By Albert Sánchez-Graells
Professor of Economic Law, University of Bristol Law School, UK
In this post, Albert Sánchez-Graells maps how the 2014 EU public procurement rules create regulatory space for human rights considerations in every phase of the procurement cycle. Despite this possibility, there are questions as to the effectiveness of any of the foreseen mechanisms due to policy fuzziness and significant resource constraints. The desirability of human rights-oriented procurement can also be queried due to the implicit trade-offs it creates against the general effectiveness of the procurement function.
Despite the fact that the term ‘human rights’ does not appear even once in the European Union’s 2014 Public Procurement Package, there is an emerging consensus that this new set of rules provides increased scope for contracting authorities to include human rights considerations in the design and execution of public tenders. However, with one limited exception concerning the mandatory exclusion of tenderers convicted by final judgment of child labour and other forms of trafficking in human beings, the 2014 rules do not mandate the use of procurement for the enforcement or promotion of human rights norms. All relevant decisions are left to either the implementing legislation of the Member States or, where the latter does not prescribe a specific approach, to general policies or case-by-case decisions by contracting authorities.
This means that, to a large extent, the pursuit of human rights goals is left to the discretion of contracting authorities and, consequently, it is subjected to the relevant checks and balances—and, in particular, the constraints derived from the general principles of EU procurement law. Equally, constraints derived from limited human and technical resources, as well as the difficult trade-off between competing procurement goals will determine the extent to which contracting authorities are willing to or capable of taking into consideration human rights issues at different phases of the procurement cycle, while still achieving the desired general effectiveness and efficiency of the procurement function.
Enabling legal framework under the 2014 EU rules
The 2014 EU procurement rules create regulatory space for the consideration of human rights issues—and in particular those relating to human rights that underpin or correspond with social and employment rights—at multiple phases of the procurement cycle. A detailed analysis shows how human rights considerations can play a role:
- as exclusion grounds, both mandatory and discretionary. As mentioned above, the 2014 rules foresee the mandatory exclusion of economic operators convicted by final judgment of child labour and other forms of trafficking in human beings. This obligation to exclude is not limited to the tendering phase, but rather reinforced by an obligation to terminate any contracts awarded to companies convicted for those offences. Moreover, contracting authorities can exercise discretion to exclude economic operators guilty of grave professional misconduct that renders their integrity questionable, which may be linked to other breaches of human rights.
- in connection with the use of labels and certification requirements. The 2014 rules foresee this possibility, provided that the requirements for the use of the label only concern criteria linked to the subject-matter of the contract and appropriate to define characteristics of the works, supplies or services.
- as award criteria. This is compatible with the contracting authority’s discretion to assess the most economically advantageous tender (MEAT) on the basis of criteria, including qualitative, environmental and/or social aspects, linked to the subject-matter of the public contract in question – and bearing in mind that award criteria shall be considered to be linked to the subject-matter of the public contract where they relate to the works, supplies or services to be provided under that contract in any respect and at any stage of their life cycle, including factors involved in 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.
- in relation to the increased leeway for decisions not to award contracts to tenderers that do not comply with relevant obligations, even if they submit the seemingly most economically advantageous tender. This is particularly the case of human rights considerations that underpin or correspond with social and employment rights. Indeed, contracting authorities are empowered not to award a contract to the tenderer submitting the MEAT where they have established that the tender does not comply with applicable social and labour obligations, but solely if such non-compliance does not make the tender abnormally low (as discussed below).
- in relation to the obligation to reject tenders that are abnormally low due to their non-compliance with relevant obligations. This is also the case in particular of human rights that underpin or correspond with social and employment considerations. In the interest of preventing social and labour dumping, the EU legislator considered that rejection of a tender should be mandatory where the contracting authority establishes that the abnormally low price or cost proposed results from non-compliance with mandatory Union or national law compatible with it in the fields of social, labour or environmental law or international labour law provisions. This is a positive duty for contracting authorities.
- as well as, finally, as contract performance requirements. Once again, this is particularly the case of human rights considerations that underpin or correspond with social and employment rights. Indeed, contracting authorities may lay down special conditions relating to the performance of a contract that may include social or employment-related considerations, provided that they are linked to the subject-matter of the contract.
In general terms, thus, the 2014 rules have indeed created regulatory space for the exercise of discretion in all relevant stages of the procurement process, so that willing contracting authorities (or Member States) can in principle use such discretion as a lever to boost compliance with human rights—and, in particular, compliance with those that underpin or correspond with social and employment rights. However, the potential for the effective implementation in practice of such a human rights-oriented policy is severely limited by general constraints on the exercise of executive discretion and by more general resource constraints.
