EU procurement: Reserved contracts

The European Community (European Union) Procurement Directive 2004/18/EC offers room for social considerations, by giving the member states an option to reserve public contracts for handicapped persons.

We look at the relevant Directive provision and its explanation. Sweden and Finland present different legislative solutions at national level.

We then broaden our outlook by a few examples of activities within broader or related contexts: responsible purchasing, sustainable procurement and socially responsible procurement.



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Article 19

As an exception to ordinary award procedures public contracts can be reserved for sheltered workshops and sheltered employment programmes for handicapped persons. Article 19 of the Procurement Directive 2004/18/EC leaves this option to the member states.

This exemption has to fulfil objective criteria: Most of the employees are handicapped persons, who, by reason of the nature or the seriousness of their disabilities, cannot carry on occupations under normal conditions.

Even if only sheltered workshops or employment programmes are eligible, the rest of the Procurement Directive 2004/18/EC applies to the contract award procedure. It has to be non-discriminatory and transparent, including a reference to Article 19 in the contract notice:



S e c t i o n 4
Special arrangement

Article 19
Reserved contracts

Member States may reserve the right to participate in public contract award procedures to sheltered workshops or provide for such contracts to be performed in the context of sheltered employment programmes where most of the employees concerned are handicapped persons who, by reason of the nature or the seriousness of their disabilities, cannot carry on occupations under normal conditions.

The contract notice shall make reference to this provision.


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Reasons for special arrangement

Recital 28 of the Procurement Directive presents the reasons for creating the special arrangement, whereby contract notices can be directed solely at sheltered workshops or employment programmes:

(28) Employment and occupation are key elements in guaranteeing equal opportunities for all and contribute to integration in society. In this context, sheltered workshops and sheltered employment programmes contribute efficiently towards the integration or reintegration of people with disabilities in the labour market. However, such workshops might not be able to obtain contracts under normal conditions of competition. Consequently, it is appropriate to provide that Member States may reserve the right to participate in award procedures for public contracts to such workshops or reserve performance of contracts to the context of sheltered employment programmes.


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National level examples


Sweden

National circumstances vary. In Sweden a number of organisations consulted expressed misgivings about the effects of a provision on reserved contracts, given existing arrangements for employment of disabled persons.

This was discussed in the Government Bill (Regeringens proposition 2006/07:128 Ny lagstiftning om offentlig upphandling och upphandling inom områdena vatten, energi, transporter och posttjänster, under 9.3 Reserverade kontrakt on page 185 to 187).
The Swedish Government decided not to include a provision on reserved contracts in its proposal, with the following conclusions:


Utredningen föreslår att bestämmelserna om reserverade kontrakt genomförs i den svenska lagstiftningen. Flera remissinstanser har emellertid invänt att en bestämmelse om reserverade kontrakt kräver ytterligare preciseringar bl.a. såvitt avser hur begreppen ”skyddade verkstäder” och ”program för skyddad anställning” skall tolkas. Det har även framförts att förslaget skulle kunna få ogynnsamma marknadsstörande effekter.

Regeringen anser att utredningens förslag för närvarande inte bör genomföras.


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Finland

Finland has made use of the option to reserve the award of certain public contracts to sheltered workshops or employment programmes. Section 14 of the Act on Public Contracts (348/2007) is practically identical to Article 19 of the Procurement Directive:


Section 14 — Reserving public contracts for sheltered workshops

Contracting authorities may reserve the right to participate in public contract award procedures in favour of sheltered workshops or provide for such contracts to be performed in the context of sheltered employment programmes where most of the employees concerned are people with disabilities who, by reason of the nature or the seriousness of their disabilities, cannot carry on occupations under normal conditions. The public contract notice must indicate that the contract is reserved for sheltered workshops or programmes.


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Responsible purchasing

A broader outlook is provided under the term responsible purchasing, which includes issues such as professional standards for purchasing staff, environmental considerations, ethical and social issues as well as the role of small and medium-sized enterprises (SMEs).


The Scottish Parliament has approved a Responsible purchasing strategy, which may be of interest elsewhere in Europe:



http://www.scottish.parliament.uk/corporate/procurement/docs/Strategy-FINAL.pdf


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Sustainable procurement

Even if the Scottish Parliament preferred the term responsible purchasing (rather than sustainable procurement) Local Governments for Sustainability ICLEI campaign for sustainable procurement. You can find information about their Procura+ campaign and other activities on:


http://www.iclei-europe.org/index.php?id=procurement




Socially responsible procurement (SRP)

The ICLEI Respiro project is aimed at socially responsible procurement. You can access information here:

http://www.respiro-project.eu/index.php?id=conference



Ralf Grahn