Interpretative communication of the Commission on the Community law applicable to public procurement and the possibilities for integrating social considerations into public procurement
Date: 2001-10-15
Institutions: European Commission
Subjects: European social policy, application of EU law, award of contract, public contract, tendering

28.11.2001

EN

Official Journal of the European Communities

C 333/27

Interpretative Communication of the Commission on the Community law applicable to public
procurement and the possibilities for integrating social considerations into public procurement

(2001/C 333/08)

(Text with EEA relevance)

(COM(2001) 566 final)

EXECUTIVE SUMMARY

The aim of this communication, which follows on from the
Commission’s communication on (cid:145)Public procurement in the
European Union(cid:146) of 11 March 1998 (1), is to clarify the range
of possibilities under the existing Community legal framework
for integrating social considerations into public procurement.
This communication also figures among the actions announced
in the Social Policy Agenda adopted by the European Council
of Nice in December 2000 (2). The Agenda is part of
the
integrated European approach set out in Lisbon whose goal
to
is economic and social renewal.
provide
between
dynamic
economic, social and employment policies, which mutually
reinforce one another.

It seeks in particular
interaction

positive

and

a

in particular, of
The introduction of other possibilities and,
practices that go beyond the current system of
the public
procurement directives would require intervention by the
Community legislator.

All relevant national rules in force in the social field, including
those implementing relevant Community rules in the field, are
in so far as they are
binding on contracting authorities,
compatible with Community law. Such rules
in
particular, provisions on workers’
rights and on working
conditions.

include,

Non-compliance by tenderers with certain social obligations
may in some cases lead to their exclusion. It is for Member
States to determine in which cases this should arise.

It is especially during the execution of the contract, that is,
once the contract has been awarded, that public procurement
can be used by contracting authorities as a means of
encouraging the pursuit of social objectives. Contracting auth-
tenderer to comply with
orities can require the successful
contractual clauses
in which the
to be performed, which are compatible with
contract
is
Community law. Such clauses may include measures
in
favour of certain categories of persons and positive actions
in the field of employment.

relating to the manner

The public procurement directives also offer various possi-
bilities for taking account of social considerations that relate
to the products or
in particular when
drawing up the technical specifications and selection criteria.

required,

services

Public purchasers are free to pursue social objectives in respect
of public procurement contracts not covered by the public
procurement directives, within the limits laid down by the
general
for
Member States to determine whether contracting authorities

rules and principles of

the EC Treaty.

is

It

may, or must, pursue
procurement.

such objectives

in their public

INTRODUCTION

The purpose of this communication, which follows on from
the Commission’s communication on (cid:145)Public procurement in
the European Union(cid:146) of 11 March 1998,
is to clarify the
range of possibilities under
the existing Community legal
framework for integrating social considerations into public
procurement. The
it
possible to integrate various social considerations into public
procurement
in the best way possible and in this way
contribute to sustainable development (cid:151) a concept which
combines economic growth, social progress and respect for
the environment.

communication should thus make

In this

Public procurement policy is one of the components of internal
the public procurement
respect,
market policy.
directives (3)
free
attainment of
(cid:145)the
aim to guarantee
movement of goods(cid:146) and (cid:145)the attainment of freedom of estab-
lishment and freedom to provide services in respect of public
works contracts(cid:146) (4). Attainment of these objectives necessitates
coordination of public procurement procedures in order to
ensure
competition and non-discrimination in
respect of such procedures and optimal allocation of public
money through the choice of the best tender. Contracting auth-
orities (5) must be allowed to obtain best value for money while
complying with certain rules, especially as regards selection of
in accordance with objective requirements and
candidates
award of contracts solely on the basis of price or of
the
most economically advantageous tender based on a set of
objective criteria.

effective

Internal market policy can be pursued while at the same time
integrating pursuit of other objectives, including social policy
objectives.

Social policy has played a central role in building Europe’s
economic strength,
through the development of a unique
social model (6). Economic progress and social cohesion, and
a high level of protection and improvement of the quality of
the environment, are complementary pillars of sustainable
development and are at the heart of the process of European
integration. Raising living standards, promoting a high level of
employment and social protection,
improving living and
working conditions and promoting quality of life are goals of
the European Union (7). The Social Policy Agenda adopted at
the Nice European Council in December 2000 forms part of
the integrated European approach that aims to achieve the
Lisbon
economic
the
European Council
it seeks to
ensure the positive and dynamic interaction of economic,
employment and social policies, and to forge a political
agreement
to work jointly
towards the new strategic goal (8).

that mobilises all key players

in March 2000. Specifically,

renewal outlined by

and social

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the Treaty of Amsterdam sets as one of

the
In addition,
priorities of the European Union the elimination of inequalities
and the promotion of equal opportunities between men and
women in all policies and activities of the European Union.
Article 13 of the Treaty also lays down the need to combat all
forms of discrimination (9). The Charter of Fundamental Rights
of
the Nice European
Council, restates the European Union’s aim to fully integrate
fundamental rights in all its policies and actions (10).

the European Union, proclaimed at

The public procurement directives currently in force contain
no specific provision on the pursuit of social policy goals
within the framework of public procurement procedures (11).
stated in its 1998 communication
The Commission, as
referred
current
Community public procurement law offers a range of possi-
bilities which, if properly pursued, should make it possible to
attain desired objectives.

to above, nevertheless

considers

that

national

The expression (cid:145)social considerations(cid:146) used in this communi-
cation covers a very wide range of issues and fields. It can
compliance with fundamental
mean measures
to ensure
rights, with the principle of equality of
treatment and
non-discrimination (for example, between men and women),
and with
on
with
field (12). The
Community directives applicable in the social
expression (cid:145)social considerations(cid:146) also covers the concepts of
preferential clauses (for example, for the reintegration of disad-
vantaged persons or of unemployed persons, and positive
actions or positive discrimination in particular with a view
to combating unemployment and social exclusion).

legislation

affairs,

social

for

taking social considerations

This communication aims to identify the possibilities
under existing Community law applicable to public
procurement
into
account in the best way in public procurement. The
communication examines the different phases of a
procurement procedure and sets out, for each phase,
whether and to what extent social considerations can
be taken into account.

should be noted that,

It
interpretation of
Community law is ultimately the role of the European Court
of Justice.

in any event,

it were considered that

If
the current public procurement
regime does not offer sufficient possibilities for taking social
the public
into account, modification of
considerations
should be
procurement directives would be necessary.
It
noted that in the proposals for modification of
the public
procurement directives adopted by the Commission on 10
May 2000, specific mention is made of the possibility to use
contractual conditions regarding execution of a contract that
have as their goal the promotion of employment of disad-
vantaged or excluded persons, or the combating of unem-
ployment (13).

1. CONTRACTS COVERED BY THE PUBLIC PROCUREMENT

DIRECTIVES

1.1. Definition of the subject matter of the contract

The first occasion for taking social considerations into account
in respect of a public procurement contract is the phase just
before the public procurement directives will be applicable: the
actual choice of the subject matter of the contract or, to put it
more simply (cid:145)what do I, public authority, wish to construct or
purchase?(cid:146) At this stage, contracting authorities have a great
deal of scope for taking social considerations into account
and choosing a product or service that corresponds to their
social objectives. How far this will actually be done depends to
the
a great extent on the awareness and knowledge of
contracting authority.

the Commission states

from the basic choice of

in its communication on the
As
Community law applicable to public procurement and the
possibilities for integrating environmental considerations into
public procurement,
the possibilities for taking account of
environmental considerations vary from one type of contract
to another (14). This is also true as regards the possibilities for
taking account of social considerations. Public contracts for
works and services, in respect of which it is possible to lay
down the manner in which the contract is to be performed,
provide the best opportunity for a contracting authority to take
account of social concerns. In the case of supply contracts,
apart
the
the possibilities to take
I purchase?(cid:146)),
contract
social
limited. A
into account
contracting authority can, for example, choose to buy goods
or services which meet the specific needs of a given category of
person, such as the socially disadvantaged or excluded (15). In
this context, it should be noted that service contracts which
have a social objective relate in most cases to services within
the meaning of Annex I B of Directive 92/50/EEC or Annex
XVI B of Directive 93/38/EEC and are thus not subject to the
detailed procedural rules of the directives, and in particular the
rules on selection and award (16) (see chapter 2, last paragraph,
below).

((cid:145)what shall
considerations

the subject matter of

are more

If different solutions exist which would meet the needs of a
contracting authority, the contracting authority is free to define
contractually what it considers as corresponding best to its
social concerns in the subject matter of the contract, and it
may also use variants in this respect (see point 1.2, below).

