Contract award criteria in public procurement procedures – The possibility of improving the situation of society from the perspective of the European Union and Poland

Legal basis in the EU

According to Jolien Grandia and Joanne Meehan public procurement can be leveraged to accomplish specific policy objectives, thereby benefiting society. This approach often involves selecting a tender design that awards contracts based on criteria beyond just the price, such as choosing the tender that offers the greatest economic advantage. Numerous studies have found that public procurement can stimulate innovative solutions by procuring functions rather than predefined goods or services (Geroski 1990; Elder and Georghiou 2007; Aschhoff and Sofka 2009). Socially responsible public procurement is an approach in which contracting authorities use solutions that allow them to achieve additional social benefits when awarding public contracts. In practice, contracting authorities in European Union Member States have been using solutions to achieve additional social benefits for over 30 years, but it was only in 2004 that they were included in the EU directives on public procurement.

One of such elements of socially responsible public procurement may be the contract award criteria. The essence of the contract award criteria, as emphasized in recital 92 of the preamble to Directive 2014/24/EU, is to enable a comparative assessment of the level of performance offered in each of the tenders for the subject of the contract. Bearing in mind also the principle that public tenders should be awarded on the basis of objective criteria ensuring compliance with the principles of transparency, non-discrimination and equal treatment, with a view to ensuring an objective comparison of the relative value of tenders in order to determine, in conditions of effective competition, which of the tenders is the most economically advantageous (see recital 90 of the preamble to Directive 2014/24/EU), all principles that the contracting authority intends to apply to the evaluation of tenders (i.e. criteria, weights and method of evaluation based on the criteria) must be specified in the procurement documents in an unambiguous and understandable manner. The description of the evaluation criteria and principles of evaluation of offers should therefore allow contractors to obtain full knowledge of how and based on what information their offers will be assessed, so that they can include appropriate data in the content of their offers.

The EU legislator himself in article 67 para 2 of Directive 2014/24/EU indicates that the most advantageous offer may include the best value for money, which is estimated on the basis of criteria including qualitative, environmental or social aspects related to the subject of a given public procurement - depending on which decision is made. The contracting authority itself will decide on the criteria.

It is important that the EU legislator advised contracting authorities that one of the criteria for evaluating offers may be social or environmental aspects. It is important because in the previously applicable Directive 2004/18/EC, in article 53 para 1 regarding contract award criteria, there was no indication at all that social aspects could be one of the possible contract award criteria. This also means that the EU legislator has noticed that it is actually possible to include this element in the contract award criteria and that they can not only help obtain the most advantageous offer in general, but it is also possible, using social aspects in public procurement, to meet the social goals of countries or local government units. Indeed, policies aimed at promoting societal objectives like social sustainability or innovation can impact the criteria (Kadefors et al. 2021).

Nevertheless, it is noted that the lowest price is chosen when the goal is to maximize savings, while the best value approach is used for more complex projects (Ballesteros-Perez et al. 2017). However, each time it is the contracting authority who must decide which contract award criteria to choose for a given public tender. Importantly, the EU legislator does not indicate exemplary contract award criteria - it describes them rather in terms of categories in which contracting authorities can look for appropriate solutions. Therefore, the freedom of choice rests with the contracting authority both in terms of selecting the category of contract award criterion or criteria in general, as well as in terms of determining these criteria in detail.

Legal basis in Poland

Due to the fact that the EU legislator decided to use directives to regulate the issue of public procurement in the EU, in Poland the issue regarding contract award criteria, at the level of principles and objectives, is the same as in the provisions of Directive 2014/24/EU. However, precisely because the issue was regulated by directives, EU Member States were able to clarify and detail certain issues. This also happened in the case of Poland, where the PPL regulations stated that the most advantageous tender may be selected on the basis of quality criteria and price or cost, according to article 242 para 1 point 1 of the PPL.

In this respect, it is worth paying attention to article 242 para 2 point 2 of the PPL, where it is indicated that quality criteria may be, in particular, criteria relating to the social aspects, including the social and occupational integration of persons referred to in article 94 para 1 (persons with disabilities, the unemployed, jobseekers, who do not remain in employment or do not perform gainful employment, to-be self-reliant persons, persons deprived of liberty or released from prisons having difficulties in integration with the environment, persons with mental disorders, homeless persons, persons who have obtained refugee status or subsidiary protection in the Republic of Poland, persons under the age of 30 and after 50 years of age with job-seeker status, without employment, persons who are members of disadvantaged minorities, in particular members of national and ethnic minorities). Interestingly, under contract award criteria it is not possible to reward employment based on an employment contract. This is due to the fact that the legislator in article 95 para 1 of the PPL provides for the obligation to employ people on the basis of an employment contract - the contracting authority is obliged to indicate in the procurement documents the persons or the scope of activities to which the contractor’s obligation to demonstrate the employment of persons under an employment contract applies.

