Kompass Nachhaltigkeit

A requirement analysis should be used to answer the first question that comes up in a public procurement process: What do I need?

Products are often bought out of habit and not necessarily because they offer the best solution. In the requirements analysis, we thoroughly examine which solution and, by extension, which product best serves our purpose.

The following sustainability aspects might be considered in a requirements analysis:

• Do we actually need this product? Will there still be a need for it in the future?
• Is there another way to adequately cover the respective need? E.g. through recycling, exchange, repair, buying a multifunctional product, purchasing a substitute
• Life-cycle costs of the respective product (you can find tools for life-cycle costing (LCC) on the website of the German Federal Environment Agency (Umweltbundesamt)
• What are the social and environmental risks along the supply chain of the respective product? How can these challenges be countervailed through strategic purchasing? Learn more about it here as well as in the CSR Risk Check by "Helpdesk Business & Human Rights".
• Are all equipment features really needed? Can I leave out unessential extras?
• Prioritise individual functions of the device according to their importance. Less important functions don’t need to be as powerful and fast. This way, you can save costs and instead invest in improved energy efficiency (e.g. an energy-efficient multifunctional printer that achieves good printing results, but is equipped with a slow photo print option).

A market analysis offers you the opportunity to get an overview of all existing alternatives and initiate a market dialogue, if possible.
Simple (desktop) research may be sufficient for some products. But for complex products and services it might be beneficial to integrate different market participants.

The following measures can be applied during market analysis:

• Holding information events for corporations on procurement practices in general and upcoming award procedures in particular
• Visiting trade fairs and consulting suppliers
• Collecting information on products that are certified – analyse and compare labels with the Sustainability Standards Comparison Tool!
• Releasing information in advance on required sustainability criteria 
• Holding exploratory discussions with long-standing partners: which additional environmental and social requirements can be integrated in the future or in existing contracts?
• Conducting analyses: which products and product parts respectively bear social and environmental risks? Consult external experts from research institutes or NGOs. For large-scale purchases involving a high degree of innovation, consider commissioning scientific studies.

All activities during the market analysis and the dialogue with market participants need to be transparent and open to all potential bidders. They must not in any way prevent the suppliers from participation in calls for tenders (e.g. by circulating information during a workshop to a specific group of participants). Furthermore, no preference should be given to potential bidders during the purchasing process (e.g. by expressing technical preferences for a specific product). All market analysis activities and results should be documented in the tender documents.

The subject-matter of the contract defines the product or service you are looking for. The subject-matter should be formulated carefully since it determines
which criteria can be integrated into the technical specifications and the award criteria. An accurate subject-matter should integrate from the outset environmental and social references to underscore their relevance for the call for tenders.

Hence, by defining the subject-matter, you can integrate environmental aspects and social standards into the procurement procedure.

Examples:

• Double-door wardrobes and shelves made of low-emission wooden composite boards and sourced from verifiably sustainable forestry
• Fair traded coffee
• Electricity produced from renewable energy sources (green electricity)
• Organically grown food
• Low-emission printer

The technical specifications provide the basis on which bidders prepare their tender. The subject-matter of the contract should be described as explicitly and
exhaustively as possible in the technical specifications. It should establish the characteristics required. This allows a comparison of all incoming tenders and clarifies the subject-matter for all potential participants.

The characteristics of the subject-matter can be defined as performance or functional requirements or as a description of the problem to be solved. The specifications may include as many references to environmental and social aspects as desired by the buyer, provided that all characteristics are linked to the subject-matter and are proportionate to the objective and value of the procurement target.

Regarding the link to the subject-matter Art. 42 Directive 2014/24/EU states that those characteristics may also refer to the specific process or method of production or provision of the requested works, supplies or services or to a specific process for another stage of its life cycle even where such factors do not form part of their material substance provided that they are linked to the subject-matter of the contract and proportionate to its value and its objectives. This includes compliance with social requirements, e.g. the ILO Core Convention.

As a means of proof that the works, services or supplies correspond to the required characteristics, contracting authorities can require a label, provided that certain conditions of Art. 43 2014/24/EU are fulfilled. The Sustainability Compass assists you in reviewing conformity of labels with these legal conditions (product search).

The selection criteria ensure that a candidate or tenderer has the legal and financial capacities and the technical and professional abilities to perform the
contract to be awarded.

