The basic idea of public procurement law is to organise public procurement in a transparent and non-discriminatory manner to ensure that as many bidders as possible are able to participate in the procurement market through fair competition. In the EU, the public sector spends the amount of 14% of GDP on contracts every year. By contracting only with companies that meet certain criteria, public procurement can (or could) be used to address social and environmental challenges.

Legal Framework
In accordance with the EU regulations for public procurement (Directive 2014/24/EU) contracting authorities are required to accept the “most economically advantageous tender” (MEAT). MEAT emphasises best value for money by considering quality, environmental and social factors, life cycle costs and innovation. Over the past few decades, the European Court of Justice (ECJ) case law has gradually developed to the effect that criteria originally seen as “unrelated to the award”, i.e. going beyond pure price competition, may now be permitted. The Public Procurement Directive was finally amended in 2014. This opened up possibilities for taking social and environmental criteria into account.

In Austria, this is regulated in the Federal Procurement Act 2018, which stipulates environmentally responsible procurement as a mandatory principle. Taking into account social, innovative and SME-promoting aspects is also possible, but not mandatory. The EU catalogues of criteria and the Austrian Action Plan for Sustainable Public Procurement (naBe) too are not legally binding. In fact, far too little use is made of linking public contracts to social criteria.

Discussion round on socially responsible public procurement
On 20 November 2024, a discussion round with the President of the Upper Austrian Chamber of Labour, Andreas Stangl, on strategic public procurement took place in Brussels. Iryna Sauca, author of the book “Strategische öffentliche Beschaffung” (Strategic Public Procurement) and winner of the AK Upper Austria Wissenschaftspreis (Science Award), presented her research on the development of ECJ case law on the criteria for public contracts.

EESC member and trade unionist Ferre Wyckmans emphasised the importance of access to public contracts for social economy enterprises, saying that especially for this sector criteria with a non-market value were vital. Oliver Roethig, European regional secretary of UNI Europa, the European Services Workers Union, called for the conclusion of and compliance with collective agreements to be made mandatory criteria for public procurement in the Public Procurement Directive. In Austria, this is usually the case; additional criteria such as a ban on anti-union practices could therefore be considered at national level. Those who practice union busting should not receive public funds.

AK President Andreas Stangl pointed out the difficulties in practice when public-sector customers aim for socially responsible procurement. As an example, he mentioned local public transport, where access to toilets for bus drivers should be set out as a mandatory criterion in the call for tenders.

What happens next?
A special report on public procurement by the European Court of Auditors (ECA) in 2023 concludes that efforts to take criteria other than price into account in public procurement have not yet had the desired effect: public contracts in the EU are still often awarded based on the lowest cost alone. On 24 May 2024, the Council adopted conclusions on this issue, which acknowledged the ECA's criticisms and called for a strategic action plan.

The European Trade Union Confederation (ETUC) is calling for a reform of public procurement to end the race to the bottom that is currently taking place. AK supports this demand, as do renowned economists. In his Mission letter, the EU Commissioner for Prosperity and a European Industrial Strategy, Stéphane Séjourné, was given the task of revising the Public Procurement Directives. As a first step, the EU Commission will evaluate them.

Further information
AK EUROPA: Sozialökologische Vergabe von Aufträgen (German only)
AK EUROPA: Making public procurement sustainable
WIFO/AK: Die Rolle des öffentlichen Vergabewesens für eine klimaneutrale Produktions- und Lebensweise (German only)
EESC: The potential of Public Procurement for Social Economy enterprises
Council: Conclusions on the European Court of Auditors’ Special Report No. 28/2023
EU Commission: Public Procurement
EU Commission: Access to public procurement | Single Market Scoreboard
UNI Europa: No public contract without collective agreement