General EU law on public procurement

3.3 EU level

3.3.1 General EU law on public procurement

The Art. 1 of of the Directive 2014/24/EU, which is secondary legislation in the EU, connects the directive to wider internal market context.²⁵⁴ The regulation of public procurement is justified by the fundamental principles of the Treaties.²⁵⁵ The scholars have claimed that present procurement directives are based on the Treaty on Functioning of the European Union (TFEU). Especially the Art. 34, Art. 56 and Art. 49 of the Directive 2014/24/EU are claimed to be based on the TFEU.²⁵⁶

250 van Asselt – van Der Grijp – Oosterhuis Climate Policy 2006, p. 222.

251 Ibid.

252 van Asselt – van Der Grijp – Oosterhuis Climate Policy 2006, p. 223.

253 van Asselt – van Der Grijp – Oosterhuis Climate Policy 2006 p. 224.

254 That is conditions of competition according to Art. 346 of the TFEU. OJ 26.10.2012 C 326, p. 47–390.

Read more Ukkola Defensor Legis 2013, p. 260.

255 Drijber – Stergiou Common Market Law Review 2009, p. 805–846.

256 Ukkola 2018, concluded that the bases is in Art. 34–37, Art. 49 and Art. 56 of the TFEU. OJ 26.10.2012 C 326, p. 47–390.

According to Art. 34 of the Directive 2014/24/EU, “quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.”²⁵⁷ Art.

49 of the Directive 2014/24/EU concludes that it is not allowed to restrict the freedom of establishment of nationals of another member state.²⁵⁸ Also, in Art. 56 of the Directive 2014/24/EU regulates, that it is prohibited to restrict the “freedom to provide services”

within the EU and “in respect of nationals of Member States who are established in a Member State other than that of the person for whom the services are intended.”

The European Parliament and the Council, “in accordance with the ordinary legislative procedure” can expand the regulation “to nationals of a third country who provide services and who are established within the Union.”²⁵⁹

The EU promotes free markets, free movement of goods, freedom of establishment and free movement of services.²⁶⁰ The public procurement measures are strictly regulated by the EU²⁶¹ by public procurement directives,²⁶² which are unique regulations in the field of Internal Market Law since they include obligation to promote internal market goals.²⁶³ The legislation of public procurement has spread rapidly.²⁶⁴ Public procurement includes barriers to entry, but it can also be a tool to reduce those barriers if used with knowledge and pragmatism.²⁶⁵ In the EU, the public procurement is considered as an essential component of the Single Market and EU integration.²⁶⁶ With the public procurement policy it is possible to promote wider political aims.²⁶⁷ One of the aims the Commission has set, is promoting environment measures²⁶⁸ in the EU with the help of public procurement.²⁶⁹ In the year 2001, the Commission published an Interpretative Communication setting out the Commission`s

257 OJ 26.10.2012 C 326, p. 47–390.

258 It is also prohibited to restrict nationals of other member state setting up agencies, branches or subsidiar-ies. OJ 26.10.2012 C 326, p. 47–390.

259 OJ 26.10.2012 C 326, p. 47–390.

260 The Art. 26 and the Art. 34 of the TFEU. OJ 26.10.2012 C 326, p. 47–390.

261 Legal bases: Articles 26, 34, 53(1), 56, 57, 62 and 114 of the TFEU. OJ 26.10.2012 C 326, p. 47–390.

262 OJ 28.3.2014 L 94/134; OJ 28.3.2014 L 94/243; OJ 28.3.2014 L 94/1.

263 Arrowsmith 2014, p. 237–302.

264 The current Directive 2014/24/EU includes 94 articles.

265 Fana – Piga 2013, p. 293.

266 Bovis 2012, p. 482; Also information about public procurement is gathered. Public procurement indicators 2015, 2016, provides three indicators of performance of public procurement in the EU. The indicators are gathered from the information published in the OJ, the TED and from National Statistics Institutes.

267 COM (2011) 15 final, p. 33.

268 Such as energy efficiency-related aspects when purchasing products and services. COM (2011) 896 final, Proposal for a Directive of the European Parliament and of the Council on public procurement. p. 23;

PE487.738 The Committee on the Environment, Public Health and Food Safety, added animal welfare p. 4, 7 and climate change p. 3, 6.

