1.
Social clauses:
the position under Directive
2014/24
Catherine Barnard
Trinity College
Cambridge

2.
Social clauses
• economic operator must comply with the
labour law rules of the state
• additional ‘social’ obligations on the economic
operator
– to hire a certain percentage of local
unemployed/the disabled/older workers/other
excluded group
– to provide staff with on the job training
– To address equality/CSR issues

3.
The context
• The purist, internal market view
• But change of context
– Article 3(3) TEU ‘social market economy’
– Article 9 TFEU mainstreaming provision:
• ‘the promotion of a high level of employment, the guarantee of
adequate social protection [and] the fight against social exclusion’
– Commission Buying Social Guide (2010)
– Case C-271/08 Commission v Germany (occupational
pensions) (see also Recital 40)
• ‘application of the procurement procedures [do not] preclude the
call for tenders from imposing upon interested tenderers
conditions reflecting the interests of the workers concerned’

4.
General principles
• Article 18(2) Member States shall take appropriate measures to
ensure that in the performance of public contracts economic
operators comply with applicable obligations in the fields of
environmental, social and labour law established by Union
law, national law, collective agreements or by the international
environmental, social and labour law provisions listed in Annex X.
• ILO Conventions
– 87 on Freedom of Association and the Protection of the Right to
Organise;
– 98 on the Right to Organise and Collective Bargaining;
– 29 on Forced Labour;
– 105 on the Abolition of Forced Labour;
– 138 on Minimum Age;
– 111 on Discrimination (Employment and Occupation);
– 100 on Equal Remuneration;
– 182 on Worst Forms of Child Labour

5.
Stages of the procurement process
Pre-contract
Technical specification
Supplier selection
Award stage
Performance stage

6.
I Pre contract stage
• Not covered by directive
• ‘linked to the subject matter of the contract’
• Example:
– the building of a youth and sports complex, or
– the building of a youth and sports complex using
the labour of young unemployed people, or
– the building of a youth and sports complex for
community purposes

7.
Application of the procurement regime
• Exclusion for reserved contracts
• Art. 20
– Member States may reserve the right to participate in
public procurement procedures to sheltered workshops
and economic operators whose main aim is the social and
professional integration of disabled or disadvantaged
persons or may provide for such contracts to be performed
in the context of sheltered employment
programmes, provided that at least 30 % of the employees
of those workshops, economic operators or programmes
are disabled or disadvantaged workers.
– The call for competition shall make reference to this
Article.

8.
II. Technical specification stage: PPMs
• Article 42(1)
– The technical specifications as defined in point 1 of Annex
VII shall be set out in the procurement documents. The
technical specification shall lay down the characteristics
required of a works, service or supply.
– Those characteristics may also refer to the specific process
or method of production or provision of the requested
works, supplies or services or to a specific process for
another stage of its life cycle even where such factors do
not form part of their material substance, provided that
they are linked to the subject-matter of the contract and
proportionate to its value and its objectives.
• Social labelling: Art. 43

9.
III. Supplier selection stage
• Exclusions
– Mandatory
• that economic operator has been the subject of a conviction by final
judgment’ for ‘child labour and other forms of trafficking in human beings (Art.
57(1)(f))
• Non-payment of taxes or social security contributions + established by a
judicial or administrative decision + not disproportionate (Art. 57(2))
– Discretionary
• Contracting authorities may exclude or may be required by Member States to
exclude from participation in a procurement procedure any economic operator
in any of the following situations:
(a) where the contracting authority can demonstrate by any appropriate
means a violation of applicable obligations referred to in Article 18(2) (Art.
57(4))
• Operator is in breach of its obligations re payment of taxes and social security
contributions (Art. 57(2), second para)
– Slate wiped clean for breaches under paras 1 and 4

10.
III. Supplier selection stage
• Article 58(4)
– With regard to technical and professional
ability, contracting authorities may impose
requirements ensuring that economic operators
possess the necessary human and technical
resources and experience to perform the contract
to an appropriate quality standard
• Recital 94 the need for a sufficient number of
suitably qualified staff can also be used as an
award criterion and Art. 67(2)(b)

11.
Stages of the procurement process
Pre-contract
Technical specification
Supplier selection
Award stage
Performance stage

