New European public procurement law: Enhancing eco-innovation

The new EU public procurement system, entering into force on 18 April 2016, will open up fresh opportunities for public authorities to spur eco-innovation by using new award criteria in contract notices that place more emphasis on environmental considerations.

Public authorities will be able to require that bidders not only comply with environmental obligations, but also deliver goods fulfilling the requirements of environmental labels. In addition, they can ask bidders to enhance environmental factors when producing goods or to integrate environmental costs in an offer based on a life-cycle cost approach.

By using their purchasing power to choose environmentally friendly goods, services and works, Europe’s public authorities can make an important contribution to sustainable consumption and production.

Horizontal clause to ensure the respect of environmental legislation

As a general rule, enterprises must comply with applicable EU, international and national environmental obligations in the performance of public contracts. Public authorities will be able to exclude enterprises from the tender procedure which do not respect these environmental obligations. Contract authorities will also not be mandated to choose the best tender if it does not comply with applicable environmental law, and they will have to reject abnormally low offers achieved through environmental dumping.

Defining environmental criteria for a contract with the help of ecolabels

To ensure that enterprises deliver products in line with high environmental standards, public authorities can request that the works, goods, or services fulfil the requirements of an ecolabel such as the European Ecolabel, multinational ecolabels or other environmental labels (see list of Ecolabels). These labels attest that the product fulfils predefined quality requirements based on objectively verifiable criteria that was adopted by a procedure in which government bodies, consumers, manufacturers, distributors and environmental organisations have had the possibility to participate.

When used in tender notices, the requirements of the label must be fulfilled by the subject-matter of the contract, such as the description of the product and its presentation, including packaging requirements. References to labels should not have the effect of restricting innovation however.

Production process - Fair trade origin or no toxic chemicals

Public purchasers, when technically describing the products or services they want to purchase, will be able to ask bidders to use inputs respecting high environmental performance, such as:

• Nonuse of toxic chemicals;.
• Use of energy efficient machines when producing/providing goods or services;.
• Favouring fair trade origin inputs for the product.

Public purchasers will also be able to award contacts to those enterprises offering products/services which meet environmental conditions in the best possible way and to assess value for money on the basis of environmental aspects (e.g. whether books were printed on recycled paper or on paper from sustainable timber).

Life-cycle costing includes internal costs and costs related to environmental factors

The new rules will allow public authorities to choose a life-cycle costing approach which allows them to take into consideration costs associated with the use, maintenance and end-of-life of supplies, services or works. This includes internal costs, as well as costs related to environmental externalities:

• Internal costs include research and development, production, transport, consumption of energy, maintenance and end-of-life disposal.
• Costs related to environmental externalities, such as the emission of greenhouse gases, pollution caused by the extraction of raw materials or caused by the product or its manufacturing, can be taken into account if their monetary value is determinable. If no common EU method exists for the calculation of life-cycle costs, methods can be established at national, regional or local level. However, these methods should not be designed only for a single specific public procurement procedure, they should be objective, and it should be possible for enterprises to provide the data required through reasonable effort.

Common methodologies should be developed at EU level for the calculation of life-cycle costs for specific categories of supplies or services. Where such common methodologies are developed and are mandatory, their use should be made compulsory in contract notices.

Background

Research and innovation, including eco-innovation and social innovation, are among the main drivers of future growth and have been put at the centre of European Commission President Jean-Claude Juncker’s priorities to bring about the transition to a low-carbon, secure and competitive economy. Buying innovative products, works and services plays a key role in improving the efficiency and quality of public services while addressing major societal challenges. It contributes to achieving best value for public money, as well as wider economic, environmental and societal benefits by generating new ideas, translating them into innovative products and services, and promoting sustainable economic growth.