The selection criteria may relate to: (1) suitability and permission to pursue the professional activity, (2) economic and financial standing and (3) technical and professional ability (Art. 58 2014/24/EU). Besides conventional criteria relating to economic standing such as turnover, financial statements and necessary insurance policies, sustainability-related aspects like information on supply chain management can be checked with regard to the technical and professional ability.

Mandatory exclusion grounds lead to the economic operator’s exclusion from participation in a procurement procedure at any time. That means contracting authorities can exclude economic operators if they are aware of grounds for exclusion. Furthermore, contracting authorities may exclude economic operators on facultative grounds, e.g. non-compliance with ILO Core Conventions.

Mandatory grounds for exclusion related to sustainability:

• Child labour and other forms of trafficking in human beings as defined in Article 2 of Directive 2011/36/EU  (Art. 57 (1) (f) 2014/24/EU)

• Awareness that the economic operator is in breach of its obligations relating to the payment of taxes or social security contributions (Art. 57 (2) 2014/24/EU)

• Corruption, as defined in Article 3 of the Convention on the fight against corruption involving officials of the European Communities or officials of Member States of the European Union and Article 2(1) of Council Framework Decision 2003/568/JHA as well as corruption as defined in the national law of the contracting authority or the economic operator (Art. 57 (1) (b) 2014/24/EU) 

Facultative reasons for exclusion related to sustainability:

• The contracting authority can demonstrate by any appropriate means a violation of applicable obligations in the fields of environmental, social and labour law established by Union law, national law, collective agreements or by the international environmental, social and labour law provisions, e.g. the ILO Core Conventions (Art. 57 (4) (a) 2014/24/EU)

• The contracting authority can demonstrate by appropriate means that the economic operator is guilty of grave professional misconduct, which renders its integrity questionable (Art. 57 (4) (c) 2014/24/EU)

Each bid that complies with the characteristics of the technical specifications as well as the selection criteria is assessed according to award criteria. Through
award criteria, further sustainability aspects can be integrated into the award decision. The most economically advantageous tender is awarded the contract, which is the tender with the best price-performance ratio identified on the basis of a cost-effectiveness approach. However, sustainability criteria can also be integrated and scored.

When defining the award criteria, it is important that they are always linked to the subject-matter. This means that award criteria relate to the specific process of production, provision or trading of those works, supplies or services; or a specific process for another stage of their life cycle, even where such factors do not form part of their material substance (Art. 67 (3) 2014/24/EU).

Labels can be used as a means of proof that the works, services or supplies correspond to the required characteristics in the award criteria.

Furthermore, abnormally low tenders must be rejected if the contracting authority have established that the tender is abnormally low because it does not comply with applicable obligations, e.g. ILO Core Conventions (Art. 69 (3) 2014/24/EU).

The tender procedure is completed as soon as the contract has been awarded. Compliance with sustainability criteria and other characteristics need to be
laid down in the contract. Furthermore, contracting authorities may lay down special conditions regarding social, environmental or employment-related conditions relating to the performance of a contract, provided that they are linked to the subject-matter of the contract. These must be indicated in the procurement documents.

Examples of criteria that might be considered for contract performance include:

• Minimum remuneration in accordance with the legal minimum wage or higher wages (also to subcontractors)

• Compliance with ILO Core Conventions along the entire supply chain

• Fair trade standards

• Adaptation to changing criteria of labels required in the contract. Requirements concerning the hiring of long-term unemployed persons, disadvantaged people as well as the organisation of professional training activities

Contract management is defined as the planning of contract renewals and follow-up contracts as well as the monitoring, controlling and documenting of awarded contracts throughout the entire term of the contract. This permanently ensures quality and conformity with the contract.

Well-designed contract management allows for the monitoring of sustainability criteria even after contract conclusion. The following measures might be applied:

• Unannounced inspection of production sites by the procurement officer or other employees of the contracting authorities

• Regular review of the social and environmental requirements by external experts

• Questionnaire on progress monitoring and documentation of the production process

• Regular reporting system on social and environmental standards by the supplier

• Evaluation of the results of services (e.g. waste production of horticultural services)

• Negotiation rounds: Can additional improvements be made to sustainability?

• Tracking of life-cycle costing parameters