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EU Parliament wants EU contracts to consider social and environmental value

Finance | Vibeka Mair | 31 Oct 2011

The EU Parliament has said that EU rules on public procurement contracts should be reformed to enable authorities to award contracts not just to the lowest bidder, but to the most innovative, or to those offering the greatest environmental or social benefits.

The move mirrors Chris White’s private member's Public Services (Social Value) Bill which is currently going through Parliament.

Last week, the EU Parliament voted on a resolution proposing big changes to EU rules on public procurement contracts to make it easier for small organisations to bid for them.

To reduce the administrative burden that compliance places on bidders, MEPs proposed setting up an EU-wide "electronic procurement passport" proving that the holder complies with EU rules on public procurement.

Other measures to remove administrative barriers could include use of self-declarations of compliance and requesting original documents only from the shortlisted candidates or the successful tenderer.

Also, dividing public contracts into lots would give SMEs a better chance of bidding, MEPs say. They also ask the Commission to assess "whether further rules on the award of subcontracts are needed, for example on the establishment of a chain of responsibility, specifically to avoid SME subcontractors being subject to conditions worse than those applicable to the main contractor".

Further, the "lowest price" criterion should no longer be the determining factor in awarding contracts, says the resolution. It should be replaced by that of the "most advantageous tender in terms of economic, social and environmental benefits, taking into account the entire life-cycle costs of the good, service or work", the resolution says. MEPs underline that this goes in particular for food to hospitals, care facilities for the elderly, schools and kindergardens where quality and production methods play an important role.

Broadening the criteria, and systematically admitting alternative bids (or variants) would also enable bidders to propose new solutions and thus make public procurement into a real driver for innovation and help obtain the goals outlined in the EU 2020 strategy, adds the resolution text.

Finally, MEPs call on the Commission to reassess "the appropriate level of thresholds for supply and services contracts, and if necessary raise them".

This resolution outlines Parliament's position ahead of the major legislative proposal for a revision of EU public procurement rules, to be presented by the Commission in December.

Europe supports social enterprise

Elsewhere, last week, the European Commission announced €90m in funding to support social investment.

This funding comes as part of the European Commission's Social Business Initiative, which aims to support social enterprise across the EU, and will likely be inplemeted in the new budget starting 2014.

The fund will "facilitate access to funding for start-up, development and expansion of social enterprises" and draw capital to the social market.

Measures to improve the access to funding for social businesses include:

•Setting up a European financial instrument of €90m to improve social businesses' access to funding (operational from 2014).

•Introducing an investment priority for social enterprises in the regulations ERDF (European Regional Development Fund) and ESF (European Social Fund), as proposed in the regulatory package on the Structural Funds 2014-2020.

And in another development, the European Investment Fund, a subsidiary of the European Investment Bank, is planning to launch a €50m social investment fund early next year. The Fund will seek match-funding from private investors to increase the fund to €100m. 

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