Public authorities should be required to allocate tenders based on lifecycle impact of purchased goods and services

In a newly adopted report, the European Economic and Social Committee (EESC) calls for mandatory circular public procurement across Europe to break governments’ unsustainable consumption patterns.

With an annual expenditure accounting for some 14% (some 2 trillion EUR per year) of the EU’s overall GDP, governments are Europe’s biggest consumers. Their expenditure stems mainly from public tenders to purchase the works, services and supplies they need from companies.

To encourage public authorities to embrace more sustainable consumption patterns through lifecycle thinking, looking beyond short-term needs to the longer-term impacts of each purchase, considerable work has been done in the EU over the last few years.

The European Commission has since 2017 issued guidance in the form of Green Public Procurement criteria, phasing in circular economy elements to close energy and material loops in supply chains, while minimising negative environmental impacts and waste creation.

However, these measures have had a limited impact because compliance is voluntary. The EESC believes it’s time to introduce mandatory minimum Green Public Procurement criteria and to give the circular economy a strong boost through procurement directives and sector-specific legislation. “There is a need for a change in which non commitment evolves towards obligations”, says rapporteur Ferre Wyckmans.

Circular public procurement will allow administrations to move beyond the lowest price criterion at the time of purchase.

“Procurement is often controversial because the selection criteria for projects are all too often very one-sided, with no consideration for lifecycle impact or what a project achieves,” says Mr. Wyckmans. “The idea that the lowest price should be the only allocation criterion should be abandoned in favour of ‘value for money’, which encompasses innovation, quality of products and services, sustainability, greening and social impact.”

The European Commission has already developed a number of Life-cycle costing (LCC) templates which are freely available for procurers to check against products and services. These tools allow public authorities to consider the lifecycle costs of the product, work or service, from purchase through operation and maintenance to end-of-life. These should now be upgraded, says the EESC, to include the cost of carbon.

One other aspect that is absolutely vital in the EESC’s view is to ensure that SMEs have a chance to bid for circular public contracts and get the help they need. They offer enormous potential but are in danger of being side-lined owing to the complexity of the procedure. Only if the necessary support is provided can they contribute to local and human-oriented tenders.

Many SMEs remain unaware of market opportunities and how to find them, including how to use the Tenders Electronic Daily (TED portal) and how to find tenders in other countries. They struggle to provide the environmental and social evidence that procurers require to compare bids. To comply with these criteria, SMEs will have to make significant investments without any guarantee. Awarding contracts based only or primarily on the lowest price would mean hurting them, cautions the EESC.

It’s important to see that circular public procurement will be an opportunity for our companies – especially SMEs – and for our workers, because it will require smart enterprises, well-prepared and efficient workers, and very effective measures from policy makers,” said co-rapporteur Gonçalo Lobo Xavier, “So we need to empower them to seize it.”

Towards circular public procurement

This opinion examines how European legislation on circular public procurement can combine the main purpose of the contract with environmental protection, greater attention to SMEs, sustainable local production and the protection of social rights. This can be achieved by seeking and favouring solutions with a lower impact on the environment throughout their lifespan.

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