This freedom is, however, not entirely unlimited. A contracting
authority, as a public body, has to observe the general rules
and principles of Community law, and in particular the prin-
ciples regarding free movement of goods and the freedom to
provide services laid down in Articles 28 to 30 (ex 30 to 36),
and 43 to 55 (ex 52 to 66) of the EC Treaty (17).

This implies that the subject matter of a public contract may
not be defined in such a way that it has as its aim, or that it
results in, a reservation of access to the contract for domestic
companies to the detriment of tenderers from other Member
States.

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Existing Community legislation, and national legislation that is
compatible with Community law, on social or other matters
may well also limit or influence the freedom of choice of the
contracting authority.

In general, any contracting authority is free, when
defining the goods or services it intends to buy, to
choose to buy goods,
services or works which
correspond to its concerns as regards social policy
including through the use of variants, provided that
such choice does not result in restricted access to the
contract in question to the detriment of tenderers
from other Member States.

In any event, the fact that a contract is intended for a (cid:145)social(cid:146)
(for example, construction of a school, a hospital or a
use,
retirement home),
to the
is of no particular
application of the public procurement directives, since such
contracts must be awarded according to the rules of such
directives, if they fall within their scope.

relevance

The choice of subject matter of
the contract made by a
contracting authority is initially reflected in the technical spec-
ifications.

1.2. Technical specifications

environmental

As the Commission stated in its abovementioned communi-
cation on integrating
into
public procurement (18), the public procurement directives (19)
contain a set of provisions regarding technical rules. According
to these provisions, the technical specifications that have to be
met by the supplies, services or works must be indicated in the
general documents or in the contract documents for each
contract.

considerations

Under the public procurement directives, contracting
authorities can use technical specifications that define
the subject matter of the purchase or service more
precisely, provided that they comply with the rules
set out
they do not
eliminate or favour a given tenderer (20).

in the directives, and that

technical

In the abovementioned communication, the Commission states
that the provisions of the public procurement directives on
specifications apply without prejudice to legally
technical
binding national
that are compatible with
rules
Community law (21). These national rules can include, among
others, requirements concerning product safety, public health
and hygiene or access for the disabled to certain buildings or
public transport (for example, accessibility standards on the
width of corridors and doors, adapted toilets, access ramps),
or access to certain products or services (for example, in the
field of information technology (22)).

for public works contracts,

for example, contracting
Thus,
authorities may be subject
to the provisions of Directive
92/57/EEC on health and safety on construction sites (23).
Directive 92/57/EEC contains rules on the technical organi-
it can lead to
sation of construction sites.
technical
relating to a given contract being
included in the contract documents, whose aim is to ensure
the safety and health of workers and others on the construction
site. Such requirements can include measures to avoid accidents
storage of
at work,
dangerous products or plans of routes for the passage of
equipment.

signposting, conditions

requirements

In practice,

such as

for

in the social

In addition to such specifications, which incorporate regu-
lations
specifications with a
social connotation exist which serve to characterise in an
objective way a product or service (24).

technical

field,

Contracting authorities may, among other things, require that
products be manufactured using a specific production process,
provided that this characterises the product in relation to other
competing products, and in such a way as to meet the needs of
the contracting authority (25). As regards the use of
(cid:145)social
labels(cid:146)
that concern the (cid:145)social(cid:146) capacity of an undertaking,
see point 1.3.2 below (26).

take

contracting authorities may

Moreover,
account of
variants (27). Variants allow contracting authorities to choose
the option which best meets their needs in financial and
social terms, while fulfilling the minimum conditions set out
in the contract documents. Variants may, for example, concern
different technical solutions concerning the ergonomic charac-
teristics of a product, or be intended to ensure access for
including
disabled persons to given equipment or services,
tools and services provided (cid:145)online(cid:146) or electronically.

1.3. Selection of candidates or tenderers

The directives essentially contain two sets of rules on selection.

On the one hand, the directives contain an exhaustive list of
cases in which the personal situation of a candidate or tenderer
may lead to its exclusion from a procurement procedure. These
cases essentially concern bankruptcy, conviction of an offence,
grave professional misconduct or non-payment of statutory
contributions. The causes of exclusion are interpreted strictly.
However, application of these provisions on exclusion remains
optional for contracting authorities.

On the other hand, the directives provide that the suitability of
tenderers or candidates
to participate in a procurement
procedure or to submit a tender must be assessed on the
financial or
basis of criteria relating to their economic,
technical capacity (28). The directives set out exhaustive and
mandatory, qualitative selection criteria, which can be used
to justify the choice of candidates or tenderers (29). Selection
criteria different from those set out in the directives would thus
not comply with the current directives.

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the Court

found that a
In the Beentjes case cited above,
condition regarding the employing of long-term unemployed
persons had no relation to the checking of tenderers’ suitability
on the basis of their economic and financial standing and their
the
of
technical
judgment) (30). The Commission notes in this respect
that
contracting authorities can include a condition relating to the
employment of long-term unemployed when setting conditions
relating to the execution of a contract (see point 1.6 below).

knowledge

(ground

ability

and

28

references

With regard to economic and financial standing, the directives
set out a number of references which can be provided to prove
the good standing of candidates or tenderers in respect of a
is not exhaustive.
list of
given contract. This
However, any other
reference required by the contracting
authority must be necessary, from an objective point of view,
to prove the economic and financial standing of the tenderers
as regards a specific contract (31).
In view of the references
to assess the
which may currently be required in order
economic and financial
is not
possible for social considerations
to be included in such
references.

standing of

tenderers,

it

As regards proof of technical capacity, the directives permit
social considerations to be taken into account to a certain
extent. The possibilities for taking social considerations into
account under the directives are set out below (see point
1.3.2 below).

The Directives specify (32)
the information required as
evidence of an operator’s financial and economic standing
and its technical capability must be confined to the subject
matter of the contract.

that

In the (cid:145)utilities(cid:146) sectors, the contracting authorities’ discretion in
this respect is wider, due to the fact that Article 31(1) of
Directive 93/38/EEC requires only that
(cid:145)objective rules and
criteria(cid:146) be used, which are laid down in advance and made
available to interested candidates or tenderers.

1.3.1. Exclusion of candidates or tenderers for non-compliance with

social legislation

that

In its abovementioned 1998 communication, the Commission
reiterated the fact
the public procurement directives
currently in force contain provisions that permit the exclusion,
at the selection stage, of candidates or tenderers who (cid:145)breach
national social
to the
promotion of equality of opportunities(cid:146).

including those relevant

legislation,

public

directives

procurement

The
the
exclusion of a tenderer who (cid:145)has not fulfilled obli-
gations relating to the payment of social security
contributions in accordance with the legal provisions
of the country in which he is established or with those
of the country of the contracting authority(cid:146) (33).

permit

the
The public procurement directives also permit
exclusion of a tenderer who (cid:145)has been convicted of
an offence concerning his professional conduct by a
judgment which has the force of res judicata(cid:146) or who
(cid:145)has been guilty of grave professional misconduct
proved by any means which the contracting authorities
can justify(cid:146) (34).

A tenderer who has been convicted by a judgment that has the
force of res judicata for failure to comply with national legis-
lation concerning, for example, the prohibition of clandestine
employment, may be excluded from a public procurement
procedure in accordance with the provisions mentioned
above (35).

the public procurement

In addition,
directives permit
contracting authorities in Member States that have provided
for this possibility in their national
to exclude
from a public procurement procedure any candidate or
tenderer who has not respected the provisions of such legis-
lation.

legislation,

can

clauses

Circumstances can thus be envisaged in which tenderers who
have not complied with social legislation can be excluded from
public procurement procedures, where such non-compliance is
deemed to constitute grave professional misconduct or an
offence having a bearing on its professional conduct. These
example,
also
exclusion
non-compliance with provisions on equality of treatment, or
on health and safety, or with provisions in favour of certain
categories of persons (36). A contracting authority may,
for
example, exclude a tenderer from its Member State who has
not introduced an equal opportunities policy as required by the
national legislation of the Member State where the contracting
authority is established, provided that non-compliance with
such legislation constitutes grave misconduct in the Member
State in question.

include,

for

Grave professional misconduct is a concept that is not yet
defined by European legislation or case law (37). It is thus for
the Member States to define this concept in their national
legislation and to determine whether non-compliance with
certain social obligations
grave professional
misconduct.

constitutes

1.3.2. Taking social considerations into account when verifying the

technical capability of candidates or tenderers

The public procurement directives lay down the means by
which the technical capability of a candidate or tenderer can
be demonstrated. The directives contain an exhaustive list of
references or evidence that candidates or tenderers can be
required to provide in order to demonstrate their technical
capability in view of the nature, quantity and purpose of the
contract in question (38). Hence, each particular requirement
laid down by the contracting authority with regard to the
technical capability of
tenderer must be
based on one of the references listed in the directives.

the candidate or

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to identify those
the selection phase is
The purpose of
tenderers who are considered by the contracting authority to
be capable of executing a given contract. Requirements must
therefore have a direct link to the subject matter of the contract
in question (39).

intends to use when evaluating tenders, and is required, at
the time of evaluation of tenders, not to use criteria other
than those set out
in the contract notice or contract
documents.

