Modernisation of procurement law – environmental aspects reinforced

On 18 April 2016, just as the two-year deadline to implement the latest EU Directives on the award of concession contracts expired, an amended procurement law came into force in Germany. In addition to various editorial rearrangements, deletions and the codification of key parts of procurement case law from the European Court of Justice (ECJ), the strategic goals of procurement procedures were also comprehensively reinforced.

In line with the requirements of the EU Directives on the award of concession contracts 2014/23/EU, 2014/24/EU and 2014/25/EU, the revised national contract award regulations contain remarks on the inclusion of qualitative, social, innovative (sustainable) and also environmental aspects in procurement projects (see also Sec. 97(3) German Act against Restraints of Competition, new version).

Environmental considerations to be taken into account in every phase

Environmental requirements, as well as the other principles mentioned above, should be capable of consideration at every phase of a contract award procedure – from listing performance specifications to defining the suitability and award criteria to setting the conditions for execution. Both optional requirements and future mandatory requirements are provided for:

Optional requirements

As proof that applicants or bidders meet certain systems or standards of environmental management (suitability requirement), contracting authorities can demand presentation of certificates from independent bodies. The contracting authority refers to the following systems/standards (to be considered as alternatives) (Sections 49(2); 46(3) No. 7 German Regulation on the Award of Public Contracts):

• The community EMAS European eco-management and audit scheme of the European Union, or
• other recognised environmental management systems in accordance with Article 45 of Regulation (EC) No 1221/2009 on the voluntary participation by organisations in a community eco-management and audit scheme, or
• other environmental management standards based on the relevant European or international standards and certified by accredited bodies.

Environmental requirements can basically be defined as a condition for execution if they are designated in the procurement documentation and connected with the contractual object (Sec. 128(2) German Act against Restraints of Competition, new version).

Characteristics of the contractual object (performance specification) can include environmental aspects. They can also refer to the process or method of manufacture or provision of the service or to another stage in the lifecycle of the contractual object including the production and supply chain, “if these characteristics are connected with the contractual object and are reasonable in relation to its value and procurement goals” (Sec. 31(3) German Regulation on the Award of Public Contracts, new version).

The usage of and demand for quality marks – as a means of proving environmental performance characteristics – is more comprehensive than previously permitted (Sec. 34 German Regulation on the Award of Public Contracts, new version): as long as all criteria for the seal of quality are connected with the contractual object (i.e. are factually and objectively justified), the quality mark was introduced as part of a transparent procedure, is accessible to all interested companies and is issued by a third body (on which the interested company has no significant influence), contracting authorities can request that a quality mark be presented. Quality marks can be taken into account as a minimum requirement (exclusion criterion) or condition of execution, or during the evaluation of quotations (award criterion).

Mandatory requirements

With regard to the procurement of services for which energy consumption is relevant, the contracting authority must set compulsory requirements for energy efficiency – in other words there is not an option here but an explicit duty to take into account environmental aspects in procurement (as a minimum requirement and evaluation criterion; see Sec. 67 German Regulation on the Award of Public Contracts, new version). When road vehicles are to be procured (e.g. for the car pool of the security authorities), these requirements are again made more specific and refer to specific factors regarding total mileage of the vehicles (Sec. 68 German Regulation on the Award of Public Contracts, new version).

Conclusion & outlook

The reinforcement of environmental aspects in procurement processes creates greater structuring and selection options for contracting authorities, but also brings with it specific implementation obligations. The companies concerned will certainly face considerable challenges, especially regarding the future compulsory inclusion of energy efficiency standards.

Firstly, the transitional periods (which are long in some cases) for implementing the requirements of enforcement activities under Directive 2009/125/EC (“ecodesign”) and Directive 2010/30/EU (“labelling of energy consumption”) can be shortened in practice. After all, Sec. 67(2) German Regulation on the Award of Public Contracts, new version, specifies that in each case the “highest” standards should be set.

Secondly, companies which want to take part in public tenders in future for the procurement of products for which energy consumption is relevant must be careful to comply with the legal provisions and document them reliably. But already, the ongoing debate about the regulatory treatment of measurement uncertainties and the verification tolerances often used by manufacturers to improve the legal classification also highlight that robust, product-related environmental compliance is certainly not (yet) a matter of course. The current modernisation of procurement law thus increases the pressure on the companies concerned to take action.