269 PE487.738 The Committee on the Environment, Public Health and Food Safety

view on the use of public procurement for environmental purposes.²⁷⁰

The EU Public procurement Directives²⁷¹ set and define the legal framework of the public procurement in the EU member states. The aim of the public procurement legislation is to promote fair competition and equal treatment of all economic operators in the EU.²⁷² The EU member states’ task is to ensure that public entities comply with obligations those set by the EU and national laws, but also by the collective agreements and the international envi-ronmental law according to Art 18 of the Directive 2014/24/EU.²⁷³ These provisions include the field of environmental law conventions such as the Vienna Convention for the protection of the Ozone Layer, the Basel Convention, the Stockholm Convention on Persistent Organic Pollutants (Stockholm POPS Convention) and the Convention on the Prior Informed consent procedure for certain Hazardous Chemicals and Pesticides in International Trade (UNEP/FAO) (The PIC Convention). ²⁷⁴ However, the international climate treaties such as the Kyoto Protocol and the Paris Agreement are not mentioned.

According to the preamble of the Directive 2014/24/EU, principles such as “equal treatment, non-discrimination, mutual recognition, proportionality and transparency,” need to be taken into account in every procurement process.²⁷⁵ If these principles are not carefully considered, when preparing the public purchase, there will be a high risk that one or several candidates will appeal to the court about the procurement process or about the procurement decision. Also, during the process, it should be secured that all potential candidates have similar possibilities to tender.²⁷⁶ The main rule is that all kind of discrimination is banned.²⁷⁷

270 McCrudden, Natural Resources Forum 2004; SEC (2004/1050). Also, similar document relating to pursuit of social policy in public procurement was published.

271 The public procurement is regulated in the Directives (Directives 2004/17/EC on procurement in the wa-ter, energy, transport and postal services sectors (COM/2011/895 final) and 2004/18/EC on public works, supply and service contracts (COM/2011/0896 final)), and in the adoption of a Directive on concession con-tracts).

272 The preamble 1 of Directive 2014/14/EU

273 OJ 28.3.2014 L 94/143

274 Listed in the Annex X of the Directive 2014/24/EU. OJ 28.3.2014 L 94/134.

275 OJ 28.3.2014 L 94/134. For example, one way the principle of transparency is guaranteed is publishing three types of notices in the Official Journal of the EU (OJ); periodic indicative notice, invitation to tender and contract award notice. These notices serve the openness of the system and proactivity of the public enti-ties.

276 Art. 42 para. 2 of Directive 2014/24/EU

277 The preamble 1 of Directive 2014/24/EU

34 3.3.2 EU law on sustainable public procurement

Shared competences found in TFEU Art. 191²⁷⁸ promote EU policies which aim to solve regional and global environmental problems. This article gives competence to the EU to regulate directives and regulations which are completed by environmental action plans.

Decision No 1386/2013/EU of the European Parliament and of the Council of 20 November 2013 on a General Union Environment Action Programme to 2020 Living well, within the limits of our planet sets environmental goals for the EU until 2030.²⁷⁹ These action plans in the EU include, for example, how to reinforce sustainability of cities and how to transfer EU to low carbon economy. All in all, sustainable development has a strong legal position among the objectives of the EU and it is promoted in various ways.²⁸⁰ The interpretation of EU law bases on teleological approach,²⁸¹ which highlights commonly agreed objectives.²⁸² One of the legal principles is found in EU primary law the Art. 11 of the TFEU i.e. integration principle, which demonstrates a comprehensive duty to integrate environmental protection requirements in all activities of the EU. ²⁸³

Art. 11 (ex-Art. 6 TEC) of the TFEU sets the obligation to integrate environmental protection requirements and promote sustainable development in all EU policies.²⁸⁴ This sets a duty for law-makers to ensure the environment protection requirements are initiated.²⁸⁵ It means that sustainable development measures in legal infrastructure are applied. This promotes change in all sectors since the status quo has been unsustainable and cannot be continued according to IPCC.²⁸⁶Art. 191 of the TFEU regulates that one of the objectives and policies is the combating of climate change. The procurement Directive 2014/24/EU includes provisions, which can be used defining climate criteria in public procurement measures.