At this stage of selection, a contracting authority can require
references concerning tenderers’ experience and know-how (40).
It may, for example, verify the composition and management
of the personnel of the enterprise, its technical equipment and
its quality control system, in order to ensure that it has the
to
capability,
properly perform the contract.

in terms of staff qualifications and resources,

1.4.1. The criterion of the most economically advantageous tender

The public procurement directives list, by way of example, a
number of criteria that the contracting authorities can use as a
basis to identify which tender would be the most advantageous
from an economic point of view (45). Other criteria may also be
applied.

If a contract requires specific know-how in the (cid:145)social(cid:146)
field, specific experience may be used as a criterion as
regards technical capability and knowledge in proving
the suitability of candidates (41).

permitted

references

the
by
to be

procurement
The
directives (42) allow account
(cid:145)social
capacity(cid:146) of the undertaking (sometimes also known as (cid:145)social
responsibility(cid:146) (43)) only if this demonstrates the technical capa-
bility, within the meaning set out above, of the undertaking to
perform a given contract.

public
taken of

the

First,

tender.

Justice has

advantageous

As a general rule, the public procurement directives impose
two conditions with regard to criteria used for determining
the most
the
economically
to be observed (46).
principle of non-discrimination has
Second,
the criteria used should generate an economic
advantage for the contracting authority. The European Court
of
the public
procurement directives is to avoid the risk of preference
being given to national tenderers or candidates whenever a
contract is awarded by contracting authorities, and to avoid
the possibility that a body financed or controlled by the
State, regional or local authorities or other bodies governed
by public law may choose to be guided by considerations
that are not economic in nature (47).

confirmed that

aim of

the

1.4. Award of the contract

the

candidates or

Once
contracting authorities enter
tenders, leading to the award of the contract.

tenderers have been selected,
the phase of evaluation of

tenderers and the award of a
Selection of candidates or
contract are two distinct operations that are governed by
separate rules.

the public
For the award of public procurement contracts,
procurement directives (44) permit
two different
criteria, namely the lowest price and the most economically
advantageous tender.

the use of

When a contract is to be awarded to the most economically
advantageous tender, the public procurement directives require
the contracting authority to indicate in the contract documents
or in the contract notice the award criteria it will apply, where
possible in descending order of importance. As a result, the
the criteria it
contracting authority is required to state all

The common factor shared by all criteria used for evaluation of
offers is that they must, like the criteria cited as examples, all
concern the nature of the work which is the subject matter of
the contract or the manner in which it is carried out (48). They
must permit the contracting authority to compare tenders in
an objective way in order to determine which tender best
meets its needs in respect of a given contract. An award
criterion must allow the intrinsic qualities of a product or
service to be assessed.

Award criteria must therefore be linked to the subject matter of
the contractor or the manner in which it is performed (49).

if

the term (cid:145)social criterion(cid:146)

included among the various criteria
Social criteria are not
in the public procurement directives.
given as examples
is construed as a
However,
criterion that makes it possible to evaluate, for example, the
quality of a service intended for a given category of disad-
vantaged persons (50), such a criterion may legitimately be
used if it assists in the choice of the most economically advan-
tageous tender within the meaning of the directives.

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incompatible with the

The use of quotas to reserve contracts for a given category of
supplier (51) or the use of price preferences (52) would, however,
be
current public procurement
directives. This would also be the case for criteria relating to
whether tenderers employ a certain category of person or have
set up a programme for the promotion of equal opportunities,
as they would be considered criteria which are unrelated to the
subject matter of a given contract or to the manner in which
the contract is executed. Such criteria, which do not assist in
the choice of the most economically advantageous tender, are
not permitted under the public procurement directives, given
the objective of the directives, which is to allow the intrinsic
qualities of a product or service to be assessed. Moreover, such
criteria would
the
commitments entered into by the Member States under the
Agreement on Government Procurement concluded under the
auspices of the WTO (53).

incompatible with

considered

be

Criteria involving social considerations may be used to
determine the most economically advantageous tender
where they provide an economic advantage for the
contracting authority which is linked to the product
or
the
contract (54).

the subject matter of

service which is

that

implies

The question arises whether the concept of (cid:145)most economically
tender(cid:146)
advantageous
each individual award
to provide an economic advantage which
criterion has
directly benefits the contracting authority, or if it is sufficient
that each individual criterion has to be measurable in economic
terms, without the requirement that it directly provides an
economic advantage for
the contracting authority in the
given contract.

This question was put to the European Court of Justice in case
C-513/99. The judgment in this case is expected by the end of
2001. This judgment, which concerns a question relating to the
environment, could be applied by analogy to provide elements
for a response as regards use of social considerations (55).

Both in its Green Paper (56) and in the abovementioned
communication on public procurement (57), the Commission
clearly favoured the first interpretation.

The Commission notes that contracting authorities have the
possibility to set certain conditions for the execution of a
contract and that, at
they can take account of
certain social objectives (see point 1.6 below).

that stage,

1.4.2.

(cid:145)Additional criterion(cid:146)

This concept was first developed by the European Court of
Justice (58).

The concept was first mentioned in the Beentjes case cited
above, where the Court held that a criterion relating to the
employment of
long-term unemployed persons was not
relevant either to the checking of a candidate’s economic and
financial suitability or of the candidate’s technical knowledge
and ability, or to the award criteria listed in the relevant
directive. The Court also held that this criterion was never-
theless compatible with the public procurement directives if
it complied with all relevant principles of Community law.

In Case C-225/98, the Court of Justice held (59) that contracting
authorities can base the award of a contract on a condition
related to the combating of unemployment, provided that this
condition was in line with all the fundamental principles of
Community law, but only where the said authorities had to
consider two or more economically equivalent tenders. This
condition was regarded by the Member State in question as
an additional, non-determining criterion and was considered
only after tenders were compared from a purely economic
point of view. Finally,
the
the Court of
application of the award criterion regarding combating unem-
ployment must not have any direct or indirect impact on those
submitting bids from other Member States of the Community
and must be explicitly mentioned in the contract notice so that
potential contractors were able to ascertain that
such a
condition existed.

Justice stated that

This might also be the case for other conditions in the social
field.

1.5. Abnormally low tenders

Under the current public procurement directives (60), where
contracting authorities consider a tender to be abnormally
low, their only obligation is to ask for an explanation from
the tenderer before being able to reject
the tender. The
contracting authority must verify the content of the tender
in question, and can reject it if it appears to be unreliable,
In
although it
Member States that have adopted legislation to this effect,
contracting authorities can nevertheless be required to reject
abnormally low tenders where this is due,
for example, to
non-compliance with employment or labour law rules.

is not required by the directives to do so.

The public procurement directives list, by way of example,
certain elements that the contracting authority can take into
account such as the economy of the manufacturing process,
technical
solutions and exceptionally favourable conditions
available to the tenderer. Elements relating to non-compliance
with rules on safety or employment can, under the current
public procurement directives, be taken into consideration to
reject an abnormally low tender. In keeping with the general
approach of the directives, the practical rules regarding such
verification are governed by national law, it being understood
that such rules must permit the tenderer to present its position.

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1.6. Execution of a contract

One way to encourage the pursuit of social objectives
is in the application of contractual clauses or of
conditions for execution of
the contract, provided
implemented in compliance with
that
they are
Community law and,
in particular, that it does not
discriminate directly or indirectly against tenderers
from other Member States.

some

examples of

specific
Listed below are
conditions which a contracting authority might
impose on
the successful tenderer while complying with the requirements
set out above, and which allow social objectives to be taken
into account:

additional

(cid:151) the obligation to recruit unemployed persons, and in
particular long-term unemployed persons, or to set up
training programmes for the unemployed or for young
people during the performance of the contract,

Contracting authorities can impose contractual clauses relating
to the manner in which a contract will be executed. The
execution phase of public procurement contracts
is not
currently regulated by the public procurement directives.

(cid:151) the obligation to implement, during the execution of the
contract, measures that are designed to promote equality
between men and women or ethnic or racial diversity (67),

However, the clauses or conditions regarding execution of the
contract must comply with Community law and, in particular,
not discriminate directly or
indirectly against non-national
tenderers (61) (see point 3.2 below).

