The political will to get the long-term unemployed back into work exists in many respects. One instrument being discussed is the use of public procurement to reintegrate the long-term unemployed. This raises the question of how a public contracting authority’s claim to employ the long-term unemployed in the bidding companies can be reconciled with the provisions of public procurement law.
In public procurement law, these considerations are linked to the admissibility of social award criteria. Social criteria in the narrowest sense are, for example, design for all or barrier-free construction. In addition to these narrow social criteria, award procedures are also conceivable that are intended to stimulate employment policy.
This is not about compliance with minimum wages or collective agreements that have been declared generally binding by the state, but about management instruments that have an impact on employment in the broader sense. These management instruments can affect the long-term unemployed who are to be reintegrated into the regular labor market. However, they can also concern, for example, the promotion of young people in order to promote the integration of young people or young adolescents.
The social criteria are limited by the ban on discrimination. In practice, this prohibition always applies where member states allow social conditions in public procurement that contradict the actual and legal situation in other states. In terms of the European prohibition of discrimination, it is therefore inadmissible for the policy of a member state to initiate regulations that either permit the exclusive award of contracts to training companies as a knock-out criterion in terms of suitability or that include a better assessment in this respect as part of the evaluation of tenders when awarding the contract. Corresponding apprenticeship training decrees therefore already expired in 2001
However, the requirement to award contracts in the most economical way does not stand in the way of social criteria. At least since 2002/2005 (ECJ and ECJ case law), economic efficiency is not always the sole criterion for the award of a contract.
In recital 93 of the current Procurement Coordination Directive 2014/24/EU, the legislator also emphasizes the strategic goal of social integration of disadvantaged persons or members of socially disadvantaged groups. In recital 95, the legislator emphasizes that public procurement law should exploit the potential available to it and which is set out in the Europe 2020 strategy for smart, sustainable and inclusive growth.
Systematic integration of social and (employment) policy objectives into the procurement procedure
Social as well as environmental criteria in public procurement law cannot easily be classified under the traditional legal criteria with absolute clarity: The traditional legal criteria are
- Suitability: Suitability is traditionally understood to mean expertise, performance and reliability. The suitability criteria are, at least to a large extent, the wrong starting point. In this respect, the so-called “Beentjes” case law of the ECJ also stands in the way.
- The specification of services can rank as a social criterion in the narrowest sense in the sense that barrier-free construction is even the exclusive criterion of the specification of services in this case. The specification has to do with ensuring social standards insofar as it must include aspects such as night work, which leads to increased remuneration. In this respect, the safeguarding of social standards functions unproblematically via the service description.
- The area of the award decision is more likely to reflect social or employment-related concerns if it forms an aspect beyond the classic price-performance factors that still has a sufficient connection with the performance of the service. In particular, it must then relate to a characteristic of the tender, but at least to a performance promise whose plausibility can already be assessed in connection with the evaluation with regard to the award of the contract.
The latter is the case, for example, in the case of a request for concepts in which the bidder is required, for example, to describe an operator concept involving the subsequent employment of the long-term unemployed and other qualification measures. A purely future-oriented promise that cannot be conceptually verified, however, moves beyond the award of the contract in the direction of a condition for execution. - The performance conditions are circumstances that typically go beyond the contract award and the associated evaluation options in the award phase.
Accordingly, the legislator created the provision of Art. 26 of Directive 2004/18/EC back in 2004, with which the so-called “conditions for the performance of the contract” were recognized as the 4th category in public procurement (i.e. alongside suitability, specifications and contract award).
Contracting authorities must differentiate between these criteria in the contract notice. As far as possible, they must be systematically separated from each other. The consequence of this is social criteria that are relevant for securing employment, that a decision must be made between the relevant award criteria and the performance conditions in connection with social aspects that affect employment.
The legal anchoring can be found in EU Directive 2014/24/EU (Art. 67 and 70).
The EU Directive
- only refers to “social aspects” or “social characteristics” in the award criteria in Art. 67
- whereas its Art. 70 refers to “social or employment policy concerns” under the so-called conditions for the performance of the contract.
It follows from this that the term “employment policy considerations” as permitted so-called “performance conditions” is the more specific one compared to “social considerations”, which are permitted as an award criterion.
The underlying consideration of the EU legislator is that political control should apply more to the execution of the contract. Social criteria, which would be suitable for ranking as an award criterion because they are attached to the product, tend to be less suitable for this control.
