MyFondia VirtualLawyer
January 11, 2017

Towards Greener Public Procurement – a 30 Billion Euro Opportunity

I favor organic products at the supermarket, use eco-friendly detergents and buy that unpleasantly yellowish toilet paper made from recycled paper because I want to believe that even small choices can have an impact on the future. Realistically thinking, my small purchases are unlikely to have a considerable effect on our future, but what if we were talking about 30 billion euros worth of environmentally conscious procurements each year?

The state, municipalities, and other public authorities spend about 32 billion euros annually on goods and services. Although contracting authorities themselves decide what to buy, the provisions of the Act on Public Contracts guide the process of public procurements and how the choice between submitted tenders is made. Contracting authorities can very well decide to only make environmentally conscious purchases, but the laws regarding public procurement govern how this is done in practice.

The new Public Contracts Act, which entered into force on the first of January 2017, has a number of new provisions regarding how environmental concerns can be taken into account during the procurement process. These new provisions do not bring any radical changes, but aim to give contracting authorities a wider choice in how to implement green public procurement.

Even before the reform, contracting authorities have been able to apply environmental criteria in different ways and in different stages of the procurement process. Firstly, the contracting authority could bring up environmental considerations in the description of what is being procured, either by requiring that the product is environmentally friendly (e.g., the product does not contain harmful chemicals) or requiring that it is produced using environmentally friendly methods. The contracting authority could also require that tenderers meet a specific environmental requirement (e.g. employ people who have the necessary expertise to manage environmental issues relating to the contract) in order to be considered suitable. Environmental aspects could also be used in the award criteria to compare tenders. If the contracting authority selects the most economically advantageous tender, it can set environmental considerations as evaluation criteria when assessing value for money. The awarded contract itself may also include clauses setting environmental requirements for the selected provider.

Before the reform, legislation did not allow for a contracting authority to require a particular eco-label; instead it had to refer to the label criteria. The contracting authority could inform that a product or service with a certain eco-label automatically satisfies its requirements, but it also had to accept other evidence of meeting the requirements. This is no longer the case now that the new act has entered into force. The contracting authority may now require a specific eco-label and the tenderer is no longer be allowed to provide alternative evidence, except in exceptional circumstances. However, the contracting authority must accept labels that are equivalent to their chosen label.

In addition, the new act allows for the contracting authority to exclude from the tender competition a tenderer who has been proven guilty of breaching environmental laws.

This being said, the reform only makes it possible for environmental considerations to be taken into account – it still does not contain any provisions that would make this an obligation for contracting authorities. Indeed, even the preparatory work of the act states that it is impossible to assess what impact, if any, the reform will have on the environment. The new act gives contracting authorities already burdened with numerous requirements some surely appreciated freedom, but is this a wasted opportunity for the public sector to lead by example in the transition towards sustainable consumption?