated by reference to standards or in performancebased/functional terms May also refer to appropriate criteria that are defined in labels For example: levels of environmental performance, safety, dimensions, quality assurance, symbols, packaging, process and methods of production, design, etc.
42 Standard A technical specification approved by a recognised standardising body for repeated or continuous application Falls into one of the following categories: International standard European standard National standard Or equivalent
43 Rules on technical specifications Must be set out in the tender documentation Bear a link to the subject matter of the contract Afford equal access for tenderers and not have the effect of creating unjustified obstacles In general, TS may not contain reference of specific design, source, production, trademark, patents, types, origin, etc. use of the words or equivalent
44 Integrating environmental and social considerations into public procurement
45 The environment EU general policies to deliver sustainable growth and greener economy Lisbon Strategy Europe 2020 EU Sustainable Development Strategy To what extent can public procurement be deployed to achieve these policies?
46 Green Public Procurement (GPP) A practice whereby contracting authorities, when purchasing works, supplies or services, use their purchasing discretion to advance environmental goals The item or service to be purchased may or may not have a specifically environmental function, but the contracting authority seeks to purchase it in such a way as to avoid or limit environmental harm
47 Examples of environmental considerations in procurement Minimising the impact of a construction project on the environment (e.g. by deciding to build a tunnel rather than a road) Encouraging environmentally sensitive working practices by economic operators (e.g. by requiring an economic operator that is building a road through an area of natural beauty to meet specified environmental management measures) Increasing the energy efficiency of buildings (e.g. by requiring architects to design a building to meet the highest energy efficiency standards)
48 Examples of environmental considerations in procurement Reducing wastage of natural resources e.g. by requiring operators to recycle and re-use products Encouraging the development of alternative energy sources e.g. by purchasing green energy Reducing the carbon footprint e.g. by purchasing electric vehicles
49 GPP as a market-based instrument to implement environmental policy The challenge: the incorporation of environmental consideration must be in compliance with the fundamental Treaty principles and the general principles, also when there are specific provisions in the Directive permitting the use of these considerations. If it is legally permitted to do so, when and how can this be done?
50 The procurement life-cycle Preprocurement Tender process and contract award Contract execution
51 Possibilities to integrate environmental and social consideration into the procurement process Pre-procurement definition of the subject matter of the contract Tender process Technical specifications Exclusion criteria Selection criteria Award criteria Contract execution Contract performance conditions
52 Pre-procurement What to buy? definition of the subject matter of the contract In principle, procurement law is less concerned with what contracting authorities buy, than how they buy it. Example A local authority is buying a new fleet of delivery vehicles. It decides to purchase electric vehicles rather than petrol vehicles so as to reduce the environmental impact
53 Pre-procurement Limitations on the freedom to define the subject of the contract? The TFEU General principles (equal treatment, transparency, etc) To what extent can contracting authorities set high environmental performance requirements when deciding what to purchase? Is this a measure hindering trade? Case C-379/98 PreussenElktra: Environmental measures may sometimes be justified even if they are discriminatory in nature
54 Technical specifications When technical specifications are based on standards: reference to environmental technical standards When technical specification are based on performance or functional requirements: May include environmental characteristics Use eco-labels to define such characteristics In general, may challenge the market into developing innovative technical solutions
55 Exclusion criteria Discretionary exclusion criteria: Violation of environmental or social obligations (Article 57(4)(a)) Requires national legislation to equate the specific breach with professional misconduct Proportionality principle Recital 101 new Directive Abnormally low tenders (Art 69(3) new Directive)
56 Selection criteria Article 58 of the directive Environmental technical competence (e.g., previous experience, competent personnel, track record, etc) Use of Environmental Management Measures that will be able to apply when performing the contract to demonstrate technical capacity in appropriate cases Eco-management and audit scheme (EMAS) Other environmental management standards based on European or international standards (EN/ ISO 14001)
57 Award criteria Article 67 new Directive May include criteria that are not of a purely economic nature but influence the value of the tender from the point of view of the contracting authority (Concordia case) May include environmental characteristics Eco-label criteria as aid to assess award criteria Life-cycle costing and PPM
58 Life-cycle costing (Art. 68) costs borne by the contracting authority or other users, such as: (i) costs relating to acquisition, (ii) costs of use, such as consumption of energy and other resources, (iii) maintenance costs, (iv) end of life costs, such as collection and recycling costs costs imputed to environmental externalities linked to the product, service or works during its life cycle, provided their monetary value can be determined and verified; these costs may include the cost of emissions of greenhouse gases and of other pollutant emissions and other climate change mitigation costs
59 Contract performance conditions Article 70 new directive Contracting authorities may lay down special conditions relating to the performance of the contract. Those conditions may include economic, innovation-related, environmental, social or employment-related considerations.
60 Contract performance conditions Examples: A cleaning contract requiring the use of dosage indicators to ensure that an appropriate quantity of cleaning product is used and obliging the contractor to recycle packaging wherever possible A contract for the supply of photocopier paper requiring delivery in appropriate quantities so as to keep the number of deliveries to a minimum and delivery outside peak times to reduce petrol consumption by the delivery vehicles The terms upon which coffee and tea are purchased by a hotbeverages supplier of the contracting authority
61 Conclusion Environmental considerations and GPP in public procurement: from a condemned practice to market-based instrument for implementing the EU core environmental policy Seminar: closer look at the evolution of the case law on environmental considerations in EU procurement
62 For the seminar: Case 31/87 Gebroeders Beentjes BV v Netherlands ( Beentjes ) Case C-513/99 Concordia Bus Finland v Helsinki Kaupunki ( Concordia ) Case C-448/01 EVN v Republic of Austria ( EVN ) Case C-368/10 Commission v Netherland ( Dutch Coffee )
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