Scope for local authorities, especially in the public procurement of infrastructure measures
In the past, there have been successful models of municipal infrastructure measures in which ABM employees were deployed or so-called work opportunities were created. The city of Leipzig reports having had good experiences over a period of 10 to 12 years. Quite a few services, particularly in the low-wage segment, would not have been provided if the city had not created work opportunities or job creation measures in cooperation with the local job center.
In the context of tendering procedures, the primary option is to make the employment of the long-term unemployed a condition for the execution of the contract when awarding infrastructure measures.
Suitable infrastructure measures in the broader sense are conceivable:
- Classic building construction measures, such as investments in schools, daycare centers, sports halls and multi-purpose halls
- Classic civil engineering measures: Construction of roads, parking lots, repair work on existing roads and paths, construction of cycle paths, improvement of infrastructure through lighting of cycle paths, sewer construction work with replacement of old leaking pipes, e.g. with modern plastic pipes, laying of empty conduits for telecommunications and broadband expansion, etc.
- Maintenance and upkeep work: This can range from the repair of lighting units, tree and shrub pruning on roads and the maintenance of green spaces to work such as embankment renovation and maintenance work on embankments with ongoing weed removal
- In connection with municipal infrastructure measures, services that are entirely in the service sector should also be considered, such as gate services for a municipal library, the guarding of properties, provided this is not carried out by special third-party companies, or the operation of special facilities such as cafés, canteens or second-hand furniture stores, etc.
Example: Operation of a catering facility
The operation of a restaurant that had previously undergone structural refurbishment was put out to tender as part of a so-called expression of interest procedure, i.e. a type of negotiated procedure with a preliminary suitability test. The aim of the city was to ensure that unemployed young people and long-term unemployed adults, possibly with major barriers to employment, would be qualified, trained and employed in various occupational fields on a permanent basis.
The city expected the future operator to integrate the training/qualification and employment of unemployed people in various occupational fields on a permanent basis and within the scope of legal possibilities. For this reason, the bidders were expected to submit a meaningful concept in the award procedure that specifically outlines the qualification and employment of young unemployed and/or long-term unemployed adults, possibly with special barriers to placement.
This is a type of “classic concept query” with evaluation by a jury when the contract is awarded. The group of participants to be acquired for this was to be broken down in detail according to structure, number and with regard to the later planned areas/locations of use as part of the concept to be submitted with the application.
Statements on the (numerical) ratio between subsidized and non-subsidized employees were expected for the individual operating areas. The bidders had to present the structure of qualification and employment in a comprehensible manner, if necessary with a description of the individual funding options and all partners to be involved.
Under the heading “Suitability criteria and evidence”, the city requested that meaningful evidence of qualification and suitability and/or evidence of experience in running a café and/or restaurant as part of integration measures be submitted.
Specifically, documents and references were to be submitted as proof of experience with the qualification and employment of young unemployed persons and long-term unemployed adults, including those with special barriers to placement, over the past five years. The following were to be named
- Type and scope of the measures,
- Structure and locations of the participants and
- Cooperation and financing partners for the measures implemented.
Sufficient legal framework for procurement procedures with the aim of subsequently employing the long-term unemployed?
In corresponding tendering procedures or expression of interest procedures, one will be inclined in practice to introduce suitability criteria as knock-out criteria in such a way that primarily those companies are approached that have already provided comparable services with special objectives in the area of training/qualification on the one hand and long-term unemployed persons on the other.
In this respect, the “Beentjes” case law sets limits, which has expressly not assigned criteria such as the employment of the long-term unemployed to the area of suitability criteria. Nevertheless, there is a legitimate interest in creating suitability requirements in this direction.
Simplifications to legislation are also desirable in principle. In the area of procedures, there is already considerable flexibility where social and other special services are concerned or in individual cases where an operator contract is involved that is based on a service concession (and not a public contract in the narrower sense).
In addition to the possibly extended options for the choice of procedure on the part of the awarding authority, there is also the question of simplification through electronic awarding. This refers first of all to the electronic announcement (with unlimited electronic searchability), the provision of the tender documents in electronic form and, if necessary, the electronic submission of tenders.
Access to public contracts for interested companies?
Companies that have already carried out such and similar projects in bidding consortia with employment agencies, for example, will not find it particularly difficult.
According to the available feedback, companies that have no experience with such projects find it much more difficult. In some cases, there are reservations that the work is not done properly and corresponding negative notes are made with the contracting authorities, which lead to exclusions due to poor previous experience. This is all the more justified by the fact that the upper threshold law – and subsequently the UVgO – explicitly standardizes this situation for the first time.
Here, reservations must be reduced in an accompanying manner through an actively communicated award policy. Award criteria must be clearly weighted as an element that improves the chances of the bid being successful.
