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BackContracting authorities in the European Union spend around 14 per cent of gross domestic product on public contracts each year, which corresponds to around 2 billion euros. In Austria, this volume amounts to around 67 billion euros per year, or about 18 percent of the national gross domestic product. This makes public demand in the form of public procurement an important part of the economy, the design of value chains as well as industrial relations, and it also contributes significantly to environmental pollution. Public procurement is associated with almost 8 per cent (5.6 million tonnes of CO2) of Austria's annual domestic greenhouse gas emissions. This share is even significantly higher worldwide along value chains (19 million tonnes of CO2).
With the 2014 reform of the EU public procurement directives, social and ecological criteria were increasingly taken into account in the awarding of public contracts. Since then, qualitative and environmental aspects have also been given priority instead of the lowest price. Austria implemented these requirements in the Federal Procurement Act 2018. Despite legal requirements and leeway, preference is often given to the lowest price offer, which is disadvantageous in terms of the ecological and social impact of public contracts.
Pan-European competition for public contracts is declining, as a recent report by the European Court of Auditors shows. The concentration on contract markets is increasing due to direct awards and more complex requirements for procurement procedures. SMEs rarely participate in tenders, and strategic, social and ecological aspects are only taken into account to a limited extent in most EU countries; Austria presents a somewhat more positive picture.
Public procurement contracts not only on the basis of the lowest price, but also on the basis of criteria of social and ecological sustainability would be a central economic policy lever for the just design of the transformation to a CO2-neutral economy.

Susanne Wixforth
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Christian Berger
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Judith Vorbach (Brussels office)
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