In addition, such clauses or conditions must be implemented in
compliance with all the procedural rules in the directives, and
in particular with the rules on advertising of tenders (62). They
should not be (disguised) technical specifications. They should
not have any bearing on the assessment of the suitability of
financial and
tenderers on the basis of
technical capacity, or on the award criteria (63). Indeed,
(cid:145)the
contract condition should be independent of the assessment
of the bidders(cid:146) capacity to carry out the work or of award
criteria’ (64).

their economic,

Transparency must also be ensured by mentioning such
conditions in the contract notice, so they are known to all
candidates or tenderers (65).

Finally, a public procurement contract should, in any event, be
executed in compliance with all applicable rules,
including
those in the social and health fields (see chapter 3 below).

Contract conditions are obligations which must be accepted by
the successful tenderer and which relate to the performance of
the contract. It is therefore sufficient, in principle, for tenderers
to undertake, when submitting their bids,
such
conditions if the contract is awarded to them. A bid from a
tenderer who has not accepted such conditions would not
comply with the contract documents and could not therefore
be accepted (66). However, the contract conditions need not be
met at the time of submitting the tender.

to meet

Contracting authorities have a wide range of possibilities for
determining the contractual clauses on social considerations.

(cid:151) the obligation to comply with the substance of
ILO core

provisions of
execution of the contract,
have not already been implemented in national law,

the
conventions during the
in so far as these provisions

the

(cid:151) the obligation to recruit, for the execution of the contract, a
number of disabled persons over and above what is laid
down by the national legislation in the Member State where
the contract is executed or in the Member State of the
successful tenderer.

it would appear more difficult

It should be noted that
to
envisage contractual clauses relating to the manner in which
supply contracts are executed, since the imposition of clauses
requiring changes to the organisation, structure or policy of an
undertaking established on the territory of another Member
State might be considered discriminatory or to constitute an
unjustified restriction of trade.

2. PUBLIC PROCUREMENT CONTRACTS NOT COVERED BY

THE DIRECTIVES

The public procurement directives apply only to certain public
procurement contracts, and in particular those whose value
equals or exceeds
in the
directives.

threshold set out

the relevant

is for Member States to decide
Under Community law,
whether public procurement contracts not covered by the
Community directives should be subject to national rules.

it

Member States are also free, within the limits laid down by
Community law,
to decide whether public procurement
contracts not covered by the directives may (cid:151) or must (cid:151)
be used to pursue objectives other than the objective of (cid:145)best
value for money(cid:146) pursued by the public procurement directives.

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to define

to national

remain free,
apply,
and

legislation in the
in respect of

field,
Without prejudice
such
contracting authorities
contracts,
in their procurement
procedures, selection and award criteria of a social nature,
provided that they comply with the general rules and principles
of the EC Treaty (68). This implies, among other things, an
appropriate degree of transparency and compliance with the
principle of equality of treatment of tenderers.

constitute direct or

Practices that reserve contracts to certain categories of persons,
for example to disabled persons ((cid:145)sheltered workshops(cid:146)) or to
the unemployed, are permitted. Such practices must not,
however,
indirect discrimination as
regards tenderers from other Member States (69), or constitute
an unjustified restriction on trade (70). Thus, reservation of a
contract for national tenderers would be contrary to the rules
and general principles of the EC Treaty. However, where for
example, contracts are also open to sheltered workshops from
other Member States, this should not in principle be discrimi-
natory. In such cases, award of the contract should be made in
accordance, among other things, with the principles of equality
of treatment of tenderers and of transparency (71)
(see, also,
chapter 3 below).

the

services

Contracting authorities have a certain freedom not only as
regards contracts not covered by the directives, but also as
listed in Annex I B to Directive
regards
92/50/EEC and Annex XVI B to Directive 93/38/EEC, which
cover most services of a (cid:145)social(cid:146) nature (for example, health and
social
services). Such contracts are subject only to the
provisions of the public procurement directives on technical
specifications and advertising (award notice). The detailed
rules in the directives on selection of candidates and award
of contracts do not apply to contracts for such services.
However, procurement
in respect of such service contracts
remains subject to national law and to the rules and principles
of the EC Treaty, as outlined above.

3. SOCIAL PROVISIONS APPLICABLE TO PUBLIC

PROCUREMENT

3.1. Introduction

From the outset, it must be reiterated that, even if the public
procurement directives do not contain a specific provision to
this effect, all Community,
international and national regu-
lations, rules and provisions, which are applicable in the
social
field shall apply fully during the performance of a
public procurement contract following award of the contract.
Where necessary, they should be stated in the contract notice
or contract documents. The public procurement directives
already permit (72) contracting authorities to identify, or for
them to be obliged by a Member State to identify,
in the
contract documents the national competent authority or auth-
orities from whom tenderers may obtain relevant information
on obligations regarding safety and working conditions which

are applicable at the place where the works are carried out or
on the sites where the services are provided (73).

These obligations include respect of national rules deriving
from Community directives in the social field. Of particular
relevance in the context of public procurement are the
directives on the health and safety of workers and the directives
on the (cid:145)transfer of undertakings(cid:146) and the (cid:145)posting of workers(cid:146)
(see point 3.2.1.2 below), as well as recent directives on
equality of treatment (74).

Such obligations may also derive from certain conventions of
the International Labour Organisation (ILO) (75). As regards
the
core labour standards recognised at
fundamental principles and rights at the workplace defined
by the International Labour Organisation of course apply in
their entirety to the Member States (76).

international

level,

contracting authority in the

Bids from tenderers who have not taken account of obligations
on employment protection provisions and working conditions
contract
identified by the
documents cannot be considered as complying with the
contract documents. Moreover, where tenderers have not
taken sufficient account of these obligations in their tenders,
their tenders might be considered as abnormally low and, in
some cases, might be rejected for this reason (see point 1.5
above).

Questions have frequently been asked (77) about the interpre-
tation and application of certain rules or regulations of a social
nature which must be complied with in respect of public
procurement contracts and which might seem difficult
to
identify in the context of public procurement, and particularly
during execution of
the contract. Particularly frequent are
questions on the application of labour law and the protection
of working conditions in respect of workers posted by an
undertaking in order to provide a service in another Member
State, as particular account has to be taken of such conditions
when tenderers are drawing up their bids. Another matter on
which questions are frequently posed in respect of public
procurement concerns cases where a successful tenderer takes
the organisation
over
previously holding the contract.

the employees of

some or all of

Moreover, understanding the extent of relevant obligations in
the social field may play an important role in dealing with and
verifying tenders which are suspected of being abnormally low.

The Commission explains in this communication the scope of
Community provisions that are of particular
relevance in
answering such questions.

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3.2. Determining the working conditions applicable

In the case of national, international and Community standards
and rules that must be applied in the social field, a distinction
must be made between situations of a cross-border nature and
other situations (which can, in principle, be considered purely
national).

In (cid:145)national(cid:146) situations, the contracting authorities, tenderers
and contractors must comply, as a minimum standard, with
all obligations relating to employment protection conditions
including those deriving from
and working conditions,
collective and individual rights,
that arise from applicable
legislation, case law and/or collective agreements,
labour
provided that they are compatible with Community legislation
and the rules and general principles of Community law, and in
particular the principles of equal treatment and non-discrimi-
nation.

In (cid:145)cross-border(cid:146) situations, requirements justified by overriding
reasons in the general
interest that are in force in the host
such rules was put on a
(the
country
Community basis by Directive 96/71/EC, see point 3.2.1.2
below) must, among others, be complied with by service
providers, in the respect of the principle of equal treatment.

catalogue of

In both situations, provisions more favourable to workers may,
however, also be applied (and must then also be complied
with), provided that they are compatible with Community law.