Due to Art. 18 para. 2 of the Directive 2014/24/EU, it is the task of every member state to ensure that economic actors “comply with applicable obligations in the field of environmental law” regulated by the EU.²⁸⁷ The reformed public procurement directive also

278 OJ C 202, 7.6.2016, p. 132–133.

279 OJ L 354, 28.12.2013, p. 171–200.

280 Art. 11 of the TFEU having an influence on all the EU regulation and governance, for example: COM (2018) 353 final; COM (2016) 739 final.

281 Read more this thesis p. 12.

282 Sjåfjell 2015, p. 52.

283 Read more: Romera – Caranta EPPP 2017, p. 287.

284 Sjåfjell 2015, p. 53.

285 Sjåfjell 2015, p. 59.

286 Sjåfjell 2015, p. 60.

287 OJ 28.3.2014 L 94/143

introduced and regulated new instruments in order to combine environmental aspects to the public procurement processes. One of them can be found in the Art. 68 of Directive 2014/24/EU about life-cycle costing (LCC).²⁸⁸ The LCC combines all the costs encountered

“during the lifetime of the product, work or service.”²⁸⁹ In addition to the purchace price, delivery costs, installation and insurance costs, it can also include “operatin costs, energy and water use” or “end-of-life costs such as disposal” costs.²⁹⁰ What makes this procurement tool interesting is that it may also include costs of externalities²⁹¹ such as GHG emissions. The data and calculation methods used must, however, be defined. They need to be transparent and fair. With the help of this procurement tool, it is possible to gain savings on use of energy, on maintenance costs or for example disposal costs.²⁹²

What comes to environmental and climate-friendly criteria in public procurement, two parts of the tendering process are crucial while designing the tendering process; requirements and award criteria.²⁹³ The public procurement permits a possibility to set prequalification criteria of bidders, and mandatory requirements for the contract or for the terms of the contract.

According to the Directive 2014/24/EU, companies who have violated environmental legislation or regulations can be excluded.²⁹⁴ Art. 57 of the Directive 2014/24/EU sets criteria for exclusion grounds.²⁹⁵ The public entity can “exclude an economic operator from participation in a procurement” process, if the economic operator has committed a crime, for example, an environmental crime.²⁹⁶

The technical specifications are defined in Art. 42 of the Directive 2014/24/EU. They can be first performance-based or functional specifications or secondly specifications based on standards.²⁹⁷ Technical specifications are used to guarantee equal access for economical op-erators to the chosen procurement procedure. Technical specifications prescribe minimum

288 OJ 28.3.2014 L 94/143

289 Art. 68 of Directive 2014/24/EU.

290 Ibid.

291 The preambles 93 and 96 of Directive 2014/24/EU; Art. 68 para 1b of Directive 2014/24/EU.

292 Read more: Art. 68(2) of Directive 2014/24/EU and Art. 83(2) of Directive 2014/25/EU.

293 Appolloni et al. 2013, p. 125.

294 According to Art. 57 of the Directive 2014/24/EU. OJ 28.3.2014 L 94/143; EMAS is based on Regulation No 1221/2009.

295 OJ 28.3.2014 L 94/143

296 Art. 57 of the Directive 2014/24/EU. OJ 28.3.2014 L 94/143; COM (2011) 896 final.

297 Art. 42 para 3a and 3b of the Directive 2014/24/EU.

requirements. This means that if a tender does not conform to the specifications, it must be rejected.²⁹⁸ Environmental characteristics can also be used as a requirement (Art. 42(3)a) of the Directive 2014/24/EU. Annex VII describes how technical specification characteristics may include environmental and climate aspects.

According to the Art. 43 of the Directive 2014/24/EU the use of specific labels, such as eco-labels, in the procurement processes is possible.²⁹⁹ Labels help to identify, which products have the smallest harmful impact on environment.³⁰⁰ The requirements of the label must be based on objectively verifiable criteria, the labels should have been established in a transparent procedure and they should be accessible to all actors.³⁰¹ In addition, the requirements for the label should be set by a third party.³⁰² If the economic operator does not have access to the label, for example, due to the time-limits, but they are able to meet requirements in other ways, they can still be accepted.³⁰³ Labels can be used, but they cannot serve as selection criteria.³⁰⁴ Labels work as a valuable supplement to market-based instruments promoting environmental aspects.³⁰⁵

