New EU Directives offer boost to green procurement

Environmental criteria should play a greater role in public sector purchasing following agreement in December on two EU Directives covering public procurement. The changes mean that public bodies will no longer have to accept the cheapest bid, and will be able to specify production methods in technical specifications.

Proposals for the revision of EU Directives covering public procurement were issued in 2000. The two Directives - one for government bodies and one for utilities - aim to simplify and update the EU's public procurement rules.

These govern some €1.4 billion of public contracts granted each year, representing 14% of the EU's gross domestic product.

The existing Directives required public bodies to choose the "most economically advantageous" bid in a competitive tendering process and did not include any specific references to environmental or social considerations.

The new proposals contained the first references to the environment in EU public procurement legislation. They required purchasers to consider environmental issues alongside traditional factors, such as price and quality, before choosing the best bid - without dictating the weight purchasers should give to environmental issues in arriving at the final decision.

Negotiations on the proposals between the European Parliament and Council of Ministers concluded in December.

On social and environmental issues, the final text takes last year's "Finnish buses" ruling by the European Court of Justice as its starting point (ENDS Report 335, p 56 ).

The court ruled that the contracting authority must award a contract to the tenderer whose bid is the most economically advantageous, but that it may take environmental criteria into account when deciding which bids to take into consideration, provided the criteria are expressly mentioned in the tender notice or specification and are connected with the subject matter of the contract.

The key provisions in the final texts are:

  • Choosing a bid: The Council of Ministers wanted bodies to be required to accept the tender "most economically advantageous for the contracting authority". This was subtly changed to the tender most economically advantageous "from the point of view" of the contracting authority.

    The change should provide more scope for the inclusion of "external costs" associated with products, such as the cost of treating respiratory illness linked to the use of vehicles.

  • Relevance of green issues: Environmental criteria can be included in tenders provided they are "linked to" the subject matter of the contract. The Council had pressed for the phrase "justified by", which would have made it more difficult to include environmental issues.

  • How products are made: Contracting bodies will be able to take into account production methods in any technical specifications laid down for a contract. For example, paper could be required to be bleached without the use of chlorinated chemicals.

  • Eco-labels: Contracting bodies can use eco-label criteria, either wholly or in part, when setting environmental specifications. Products bearing the eco-label would then be presumed to comply with the specification, but other forms of proof, such as a manufacturer's technical dossier or a test report from a recognised body, are equally acceptable.

    The new Directives may not trigger a sea change in green purchasing. While the previous procurement Directives did not mention the environment, they did not rule it out either. Moreover, since the Helsinki buses ruling, public bodies have had greater freedom to take environmental criteria into account in granting contracts.

    However, the Directives spell out the new legal position, which should quell authorities' fears about potential legal challenges. And by explicitly including the environment as a legitimate factor in procurement, they will encourage more public bodies to green their purchasing operations.

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