Discretion, policy fuzziness and resource constraints
An important constraint derives from the requirement for human rights considerations to retain a sufficient link to the subject-matter of the contract. Even if, compared to the earlier 2004 EU rules, the regulation of such link to the subject-matter of the contract has now loosened this requirement through allowance for a ‘life cycle’ approach to its assessment, it still superimposes a relevant constraint on the exercise of discretion in the context of procurement.
Ultimately, the exercise of such discretion is to be subjected to a proportionality test and its impact on effective competition for the relevant contract also needs to be carefully weighed. In my view, the principle of competition and the ensuing prohibition for contracting authorities to ‘artificially narrow down’ competition should play a significant role in constraining the imposition of human rights-oriented requirements. At a minimum, it should be acknowledged that the effectiveness of the mechanisms discussed above largely rests on two main factors: policy clarity and availability of resources.
Firstly, one of the main difficulties in ensuring the effectiveness of human rights-oriented procurement policies requires much more clarity in their formulation. The 2014 rules are unclear as to the obligations that can be taken into consideration by contracting authorities and a broad policy (e.g. demanding absolute and complete compliance with any applicable human rights standards) would potentially require each contracting authority to have the ability to assess compliance with local human rights norms in any jurisdiction in which an interested tenderer or candidate is based. This is not a minor burden – not least, due to the differences in legal and regulatory regimes, languages and important practical difficulties in fact-finding processes and the assessment of foreign documentary (or other) evidence. It would also potentially generate extraterritoriality of EU human rights norms, which could in turn result in trade disputes. All of this may justify the development of an EU-wide policy and the provision by the European Commission of guidance on its implementation, which could alleviate some of these problems. However, even if the difficulties in policy formulation and interpretation could be side-stepped, the main difficulty would remain one of resources.
Indeed, secondly, it should be uncontroversial that the implementation of a human-rights oriented procurement policy will impose significant costs. Part of the costs will result from the need to adequately resource contracting authorities so that they have the skills and time required to carry out the additional human rights compliance verifications at different stages of the tender procedure and contract execution. Such verification is not optional because once a contracting authority (of its own accord or implementing domestic policies) includes human rights considerations as relevant criteria at any stage of the procurement process, it places itself under a strict duty to verify compliance therewith. Member States and contracting authorities are free to decide not to engage with the discretionary mechanisms foreseen in the 2014 rules, but once they decide to engage them, and as a matter of ensuring the effectiveness of EU law, contracting authorities have to be properly resourced to carry out the relevant checks and effectively exercise (technical) judgement.
From that perspective, it seems clear that simply burdening the existing workforce with an additional duty, without any further investment in adequate skills and resources, will not result in effective mechanisms for the promotion of human rights guarantees, and can diminish the effectiveness of the procurement function more generally. Resources will also be necessary to fund the additional litigation that is likely to result from more complex procurement exercises and from expanded possibilities for tenderers and candidates to challenge each other’s standing to be awarded a contract.
On the whole, the implementation of a human rights-oriented procurement policy will detract resources from other dimensions of the procurement function, and possibly from the acquisition of services or goods required for the provision of public services and for the discharge of public functions. Whether the relevant public interest is best served by a human rights-oriented procurement policy is both an empirical question and a democratic incognita. This should trigger additional controls and governance checks and balances at the level of policy formation and implementation (which is likely to be rather local and decentralised), and subject the formation and adoption of such policies to adequate legitimacy tests.
This is not to say that any such measures would be completely ineffective, but it should bring home the message that public procurement rules were not conceived as an instrument for the enforcement of human rights norms and that, other than by giving effectiveness to prior findings of relevant violations established under the subject-specific rules and due processes – such as the mandatory exclusion of economic operators sentenced by final judgment of child labour and other forms of trafficking in human beings – the procurement function has very limited ability to provide efficient mechanisms to react to human rights violations or prevent them.
Consequently, the resources required to try to give effectiveness to a human rights-oriented procurement policy may be put to better use if invested in the context of rules and mechanisms directly concerned with the enforcement of those standards. This is not likely to represent the majority view, and it would be interesting to see if future empirical research can demonstrate any relevant effects of policies seeking to enforce human rights norms in procurement on the overall effectiveness of such norms, as well as whether there has been a positive trade-off once the additional costs of carrying out more complex procurement are taken into account.
This post is based on Albert Sanchez-Graells’ chapter in “Public Procurement and Human Rights: Opportunities, Risks and Dilemma’s for the state as Buyer” edited by Olga Martin-Ortega and Claire Methven O’Brien (Edward Elgar, 2019). A pre-print version is available on open access at https://ssrn.com/abstract=3103194.