3.2.1. The limits laid down by Community law on the application of

national provisions

3.2.1.1. The EC Treaty

Since the relevant provisions can be applied only if they are
compatible with Community law, the limits and restrictions
laid down by Community law should be examined.

it applies

The established case law of the Court, as summarised in the
Arblade judgment (78),
is that Article 49 (ex 59) of the EC
Treaty requires not only the elimination of any discrimination
against a service provider established in another Member State
by reason of its nationality, but also the elimination of any
indiscriminately to national
restriction, even if
service providers and to those from other Member States,
which is likely to prevent, hamper or make less attractive the
activities of a service provider established in another Member
State where it lawfully provides similar services (79). Moreover,
even in the absence of harmonisation in the field, as a funda-
mental principle of
the EC Treaty, the freedom to provide
services may be limited only by rules which are justified by
imperative reasons relating to the public interest and which
apply to all persons or undertakings pursuing an activity in
is not
the State of destination,
protected by the rules
is
subject in the Member State in which he is established (80).
Moreover, application of such national rules of a Member
State to service providers established in another Member

in so far as that
to which the service provider

interest

State must be necessary to ensure attainment of the objective
pursued and must not exceed what is necessary to attain the
objective (81).

already

accepted worker protection (82),
The Court has
including protection of workers in the construction sector (83),
as an imperative reason in the general interest. However, purely
administrative considerations would not justify such a dero-
gation from Community law by a Member State, especially if
the effect of the derogation is to restrict the exercise of one of
the principal freedoms under Community law (84). It must be
stressed that
interest
which justify the substantive provisions of a regulation may
also justify the supervisory measures needed to ensure that
they are complied with (85).

the imperative reasons in the general

Exclusion from participation in a public procurement contract
of an undertaking established in another Member State because
it was not affiliated to a national collective agreement in force
the contracting
in the relevant sector
authority would thus not only be contrary to the public
procurement directives, but might also be an infringement of
the freedom to provide services and, in certain cases, of the
right of establishment (86).

in the country of

3.2.1.2. Provisions of

secondary

legislation of particular

relevance to public procurement

Directive 96/71/EC ((cid:145)posting of workers(cid:146))

the Court of

Justice (87),
According to the
case-law of
from
Community law does not prevent Member States
extending their legislation, or collective labour agreements
entered into by the social partners,
regards
minimum wages, to any person who carries out work, even
temporarily, within their territory, irrespective of the country
in which the employer is established.

including as

Having regard to this case-law and the relevant provisions of
the 1980 Rome Convention (88), Directive 96/71/EC concerning
the posting of workers in the framework of a transnational
provision of services aims to coordinate the legislation of
Member States by preparing a list of mandatory rules of
interest at Community level and by rendering obli-
general
gatory the existing (cid:145)possibilities(cid:146) for Member States as regards
transnational situations. It seeks to guarantee both the funda-
mental freedoms under the EC Treaty and worker protection,
and is intended to provide greater legal certainty to enterprises,
service providers, and to (cid:145)posted(cid:146) workers within the
as
framework of the freedom to provide services. In Community
labour
level of
protection to workers. To this end, the Directive lays down a
common list of rules for minimum protection of workers
which employers must observe in the host country in respect
of workers posted in the situations described above. It also
guarantees a level playing field for all tenderers in the field
of public procurement, and legal clarity as to the elements to
be taken into account when preparing tenders.

the Directive provides a significant

law,

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is

found either

This core of mandatory rules for minimum protection of
workers
in collective
agreements which have been declared universally applicable
within the meaning of
the
following matters:

in legislation or

the Directive,

and covers

(cid:151) maximum work periods and minimum rest periods,

(cid:151) minimum paid annual holidays,

(cid:151) minimum rates of pay,

(cid:151) conditions of hiring-out of workers
temporary employment undertakings),

(in particular by

(cid:151) health, safety and hygiene at work,

(cid:151) protective measures with regard to the

and
conditions of employment of pregnant women or women
who have recently given birth, of children and of young
people,

terms

(cid:151) equality of treatment between men and women and other

provisions on non-discrimination.

It should be noted that the Directive states that the rules laid
down by collective agreements
that have been declared
universally applicable (89) are mandatory in the construction
sector. Member States may, however, extend the application
of these rules to other sectors. Rules that are laid down in
legislative provisions apply to all sectors.

The (cid:145)posting of workers(cid:146) Directive thus introduces certain
(cid:145)social clauses(cid:146) into the relationship between service providers
operating in one Member State and the party to whom the
service is provided who is situated in another Member State
(host Member State), which may be a public authority. The
service provider who posts workers to a host Member State
must comply with a minimum set of labour law requirements
in force in that Member State.

Directive 2001/23/EC (Safeguarding workers’ rights in the event of
(cid:145)transfers of undertakings(cid:146))

to

by

another

subsequent

undertaking,

If an undertaking takes over certain activities carried out
previously
a
procedure for the award of a public procurement contract,
this might fall within the scope of the Directive on (cid:145)transfers
of undertakings(cid:146). Such a transfer may arise as part of a
procedure for the award of public service contracts (90), as
part of the privatisation of a sector where there is a transfer
of an entity in the form of an administrative concession (91), or
as a result of a public procurement procedure, for example for
a public services contract (92).

The Community directive applicable in this field (93) aims to
ensure the continuity of the existing employment relations of
an employee under national
any person protected as
the
employment
post held by such person (95).

legislation (94), regardless of

the nature of

applies

The essential and decisive criterion for establishing whether the
(cid:145)transfer of undertakings(cid:146) Directive
in particular
instances, and particularly whether there is a transfer within
the meaning of the Directive, is whether the economic entity
transferred retains its identity after its transfer (96). This may be
the case if, for example, its operations are genuinely continued
or taken over (97). The term (cid:145)entity(cid:146) thus refers to an organised
and stable set of persons and elements allowing the exercise of
an economic activity in pursuit of a given objective (98).
In
order to establish whether the conditions for a transfer of an
economic entity are met, it is necessary to take into account all
the circumstances that characterise the operation in question.
However, these elements are only some of the aspects of the
overall assessment required and should only form part of the
assessment by the national judge whose task it is to make this
assessment (99).

the Directive,

Despite the fact that it may provide an indication that there has
been no transfer within the meaning of
the
absence of a contractual
link between the transferor (that is,
the entity that held the contract previously) and the transferee
(the new tenderer to whom the contract is awarded), should
not be a deciding factor in this respect (100). The Directive
applies in all cases where there is a change in contractual
relations,
legal person responsible for
operating the undertaking, and who therefore enters into the
contractual obligations of an employer vis-(cid:224)-vis the employees
of the undertaking (101).

in the natural or

that

judgment

in the Oy Liikenne
As confirmed in the recent
case (102),
the transfer takes place following a
the fact
public procurement procedure does not pose any specific
problems as regards application of the (cid:145)transfer of undertakings(cid:146)
Directive. Moreover, the two directives can be reconciled, due
to their objectives (103). What is more, further to the case law of
the Court of Justice on public procurement, contracting auth-
orities have an obligation to inform tenderers of all conditions
relating to the performance of a contract, so that tenderers can
take them into account when preparing their tenders. An
operator must thus be in a position to assess whether, if it is
awarded the contract, it will be in its interests to buy major
assets of the current holder of the contract and take over all or
some of his staff, or whether it will be required to do so. In
such event, it should be in a position to assess whether it will
find itself in the situation of a transfer of undertaking within
the meaning of Directive 2001/23/EC (104).

(1) COM(98) 143.

(2) Social Policy Agenda, COM(2000) 379 of 28.6.2000.

(3) Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts, Council
Directive 93/36/EEC of 14 June 1993 coordinating procedures for the award of public supply contracts and Council Directive 93/37/EEC of
14 June 1993 concerning the coordination of procedures for the award of public works contracts, as amended by European Parliament and
Council Directive 97/52/EC; Council Directive 93/38/EEC of 14 June 1993 coordinating the procurement procedures of entities operating in the
water, energy, transport and telecommunications sectors, as amended by European Parliament and Council Directive 98/4/EC.

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(4) This objective means that (cid:145)it is necessary to improve and extend the safeguards in the directives that are designed to introduce transparency into
the procedures and practices for the award of such contracts, in order to be able to monitor compliance with the prohibition of restrictions more
closely and at the same time to reduce disparities in the competitive conditions faced by nationals of different Member States(cid:146) (recital 6 of Council
Directive 89/440/EEC of 18 July 1989 amending Directive 71/305/EEC concerning coordination of procedures for the award of public works
contracts (OJ L 210, 21.7.1989, p. 1)).

(5) For the purposes of this communication, the term (cid:145)contracting authorities(cid:146) shall include (cid:145)contracting entities(cid:146) within the meaning of Directive

93/38/EEC, unless specified otherwise.

(6) Preface to the communication on the Social Policy Agenda, cited above.

(7) Communication from the Commission:

(cid:145)Promoting core labour standards and improving social governance in the context of globalisation(cid:146),

COM(2001) 416 of 18.7.2001.

(8) See preface to the communication on the Social Policy Agenda, cited above.

(9) Article 13 covers all forms of discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation.

(10) See communication on core labour standards, cited above, part 3.

(11) The only provisions referring explicitly to provisions of a social nature are to be found in Article 23 of Directive 93/37/EEC, Article 28 of
Directive 92/50/EEC and Article 29 of Directive 93/38/EEC. As regards Article 9 of Directive 93/37/EEC, which lays down a special award
procedure for the design and construction of public housing, it should be noted that the sole aim of this provision dating from the 1970s was to
permit Member States to provide for the possibility for award of a contract for the construction of public housing to a single contractor who
would be responsible for both design and construction. The other relevant provisions of the directive are fully applicable to such procedures.