It is worth noting that while meeting the social aspects taken into account by the contracting authority in the conditions for participation in a procurement procedure or the terms of the contract (e.g. in terms of employment under an employment contract) is obligatory for the economic operator applying for a given contract, including them in the contract award criteria influences the selection of the most advantageous offer (the economic operator who meets the requirements regarding social aspects receives additional points in the offer evaluation), but failure to meet them does not, in principle, eliminate his offer from participation in the procedure. This is important because when determining the criteria for evaluating offers, these criteria can be defined more freely than when determining the conditions for participation in the procedure - because, in principle, they do not prevent the contractor from submitting an offer.

Before applying contract award criteria related to social aspects, it is advisable for the contracting authority to research the situation on the labor market in terms of the validity of the requirements specified in the criterion. This will avoid a situation in which the contractor gains an advantage in points by declaring the employment of e.g. unemployed people, and at the stage of order execution the declaration submitted as part of the offer turns out to be impossible to implement due to the lack of unemployed people able to perform the order. Depending on the decision of the contracting authority, related to the assessment of the specificity of the specific subject of the contract, as part of the social criterion, the contracting authority may specify the requirement to employ one or more people from one or several marginalized groups indicated in article 94 para 1 of the PPL. In practice, contracting authorities have doubts about how the evaluation is carried out in the case of the contract award criterion regarding the employment of a certain number of marginalized people to perform the contract. It is assumed that it is based on the economic operator’s only declaration regarding the employment of the indicated number of such people to perform the contract. The fulfillment of this obligation takes place during the implementation of the public procurement contract, and thus requires the contracting authority to determine the method of verifying the implementation of the obligation in question in the contractual provisions. In such a case, the contracting authority should specify the method of documenting and controlling the employment of marginalized people and the sanctions that will apply to the economic operator who does not implement the employment declared in the contract award criterion.

Nevertheless, Polish contracting authorities are quite reluctant to use contract award criteria related to social aspects. One can even risk the thesis that Polish contracting authorities are not willing to establish interesting and innovative contract award criteria. In my opinion, this is due to the fact that they are afraid of the potential use of legal remedies - an appeal to the National Appeals Chamber by a potential economic operator, and they also have doubts as to how such contract award criteria would be verified in an audit in projects co-financed from EU funds. Most often, in such a situation, a violation of the principle of fair competition and equal treatment of contractors is alleged. Nevertheless, in one of its judgments, the National Appeals Chamber emphasized that the contract award criteria are not intended to guarantee an “equal position of economic operators”, but to make competition between these economic operators more realistic. If the position of economic operators were to be equal, non-price contract award criteria would be illusory and essentially pointless. However, it is important that non-price contract award criteria are objective and guarantee that economic operators can compete. The competitiveness of economic operators in terms of non-price contract award criteria should be related to the objectivity of these criteria, so that their meaning and assessment is unambiguous, which in turn allows for a clear assessment of a given economic operator. Selection of non-price contract award criteria is the right of the contracting authority, which may also make the purpose of the public procurement procedure more realistic using these criteria, as well as obtain the subject of the contract of the highest quality (case KIO 610/22). This means that contract award criteria by their nature - by promoting specific features or functionalities - lead to an increase in the chances of obtaining a contract by some economic operators, while limiting these chances for other economic operators.

However, it should be noted that these contract award criteria may allow the fulfillment of the fundamental principles of public procurement, which are included in article 17 para 1 point of the PPL, i.e. that the contracting body shall award the contract in a manner ensuring the best results of the contract, including social, environmental and economic effects, insofar as any of these effects can be obtained in a given contract in relation to the expenditure incurred.

Actionable recommendations

None of the provisions of EU law and PPL prevent the use of social aspects as contract award criteria in public procurement procedures. Moreover, the provisions of relevant legal acts even encourage promoting the social aspects of public tenders through contract award criteria. However, in order to apply the appropriate contract award criteria in this area, each contracting authority must perform appropriate analysis, including the following:

This means that each contracting authority has a chance, through public procurement procedures and contract award criteria, to improve the social situation and enable greater activity of specific groups of people.