Green considerations in the technical capacity criteria can be included in terms of past expe-rience of companies (i.e. company references) and their personnel´s professional qualifica-tions (i.e. individual references). Inclusion of environmental management systems, such as the Eco-Management and Audit Scheme (EMAS), or eco-labels is usefull.³⁰⁶ The awarding criteria can be based on two possibilities; the lowest price or the most economically advan-tageous tender (MEAT).³⁰⁷ Using the lowest price requires a proper design of the other phases of the tender.³⁰⁸ In MEAT the environment measures can be included in the awarding procedure. The authorities need to set out the environmental criteria and their scores in the call for tenders. Scores must be objectively qualified. According to Art. 62 of the Directive

298 Art. 45 para 3 of the Directive 2014/24/EU.

299 OJ 28.3.2014 L 94/143

300 Examples of existing labels are European Ecolabel, Energy Star, TCO and Nordic Swan.

301 Art. 43 paras 1b and 1d of the Directive 2014/24/EU.

302 Art. 43 para 1e of the Directive 2014/24/EU.

303 Art. 43 of the Directive 2014/24/EU.

304 The selection criteria are defined in Art. 58 of the Directive 2014/24/EU.

305 Jänicke – Lindemann Environmental Politics, 2010 p. 134–135.

306 Art. 62 of the Directive 2014/24/EU. OJ 28.3.2014 L 94/143

307 Bovis 2012, p. 123–124.

308 On the contrary, reverse auction in public procurement means that the public entity sets the certain price level and the tenderers compete on quality.

2014/24/EU, if contracting authorities require certificates and an economic operator does not have access to them, also other evidence of environmental management is accepted. Accord-ing to Art. 67 of the Directive 2014/24/EU, also the public entity may use the most econom-ically advantageous tender not only based on the price but on using cost-efficiency approach, meaning that life-cycle costs of the product can be included as well as, environmental aspects in wider sense, if they are linked to the subject-matter.

The Directive of 2014/24/EU enables contracting authorities to procure products and ser-vices through promoting innovation and respecting environment.³⁰⁹ Also, according to Art.

70 of the Directive 2014/24/EU the authorities may consider special environmental condi-tions, which are related to the performance of a contract, on the condition, that they are linked to the subject-matter. All decisions in the public procurement must, however, always be based on the “fundamental principles of transparency, integrity, economy, openness, fair-ness, competition and accountability.”³¹⁰

The public procurement is used in order to achieve political aims, which means aims commonly agreed by the Parliament or set by the Commission. In 2001, the Commission published an Interpretative Communication, which specified the Commission`s opinion on the use of public procurement for environmental purposes.³¹¹ During the same year, the EU also published the Green Paper on Integrated Product Policy and focused on product-oriented environmental aspects.³¹² The aim was to reduce environmental impacts of products throughout their life-cycle.³¹³ The Commission has encouraged member states to formulate publicly available action plans with aim of making their public procurement more environmentally friendly.³¹⁴ In the 2005 European Commission survey on the state play of GPP in the member states, it was found that seven member states, Austria, Denmark, Finland, the Netherlands, Sweden and the UK, were practicing GPP.³¹⁵

309 Art. 70 of the Directive 2014/24/EU. OJ 28.3.2014 L 94/143

310 Art. 2 of Directive 2014/24/EU. OJ 28.3.2014 L 94/143.

311 McCrudden 2006; SEC (2004/1050).

312 COM (2001) 68 final.

313 Appolloni et al. 2013, p. 112.

314 Communication on Integrated Product Policy (IPP) of 18 June 2003.

315 In these countries 40–70 % of all tenders published on Tenders Electronic Daily (TED) during the year 2005 included environmental criteria. McCrudden 2006, p. 22.

GPP is characterized as a procurement process in which the authorities take environmental considerations voluntarily into account during the selection process of the winner of the con-tract.³¹⁶ GPP is promoted by governance instruments such as guidance, which can be used without legislation and which can help to build low-carbon markets.³¹⁷ In 2004 and revised 2011 and 2016 Buying Green! – a handbook regarding GPP was published in order to help local authorities to purchase in a more environment-friendly way.³¹⁸ Buying Green! guid-ance by the European Commission helps public authorities to buy products and services with the low environmental impact.³¹⁹ It is also a recommendation for companies responding to green tenders. Published in 2012, this publication is a collection of examples of GPP in practice introducing interesting cases since 2010.³²⁰ The aim is to inspire public entities to support green products and services in their public procurement processes.

