The European Commission announced the release of a new proposed regulation aimed at creating simpler and more modernized public procurement rules across the EU, in addition to integrating strategic policy objectives – including environmental, climate-related and social objectives – into the procurement process.
As part of the new proposed regulation, public buyers would be required to consider not only price, but also “quality” criteria in their sourcing decisions, taking into account factors such as environmental, social, innovation, security and resilience.
Public procurement in the EU, at around €2.5 trillion annually, accounts for approximately 15% of the EU’s GDP.
The new proposed Act would simplify the EU’s current procurement regulations, effectively consolidating and updating three directives from 2014. In its reasoning for the new proposals, the EU Commission noted “significant shortcomings” from the current directives, including noting that “price-only awards remain prevalent and the uptake of social, environmental and innovation requirements continue to be limited.”
In order to help procurement more strongly support EU environmental, social and innovation goals, the new regulation proposes setting a new Best Price-Quality Ratio (BPQR) as the standard award method for public procurement, which would require the quality criteria to be given a minimum weighting of 30%, increasing to at least 50% for labor-intensive contracts, to provide more space for social considerations. The selection of quality criteria would be at the discretion of the buyers, and the BPQR would be applied using a comply-or-explain basis, with contracting authorities allowed to deviate if they explain how quality will otherwise be ensured, such as through minimum quality requirements.
Key policy objectives outlined by the proposal that should guide public procurement include boosting competitiveness, advising innovation and reinforcing its manufacturing and clean industrial base, the achievement of the EU’s environmental and climate objectives, pursuit of social justice, fair working conditions and an inclusive society, as well as the EU’s safety, security, resilience and economic security.
The proposed regulation outlines environmental and climate-related considerations enabled by the new rules, including those “with a view to preventing, reducing or otherwise mitigating adverse environmental and climate-related impacts or pursuing positive environmental and climate-related impacts throughout their lifecycle.” The regulation also enables public buyers to establish criteria “in line with the objective of a high level of environmental protection, promote circularity and resource efficiency.”
“Socially responsible” procurement criteria highlighted by the proposal include those supporting objectives of “social inclusion and labour market integration of persons with disabilities and disadvantaged persons,” “gender equality and non-discrimination measures,” promotion of the social economy and social and affordable housing, and human rights protections across the supply chain, among others.
The new proposed regulation will be sent to the European Parliament and Council for negotiation, before entering into force.