(12) At Community level, there are a number of legislative texts that may apply to public procurement. They include, in particular, texts on safety and
health at work (for example, Council Directive 89/391/EEC of 12 June 1989 on the introduction of measures to encourage improvements in the
safety and health of workers at work, OJ L 183, 29.6.1989, p. 1, and Directive 92/57/EEC of 24 June 1992 on the implementation of minimum
safety and health requirements at temporary or mobile construction sites), working conditions and the application of employment law (for
example, Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the
framework of the provision of services, OJ L 18, 21.1.1997, p. 1, and Directive 2001/23/EC on the safeguarding of employees’ rights in the event
of transfers of undertakings, businesses or parts of undertakings or businesses, OJ L 82, 22.3.2001, p. 16, codifying Directive 77/187/EEC).

(13) See recital 22 of the proposal for a Directive of the European Parliament and of the Council on the coordination of procedures for the award of
public supply contracts, public service contracts and public works contracts, COM(2000) 275 final (OJ C 29 E, 30.1.2001, p. 11), relating to
Article 23(3) of the proposal, and recital 32 of the proposal for a Directive coordinating the procurement procedures of entities operating in the
water, energy and transport sectors, COM(2000) 276 final (OJ C 29 E, 30.1.2001, p. 112), relating to Article 33, third subparagraph, of the
proposal.

(14) See the chapter on the definition of the subject matter of a contract in the interpretative communication on the Community law applicable to
public procurement and the possibilities for integrating environmental considerations into public procurement, COM(2001) 274 final of 4.7.2001.

(15) Certain service contracts targeted at a particular social category have, by their very nature, a social objective (for example, a contract for training
for long-term unemployed persons). Another example is contracts for the purchase of computer hardware/services adapted to the needs of
disabled persons.

(16) For example, social and sanitary services, educational and vocational training services, or recreational and cultural services. The services listed in
Annex I B to Directive 92/50/EEC and Annex XVI B to Directive 93/38/EEC are subject only to the provisions of the public procurement
directives on technical specifications and the publication of an award notice. However, they remain subject to the provisions of the EC Treaty,
which means, among other things, that there must be a sufficient degree of transparency, and respect of the principle of equal treatment of
tenderers.

(17) Council and European Parliament communication on the internal market and the environment, COM(1999) 263 final of 8.6.1999, p. 8.

(18) See chapter II, point 1, of the communication on the possibilities for incorporating environmental considerations into public procurement cited
above, in which the Commission examines the concept of (cid:145)technical specifications(cid:146) within the meaning of the public procurement directives.

(19) See Article 14 of Directive 92/50/EEC, Article 8 of Directive 93/36/EEC, Article 10 of Directive 93/37/EEC, and Article 18 of Directive

93/38/EEC.

(20) In this context, see Article 8(6) of Directive 93/36/EEC, Article 10(6) of Directive 93/37/EEC, Article 14(6) of Directive 92/50/EEC and Article

18(5) of Directive 93/38/EEC.

(21) This means that they must comply, among other things, with the case law of the Court of Justice regarding measures having an equivalent effect

to quantitative restrictions.

(22) The e-Europe initiative calls upon contracting authorities, in order to achieve the objective of an (cid:145)information society for all(cid:146), to ensure the widest
possible access to information technologies for persons with special needs, and to adopt the (cid:145)web accessibility(cid:146) initiative for Internet sites.

(23) This obliges contracting authorities to take account of the health and safety of workers on construction sites both in the award and the execution

of their works contracts.

(24) For example, the purchase of computer equipment or services adapted to the needs of the visually impaired. Such requirements are used to define

the technical characteristics of the product and therefore relate to the subject matter of the contract.

(25) As stated in the communication on the possibilities for incorporating environmental considerations into public procurement cited above,
requirements which bear no relation to the product or the service itself, such as a requirement relating to the way in which an undertaking
is managed, are not technical specifications within the meaning of the public procurement directives and cannot therefore be imposed. Thus,
requirements concerning the use in a contractor’s office of recycled paper, the application of specific waste disposal methods on the contractor’s
premises, or the recruitment of staff from certain groups of persons (ethnic minorities, disabled persons, women) would not qualify as technical
specifications.

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(26) A (cid:145)social label(cid:146) relating to the (cid:145)social(cid:146) capacity of an undertaking cannot currently be considered a (cid:145)technical specification(cid:146) within the meaning of

the public procurement directives.

(27) All the directives allow the contracting authorities, when the criterion used is that of the most economically advantageous offer, to take account
of variants which are submitted by a tenderer and which meet the minimum requirements set by the contracting authorities. Contracting
authorities must state in the contract documents the minimum technical specifications to be respected by the variants and any specific
requirements to be met. They must indicate in the contract notice if variants are not authorised (Article 24 of Directive 92/50/EEC, Article
16 of Directive 93/36/EEC, Article 19 of Directive 93/37/EEC and Article 34(3) of Directive 93/38/EEC).

(28) Article 15 of Directive 93/36/EEC, Article 18 of Directive 93/37/EEC, Article 23 of Directive 92/50/EEC and Article 31(1) of Directive

93/38/EEC.

(29) In the Beentjes judgment of 20.9.1988 in Case 31/87, the Court stated that, according to the public procurement directives, (cid:145)the suitability of
contractors is to be checked by the authorities awarding contracts in accordance with the criteria of economic and financial standing and of
technical knowledge or ability(cid:146) (point 17 of the judgment).

(30) Similarly, a criterion regarding the good standing of executives of an undertaking was rejected by the Court of Justice, on the basis that it
(cid:145)constituted a means of proof which does not come within the closed category authorised by directive(cid:146) 71/305/EEC on economic and financial
standing of undertakings, in its judgment of 10.2.1982 in Case 76/81, Transporoute (points 9 and 10).

(31) See the Transporoute judgment referred to above, point 9.

(32) See, for example, Article 32(4) of Directive 92/50/EEC.

(33) See Articles 20(e) of Directive 93/36/EEC and 24(e) of Directive 93/37/EEC, to which reference is made in Articles 31(2) of Directive 93/38/EEC

and 29(e) of Directive 92/50/EEC.

(34) See Articles 20(c) and (d) of Directive 93/36/EEC, 24(c) and (d) of Directive 93/37/EEC, to which reference is made in Articles 31(2) of Directive

93/38/EEC and 29(c) and (d) of Directive 92/50/EEC.

(35) Conviction for infringement of the prohibition on employing unregistered workers can, under Article L362.-6.2 of the French Labour Code, lead

to temporary exclusion (of up to five years) or definitive exclusion from participation in public procurement procedures.

(36) In Spain, non-compliance with legislation on the employment of the disabled constitutes grave professional misconduct, and can lead to the
exclusion of the tenderer in question. In France, there are approximately 30 possible grounds for exclusion for non-compliance with employment
legislation (for example, labour legislation requires undertakings with more than 100 employees to employ two disabled persons; the head of the
company can be punished by the works inspectorate; this may allow a contracting authority to exclude the enterprise for serious professional
misconduct).

(37) Final report on the Falcone study on public procurement and organised crime (1998) (cid:151) Volume I: 24.5.1999 (cid:151) Institute of Advanced Legal

Studies (cid:151) University of London.

(38) Article 23 of Directive 93/36/EEC, Article 27 of Directive 93/37/EEC and Article 32 of Directive 92/50/EEC.

(39) Article 32(2) of Directive 92/50/EEC expressly states that these requirements must be defined according to the nature, quantity and purpose of

the services to be provided.

(40) For service contracts, the capability of service providers to provide certain services may be evaluated in particular with regard to their skills,
efficiency, experience and reliability (Article 32.1 of Directive 92/50/EEC). In this context, see also the Beentjes judgment cited above, point 37.

(41) For example, specific experience of management of a crŁche, or of training services for the long-term unemployed.

(42) Of all the references listed exhaustively in the public procurement directives for establishing the technical capability of a tenderer, the following
are those which might concern social considerations in certain cases: (1) a list of projects completed in the previous five years, accompanied by
certificates of due performance for the most important projects, or a list of the major services provided in the previous three years; (2) a
description of the supplier’s technical facilities, its measures for ensuring quality and its study and research facilities; or (3) a statement of the
technicians or technical bodies which the candidate can call upon for executing the contract, whether or not they belong to the firm, especially
those responsible for quality control.