12.
IV Award stage
• Article 67(2)
– The most economically advantageous tender from the point of
view of the contracting authority shall be identified on the basis
of the price or cost, using a cost-effectiveness approach, such as
life-cycle costing in accordance with Article 68, and may include
the best price-quality ratio, which shall be assessed on the basis
of criteria, including qualitative, environmental and/or social
aspects, linked to the subject-matter of the public contract in
question. Such criteria may comprise, for instance:
• (a) quality, including technical merit, aesthetic and functional
characteristics, accessibility, design for all users, social, environmental
and innovative characteristics and trading and its conditions;
• (b) organisation, qualification and experience of staff assigned to
performing the contract, where the quality of the staff assigned can
have a significant impact on the level of performance of the contract;
...

13.
IV Award stage
• Art. 67(3)
– 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:
• (a) the specific process of production, provision or trading of
those works, supplies or services; or
• (b) a specific process for another stage of their life cycle,
even where such factors do not form part of their
material.

14.
IV Award stage: Abnormally low
tenders
• Art. 69(1): contracting authorities must require economic
operators to explain the price or costs proposed in the tender
where the tender appears to be abnormally low in relation to
the works, supplies or services.
• Art. 69(2) these explanations may relate to ‘compliance with
obligations referred to in Article 18(2)’
• Art. 69(3) provides the contracting authority must assess the
information provided by consulting the tenderer.
• Contracting authorities must reject the tender, where they
have established that the tender is abnormally low because it
does not comply with applicable obligations referred to in
Article 18(2)

15.
V. Performance stage
• Art. 18(2):
– in the performance of public contracts economic operators
comply with applicable obligations in the fields of social
and labour law established by international law, Union
law, national law, or collective agreements
• Goods: PPM (Art. 42)
• Services:
– Workers (local or migrant under Art.45 TFEU) – host state
law applies
– Services (Art. 56 TFEU) – PWD 96/71, limited host state law
applies (Recital 39, 98)
– Living wage?

16.
V. Performance stage: other social
clauses
• Art. 79
– Contracting authorities may lay down special
conditions relating to the performance of a
contract, provided that they are linked to the
subject-matter of the contract within the meaning
of Article 67(3) and indicated in the call for
competition or in the procurement documents.
Those conditions may include
economic, innovation-
related, environmental, social or employment-
related considerations.

17.
V. Performance stage
• Modernisation Green Paper
– ‘The link with the subject-matter of the contract
ensures that the purchase itself remains central to
the process in which taxpayers' money is used.
This is an important guarantee to ensure that
contracting authorities obtain the best possible
offer with efficient use of public monies. As
explained above, this objective is also highlighted
in the Europe 2020 strategy, which stresses that
public procurement policy must ensure the most
efficient use of public funds.’

18.
V. Performance stage
• The link between policy related considerations and the subject
matter of the contract is also intended to ensure certainty and
predictability for enterprises. Otherwise, in the absence of such a
link (and of harmonised requirements at EU level), economic
operators might be asked to comply with different requirements
(with regard to the percentage of women, number of unemployed
people recruited, child care facilities available for
employees, environmental or waste management measures, eco-
labels, etc.) for every procurement or for each contracting
authority. ... Finally, requirements unrelated to the product or
service purchased could go against the Europe 2020 objective of
promoting innovation, as competition between undertakings would
no longer take place on the grounds of developing the best
(possibly innovative) product or service, but on the basis of
corporate policy.

19.
V. Performance stage
• Article 71:
– Observance of the obligations referred to in Article 18(2) by
subcontractors is ensured through appropriate action by the
competent national authorities acting within the scope of their
responsibility and remit.
• Transparency
– Article 71(2) economic operator indicate in its tender any share
of the contract it may intend to subcontract to third parties and
any proposed subcontractors
– Article 71(5) the contracting authority requires the main
contractor to indicate to the contracting authority the
name, contact details and legal representatives of its
subcontractors, involved in such works or services, in so far as
known at this point in time

20.
Conclusions
• Art. 18(2) has the capacity to make a
difference concerning T&C of employment
(but what about Dir. 2001/23?)
• Continues to be harder to include broader
social clauses
• Risk averse strategy
• Exercise of smoke and mirrors