In addition, there exists Public procurement for a Better environment (2008).³²¹ This document is a guide for diminishing the environmental impact, which is caused by public sector consuming. It also suggests the use of GPP in order to promote innovation in environmental technologies, products and services.³²² The EU renewed its Development Strategy in 2006 and published in 2008 the sustainable consumption and production and sustainable industrial policy action plan.³²³ This document aimed at developing the energy and environmental performance of products. EU 2020 strategy also established targets for the GPP in terms of energy savings and energy efficiency.³²⁴ The procurement directives started to be used increasingly as a tool of developing policy sectors. The Commission published a Green Paper on the modernization of EU public procurement policy on the 27th of January 2011.³²⁵ This initiative realized the Europe 2020 strategy for smart, sustainable and inclusive growth³²⁶ and the Europe 2020 Flagship Initiatives on a Digital Agenda for

316 Read more, Bowler et al. 2005, p. 26.

317 Mertz 2009, p. 304.

318 European Commission 2016b.

319 Ibid.

320 European Commission: Collection of Good Practices on GPP 2012.

321 COM(2008) 400 final.

322 Ibid.

323 COM(2008) 397 final

324 Based on COM (2011) 15 final.

325 COM (2011) 15 final.

326 COM (2010) 202.

Europe,³²⁷ the Innovation Union,³²⁸ Integrated Industrial Policy for the Globalization Era,³²⁹ Energy 2020³³⁰ and a Resource Efficient Europe.³³¹ In 2017, the Commission published a guidance considering Public Procurement for circular Economy.³³²

EU legislation on environmentally sustainable consumption began to also set obligations for the public sector. These included the Directive 2006/32/EC of the European Parliament and of the Council of 5 April 2006 on energy end-use efficiency and energy services and repealing Council Directive 93/76/EEC (energy end-use efficiency and energy services (Directive 2006/32/EC),³³³ the Directive 2008/98/EC of the European Parliament and of the Council of 19 November 2008 on waste and repealing certain Directives (Directive 2008/98/EC),³³⁴ the Directive (EU) 2019/1161 of the European Parliament and of the Council of 20 June 2019 amending Directive 2009/33/EC on the promotion of clean and energy-efficient road transport vehicles (Directive 2019/1161/EU)³³⁵ and also COM (2011) 109,³³⁶ which set an energy efficiency plan causing a key role to be played by public purchasing authorities. ³³⁷

A brochure regarding Circular Procurement introduces practical instructions to those who commit procurement decisions.³³⁸ It consists of sector specific recommendations such as construction and buildings, food and catering services and energy-using products.³³⁹ The EU has collected the good practices guide in order to make it easier for authorities to promote sustainable public procurements. ³⁴⁰GPP Toolkit includes six independent modules and ten

327 COM (2010) 245 final.

328 COM (2010) 546.

329 COM (2010) 614 final.

330 COM (2010) 639 final.

331 COM (2011) 21 final; SEC (2011) 1067 final.

332 European Commission: public procurement for a circular economy, 2017.

333 OJ 27.4.2006 L 114, p. 64–85.

334 OJ 22.11.2008 L 312, p. 3–30.

335 OJ 12.7.2019 L 188, p. 116–130.

336 COM(2011) 109 final

337 Appolloni et al. 2013, p. 113–114.

338 European Commission: Public Procurement for a Circular Economy 2017. Also practical guidance in Climate KIC EIT: The challenges and potential of circular procurements in public construction projects

339 European Commission (2016b)

340 European Commission: Environment: Green Public Procurement: Projects and Toolkit. 2019.

operation modules³⁴¹ to help in GPP procedures.³⁴² One of these guidances, is about the procurement of furniture.³⁴³ According to it, the life-cycle of furniture products has been considered to be divided into materials used, manufacturing, packaging, distribution, use and end-of-life of the product.³⁴⁴ The EU is encouraging the implementation of cost-efficient GPP and several EU member states have initiated to do efforts in order to make their public

In document Climate Criteria in Municipal Public Procurement Law Framework in Finland (sivua 68-0)