(43) The terms (cid:145)responsibility(cid:146) or (cid:145)social capacity(cid:146) reflect a trend on the part of businesses to gradually take greater account of social and ethical (and
environmental) considerations in their business and investment plans, sometimes over and above simple compliance with social
legislation.
Businesses’ approach to social responsibility varies considerably depending on the sector and on national (cid:151) or even regional (cid:151) cultures. In its
Green Paper (cid:145)Promoting a European framework for corporate social responsibility(cid:146), COM(2001) 366 of 18.7.2001, the Commission stresses the
importance of corporate social responsibility, as it can be a positive contribution to the strategic goal decided in Lisbon (see point 6 of the Green
Paper). With this Green Paper, the Commission aims to launch a broad debate on how the European Union could promote such social
responsibility at both European and international
labels(cid:146) of a voluntary nature are currently
emerging on the market. In its Green Paper, the Commission defines the concept of (cid:145)social label(cid:146) as (cid:145)words and symbols on products which
seek to influence the purchasing decisions of consumers by providing an assurance about the social and ethical impact of a business process on
other stakeholders(cid:146).

(point 7). Moreover, various (cid:145)social

level

(44) Article 26 of Directive 93/36/EEC, Article 30 of Directive 93/37/EEC, Article 36 of Directive 92/50/EEC and Article 34 of Directive 93/38/EEC.

(45) The criteria cited as examples in the directives are price, delivery or performance dates, running costs, cost-effectiveness, quality, the aesthetic and

functional character, the technical value, after-sales service and technical assistance.

(46) A criterion that favours local tenderers, and that is likely to make it more difficult for potential tenderers established in other Member States to be
awarded the contract in question and to perform the services which are the subject matter of the contract, would constitute a restriction on the
freedom to provide services within the meaning of Article 49 (ex 59) of the EC Treaty.

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(47) Judgment of the Court of 3.10.2000 in Case C-380/98, University of Cambridge, point 17, in which the Court refers to the judgments of
15.1.1998, Mannesmann Anlagenbau Austria et al., Case C-44/96, ECR p. I-73, point 33; and BFI Holding, of 10.11.1998, Case 360/96, points 42
and 43. See also the judgment of 1.2.2001 in Case C-237/99, Commission v. French Republic, (cid:145)HLM(cid:146), points 41 and 42.

(48) Conclusions of Advocate-General Darmon of 4.5.1988 in the Beentjes case cited above, point 35.

(49) See, for example, Article 30(1) of Directive 93/37/EEC. In this context, see also the conclusions of Advocate-General Colomer presented on 5 June

2001 in joined cases C-285/99 and C-286/99, Lombardini, footnote 23.

(50) In the context of a contract to provide computer services to all the employees of a local authority (services under Annex IA), a criterion relating
to the method proposed by the tenderer to ensure, at all times and in a satisfactory fashion, a quality service which meets the needs of any
disabled person, may, in principle, be one of the criteria to be taken into account in determining the most economically advantageous tender.

(51) In the United States, 20 % of contracts are reserved for (cid:145)small minority businesses(cid:146), i.e., undertakings controlled by minorities. The United States

has a derogation to this effect in the Agreement on Government Procurement.

(52) Certain categories of tenderer benefit from a price preference where the tender submitted by tenderer A, despite the fact that it is higher than
that of tenderer B, is considered equivalent to that of B insofar as A applies a given social policy, for example, an active policy for the promotion
of women.

(53) Certain states that are signatories to the Agreement on Government Procurement made express reservations to allow their contracting authorities
to apply a social criterion when awarding contracts. The United States, for example, reserved the right to reserve certain contracts for minorities.
However, no such reservation was made by the European Community. As a result, such criteria must be considered as being contrary to the
provisions of the public procurement directives, especially where they relate to the award of contracts.

(54) In one case handled by the Commission, a contracting authority had based itself principally on the following elements to award a contract to the
local transport company: the fact that the company was based in the area had repercussions both from a taxation point of view and in terms of
the creation of stable jobs. Moreover, the local purchase of large quantities of equipment and services by the service provider guaranteed local
jobs. The Commission considered that these criteria could not constitute criteria on the basis of which contracting authorities could evaluate
tenders insofar as they did not make it possible to measure an economic advantage inherent in the service which was the subject matter of the
contract to the benefit of the contracting authority. Moreover, these elements had the effect of discriminating against other tenderers insofar as
this resulted in giving an advantage in the evaluation of tenders to the only service provider established in the area concerned. This was therefore
an infringement of the general principle of non-discrimination between service providers set out in Article 3 of Directive 92/50/EEC.

(55) Case C-513/99 Stagecoach Finland Oy/AB (OJ C 102/10, 8.4.2000).

(56) Green Paper on (cid:145)Public procurement in the European Union: exploring the way forward(cid:146), COM(1996) 583 of 27.11.1996.

(57) See chapter 4.3 of the 1998 communication cited above on the integration of environmental considerations into public procurement. See also
point 48 of the communication on (cid:145)Social and regional aspects of public procurement(cid:146), COM(89) 400, adopted by the Commission on 22.9.1989
(OJ C 311, 12.12.1989).

(58) See Beentjes case cited above (at point 29) and Case C-255/98, Commission of the European Communities v. French Republic, judgment of 26.9.2000,

School buildings (cid:151) Nord-Pas-de-Calais Region (ECR 2000, I-7445).

(59) See the (cid:145)General report on the activities of the European Union(cid:146), 2000, point 1119, p. 407.

(60) Article 27 of Directive 93/36/EEC, Article 30 of Directive 93/37/EEC, Article 37 of Directive 92/50/EEC and Article 34(5) of Directive

93/38/EEC.

(61) By way of example, a clause stipulating that a successful tenderer must employ a certain number or percentage of long-term unemployed or
apprentices, without requiring the unemployed or apprentices to be from a particular region or registered with a national body, for instance for
the execution of a works contract, should not, a priori, amount to discrimination against tenderers from other Member States.

(62) See point 31 of the Beentjes judgment cited above.

(63) See point 28 of the Beentjes judgment cited above.

(64) Communication on regional and social aspects of public procurement, cited above, point 59.

(65) (cid:145)In order to meet the directive’s aim of ensuring development of effective competition in the award of public works contracts, the criteria and
conditions which govern each contract must be given sufficient publicity by the authorities awarding contracts(cid:146) (see the Beentjes judgment cited
above, point 21).

(66) The judgment of the Court of Justice of 22.6.1992 in Case C-243/89, Storebaelt, stated that a contracting authority must reject bids which do not
comply with the tender conditions to avoid infringing the principle of equal treatment of tenderers, which lies at the heart of the public
procurement directives.

(67) In the case of services contracts, this might for example involve establishing a policy aimed at promoting ethnic and racial diversity in the
workplace, through instructions given to the persons in charge of recruitment, promotion or staff training. It may also involve the appointment
by the contractor of a person responsible for implementing such a policy in the workplace.

(68) For more details, see chapter III of the interpretative communication on the Community law applicable to public procurement and the

possibilities for integrating environmental considerations into public procurement, cited above.

(69) In the United Kingdom, a preference scheme, the (cid:145)Priority suppliers scheme(cid:146), whose aim was to encourage employment of disabled workers
through the award of government supply contracts, stipulated that certain undertakings registered on a list could submit a second tender to bring
it into line with the lowest tender, a rule that could not benefit similar tenderers from other Member States. This scheme was discontinued at the
time of negotiations on codified Directive 93/36/EEC and was replaced in November 1994 by a procedure that complied with Community law,
the (cid:145)Special contract arrangement’. Eligibility for the scheme was extended to employers of disabled persons throughout the European Union, and
application of the scheme is limited to public procurement contracts whose value is below the thresholds set out in the directives(cid:146).

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(70) Article XXIII of the Agreement on Government Procurement ((cid:145)Exceptions to the agreement(cid:146)) provides the parties to the agreement with the
possibility of (cid:145)imposing or enforcing measures [. . .] relating to the products or services of handicapped persons, of philanthropic institutions or
of prison labour(cid:146), provided such measures do not (cid:145)constitute a means of arbitrary or unjustifiable discrimination(cid:146) and are not (cid:145)a disguised
restriction on international trade(cid:146). This possibility was not implemented in the public procurement directives.

(71) In this context, see the judgments of the Court of Justice of 18.11.1999 in Case C-275/98, Unitron, and of 7.12.2000 in Case C-324/98, Telaustria.

(72) Article 23 of Directive 93/37/EEC, Article 28 of Directive 92/50/EEC and Article 29 of Directive 93/38/EEC.

