1.    Introduction

Public procurement refers to the process by which public authorities, such as government departments or local authorities, purchase works, goods or services from companies. Every year, over 250,000 public authorities in the EU spend around 14% of GDP on the purchase of services, works and supplies. It is thus a powerful instrument to influence the market.

More specifically, public procurement can help to increase the market share of products and services that are more respectful of the environment and also contribute in the future to reduce the price of those products and services.

In addition, it might be useful for public authorities to implement joint procurement procedures in order to reduce their costs. However, public authorities have to be careful with joint procurement initiatives to not scratch completely local actors that depend on smaller procurement opportunities and cannot answer joint procurement tenders.

2. General European Framework

Since 18 April 2016 the EU member states had to transpose into their national legislation three directives: the directive 2014/23/EU on the award of concession contracts, the directive 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sectors, and lastly the directive 2014/24/EU on public procurement (for the purpose of this guidance material, only the last one will be discussed in detail, as below). These rules simplify the procedures, promote competition and transparency, make it easier for SMEs to participate in tenders and introduce environmental and social considerations as well as innovation aspects. These directives stipulate the following principles:

  • wider use of electronic procurement (e-procurement),
  • participation of small and medium-sized enterprises (SMEs) in public tenders,
  • simplified procurement rules for public authorities,
  • innovation partnerships to keep public services up to date,
  • more competition with new rules on concessions,
  • facilitating procurement cooperation among public authorities,
  • lighter rules for the utilities sector,
  • preventing corruption,
  • supporting social responsibilities,
  • enhancing eco-innovation,
  • more flexibility for service contracts on health and social issues.

Directive 2014/24/EU on public procurement

The legislation specifies that when national authorities use public procurement to invite tenders to provide works, supplies or services, they must treat all applicants equally and not discriminate among them. They must also be transparent in their dealings. The rules applicable to public contracts must be followed when the sums involved are above 221,000€ for local and regional government contracts.

The contract is awarded to the most economically advantageous tender (MEAT) to be identified in particular on the basis of the best price-quality ratio. This criterion takes into account such factors as the overall cost effectiveness, quality, environmental and social aspects, trading and delivery conditions. The Directive introduces a new procedure to promote the development of innovative products, services or works. To facilitate the participation of small companies, the new rules encourage public authorities to divide up large contracts into individual lots.

Furthermore, in October 2017, the European Commission adopted the new Public Procurement Strategy, which is based on six main pillars as policy strategy priorities. These six priorities are: ensuring wider uptake of innovative, green and social procurement; professionalising public buyers; increasing access to procurement markets; improving transparency, integrity and data; boosting the digital transformation of procurement; cooperating to procure together.

The European Commission has developed criteria to facilitate the inclusion of green requirements into public procurement tenders for more than 20 product groups. These include ‘core criteria’ suitable for any contracting authority and focused on key environmental issues, and ‘comprehensive criteria’ with a higher level of ambition aimed at purchasing the best environmentally-friendly products available on the market.

Additionally, there are some legislative instruments from the Circular Economy Action Plan that have an influence on public procurement procedures. However, the integration between PP and circular economy is still at its early stage at the EU level. Incorporating social, environmental and economic specifications into public procurement can produce an indirect effect on products and consumers themselves, stimulating circular economy. In particular the following initiatives are linking PP and circular economy:

Eco-design Directive 2009/125/EC

EU Member States are able to implement waste-preventing public procurement strategies according to information about the products’ technical durability. Moreover, recycling requirements could be designed taking into consideration the corresponding requirements for waste treatment in the waste legislation related to products. This move could significantly support the circular flow of substances and materials.

Environmental Footprint Initiative of the European Commission

This approach is providing a harmonisation process for the development of a scientific and consensus based method, trying to inform and direct consumer choices with clear and comparable environmental information.