(73) Under the current public procurement directives, contracting authorities that make use of this possibility and thus provide such information in
the tender documents are required to ensure that tenderers have taken the obligations relating to protection provisions and working conditions
into account in the preparation of their tenders, by asking tenderers to state this in their tenders. In this way, tenderers can obtain the necessary
information in advance on the social obligations that will be applicable if the contract is awarded to them. It also permits tenderers to take
account in the preparation of their tenders of the costs that compliance with such obligations would involve.

(74) Directive 2000/43/EC of 29 June 2000 implementing the principle of equal treatment between persons irrespective of racial or ethnic origin (OJ L
180, 19.7.2000, p. 22) and Directive 2000/78/EC of 27.11.2000 establishing a general framework for equal treatment in employment and
occupation (OJ L 303, 2.12.2000, p. 16).

(75) Conventions No 87 of 9.7.1948 and No 98 of 1.7.1949 (on, respectively, freedom of association and protection of the right to organise, and
application of the right to organise and collective bargaining); No 29 of 28.6.1930 and No 105 of 25.6.1957 (abolition of forced labour); No 111
of 25.6.1958 (discrimination in employment and occupation); No 100 of 29.6.1951 (principle of equal remuneration and abolition of all
discrimination); No 138 of 26.6.1973 and No 182 of 17.6.1999 (minimum age and prohibition of the worst forms of child labour).

(76) Commission communication on core labour standards, cited above, point 3.1. In this context, the Commission states that, since rapid ratification
by all Member States of the eight core ILO conventions goes hand in hand with the European Union’s commitment to promoting core labour
standards, on 15.9.2000 it sent the Member States a recommendation on ratifying the most recent basic convention, i.e. Convention No 182
cited above (recommendation published in OJ L 243, 28.9.2000).

(77) The wish to improve social protection for workers and their working conditions is frequently behind such questions. Moreover, the objective of
ensuring social protection of workers has been recognised by the Court of Justice as an imperative requirement of general interest which may
justify national measures restricting the exercise of one of the fundamental freedoms of Community law (judgments of 17 December 1981, Webb,
Case 279/80, ECR 3305; of 3.2.1982, Seco and Desquenne & Giral, Joined Cases 62/81 and 63/81, ECR. 223; of 27.3.1990, Rush Portuguesa,
Case C-113/89, ECR I-345; of 28.3.1996, Guiot, Case C-272/94, ECR I-1905; of 23.11.1999, Arblade, Joined Cases C-369/96 and C-376/96).

(78) See the Arbalde judgment, cited above, and in particular points 33-39.

(79) See the judgments of 25.7.1991, S(cid:228)ger, Case C-76/90, ECR p. I-4221, point 12; of 9.8.1994, Vander Elst v. OMI of 9.8.1994 in Case C-43/93, ECR
p. I-3803, point 14; of 12.12.1996, Reiseb(cid:252)ro Broede, Case C-3/95, ECR p. I-6511, point 25; and of 9.7.1997, Parodi, Case C-222/95, ECR
p. I-3899, point 18, and point 10 of the Guiot judgment, cited above.

(80) See, in particular, the Webb judgment cited above, point 17, and judgments of 26.2.1991, Commission/Italy, Case C-180/89, ECR p. I-709, point
17; Commission v. Greece, Case C-198/89, ECR p. I-727, point 18; S(cid:228)ger, cited above, point 15; Vander Elst, cited above, point 16, and Guiot, cited
above, point 11.

(81) See in particular the S(cid:228)ger judgment, cited above, point 15, and judgments of 31.3.1993, Kraus, Case C-19/92, ECR p. I-1663, point 32; of

30.11.1995, Gebhard, Case C-55/94, ECR p. I-4165, point 37, and Guiot, cited above, points 11 and 13.

(82) See the Webb judgment, cited above, point 19, and judgments of 3.2.1982, Seco and Desquenne & Giral, cited above, point 14, and of 27.3.1990,

Rush Portuguesa, cited above, point 18.

(83) Guiot judgment, cited above, point 16.

(84) See, in particular, the judgment of 26.1.1999, Terhoeve, Case C-18/95, ECR p. I-345, point 45.

(85) In this context, see the Rush Portuguesa judgment, cited above, point 18, and the Arblade judgment, cited above, points 61 to 63 and 74.
However, although in the latter judgment, the Court confirmed the importance of social protection of workers and the justification for certain
supervisory measures needed to ensure that it is complied with, it added that such supervisory measures could be accepted only (cid:145)where there
exists no organised system for cooperation or exchanges of information between Member States as provided for in Article 4 of Directive 96/71(cid:146)
(see point 3.3.2 above). The organised system for cooperation or exchanges of information between Member States thus provided for will
therefore make certain supervisory measures superfluous after expiry of the date for implementation of that Directive (16.11.1999). See also, in
this context, the answer to Written Question E-00/0333 by Mrs B. Weiler.

(86) See, in this context, the conclusions of the Advocate-General in Case C-493/99, Commission v. Germany, of 5.4.2001.

(87) See, in particular, the Rush Portuguesa judgment, cited above, point 18.

(88) On the law applicable to contractual obligations, OJ 1980 L 266.

(89) Article 3 of the (cid:145)posting of workers(cid:146) Directive lays down what is meant by collective agreements or arbitration awards which are (cid:145)universally
applicable(cid:146) (Article 3(1)) or which have been (cid:145)declared universally applicable(cid:146) (Article 3(8)). In any event, application of such collective agreements
must comply with the principle of equality of treatment as set out in the last paragraph of the Article in question. There is equality of treatment
within the meaning of this provision (cid:145)where national undertakings in a similar position are subject, in the place in question or in the sector
concerned, to the same obligations as posting undertakings as regards the matters listed in the first subparagraph of paragraph 1(cid:146), and (cid:145)are
required to fulfil such obligations with the same effects(cid:146).

(90) See, for example, the proposal for a Regulation of the European Parliament and of the Council on action by Member States concerning public
service requirements and the award of public service contracts in passenger transport by rail, road and inland waterway, 26.7.2000, COM(2000)
7, in particular Article 9(3).

(91) Case C-343/98, Collino, judgment of 14.9.2000 on the transfer for value, in the form of an administrative concession, by an entity operating
public telecommunications services (and managed by a public body forming part of central government) to a private law company established by
another public body which holds its entire capital.

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(92) Case C-172/99, Oy Liikenne, judgment of 25.1.2001 concerning bus services.

(93) Directive 2001/23/EC, cited above.

(94) See the judgments of 11.7.1985, Case 105/84, Danmols Inventar; of 19.5.1992, Case C-29/91, Sophie Redmond Stichting; and of 10.12.1998,

Joined Cases C-173/96 and C-247/96, Sanchez Hidalgo et al.

(95) See the Collino case, cited above.

(96) Judgments of 14.4.1994, Case C-392/92, Schmidt; of 19.9.1995, Case C-48/94, Rygaard; of 26.9.2000, Case C-175/99, Mayeur.

(97) Judgments of 18.3.1986, Case 24/85, Spijkers; of 11.3.1997, Case C-13/95, S(cid:252)zen; and of 10.12.1998, joined cases C-127/96, C-229/96 and
C-74/97, HernÆndez Vidal, as well as the judgment of 2.12.1999 in the Allen et al. case, Case C-234/98 and the Oy Liikenne case cited above.

(98) See, for example, the S(cid:252)zen, Hidalgo et al., Allen et al. and Oy Liikenne cases cited above.

(99) See the Spijkers, S(cid:252)zen, Sanchez Hidalgo et al. and HernÆndez Vidal cases cited above.

(100) Judgment of 10.2.1988, Case 324/86, Tellerup, known as (cid:145)Daddy’s Dance Hall(cid:146), and the S(cid:252)zen, Hidalgo et al., Mayeur and Oy Liikenne cases cited

above.

(101) See Tellerup judgment, cited above, and the S(cid:252)zen, Hidalgo et al., Mayeur and Oy Liikenne cases cited above. Moreover, the Directive also applies
subsequent to a transfer decision taken unilaterally by the public body (local authority), see judgment of 19.5.1992, Case C-29/91, Sophie
Redmond Stichting. Moreover, the fact that the service was transferred by a public law body, which was a local authority in the case in question,
would not exclude application of the Directive because the activity involved is not covered by the exercise of public powers. See Collino (point
32) and Hidalgo et al. (point 24) cases cited above. On the other hand, a reorganisation of the structures of public administration or the transfer
of administrative tasks between public administrations is not a transfer of an undertaking. See judgment of 15.10.1996, Case C-298/94, Henke
and the Mayeur case cited above.

(102) Judgment of 25.1.2001, Case C-172/99, in particular, points 21/22.

(103) See also the conclusions of Advocate-General LØger in Case C-172/99, in particular points 28 to 37; and point 22 of the judgment in this case.

(104) Oy Liikenne judgment cited above, point 23.