The European Commission has published its proposal for a Public Procurement Act Regulation. Unlike the previous legal framework, which relied on three separate Directives, this new proposal aims to be directly applicable across all EU Member States, potentially eliminating some of the discrepancies, delays, and fragmentation in national transposition.
For social and circular economy actors that are often systematically excluded from public procurement opportunities, the proposal contains several landmark advancements as well as regressions compared to earlier drafts.
What the proposed Regulation gets right
The proposal introduces several key structural and procedural improvements:
- Best Price-Quality Ratio (BPQR) as the default: In a major victory for sustainable procurement, BPQR becomes the standard award method. Quality criteria must account for at least 30% of the award points, rising to at least 50% for labour-intensive contracts. While a "comply or explain" mechanism allows public buyers to deviate, they must explicitly justify how quality will be otherwise ensured.
- Explicit encouragement to promote the social and circular economy: The Regulation introduces new chapters on socially responsible and green public procurement, in which the promotion of the social economy and the transition to a circular economy are featured as unequivocal Union objectives. The Proposal also refers to the 2023 Recommendation on the Social Economy to align concepts and procurement dispositions.
- Reuse and preparation for reuse in procurement: The Proposal clarifies that public buyers can adopt requirements or criteria such as durability, reparability, reuse, refurbishment, waste prevention, preparation for reuse or the procurement of refurbished, remanufactured or second-hand products. It also enables buyers to consider circular business models rather than purchasing new products. This is a notable step forward in enhancing legal clarity and mainstreaming circular solutions, especially for the activities at the higher levels of the waste hierarchy.
- Abnormally low tenders: Public buyers are now required to reject tenders if the price is abnormally low and the explanation is unsatisfactory, thereby protecting actors such as social enterprises from being undercut by exploitative low-cost bids.
- National and EU-level data spaces: Each Member State must establish a National Public Procurement Data Space feeding into a Union-level portal. Crucially, this must track data on how public buyers are pursuing strategic environmental and social objectives, and the extent of SME participation, enhancing monitoring and accountability.
- Capacity building and support: Member States are mandated to create national strategies and support structures to help public buyers. Importantly, the proposal also encourages establishing support structures to build skills and navigate procurement for actors such as SMEs, which may have limited resources to keep up with procurement processes.
Critical gaps and risks: our key concerns
Despite these steps forward, the proposal leaves several crucial aspects voluntary or overly restrictive, posing a threat to enforcing sustainable public procurement:
- Voluntary reserved contracts: While a Regulation suggests stronger EU-level enforcement, the fact that reserving contracts remains discretionary leaves doubt about how a Regulation could achieve more even support for inclusive employment. The lack of a minimum percentage target set for reserved contracts further restrains uptake.
- Reserved contracts for limited general interest services: A second possibility to qualify for reserved contracts requires organisations to fulfill established social economy criteria except for the need to be "recognised as non-profit under national law." However, many social economy actors can equally operate under limited-profitability models. The narrow definition thus risks excluding a massive portion of the social economy. Furthermore, the list of eligible services should expand to encompass work integration, training, and circular economy services to adequately reflect the biggest social economy activity areas.
- A regressive step on circular public procurement: Compared to previous leaked drafts, the final proposal makes circular economy and resource- efficiency considerations even more voluntary. It stipulates that public buyers may establish specifications and award criteria that promote circularity – including reuse and preparation for reuse. Yet, by failing to mandate these circular considerations, the EU misses a vital opportunity to enforce the EU Waste Hierarchy, joint social-circular solutions, and better resource efficiency.
- Broad interpretation of quality criteria: Public buyers enjoy great discretion to define what constitutes quality criteria, as they can include social and environmental considerations as well as aspects related to technical merit and design for users. This risks continuing to gatekeep the €2 trillion of EU public procurement away from sustainable public procurement.
Ultimately, social and environmental considerations remain voluntary throughout the text, relying on encouragements that, albeit bolder, are not binding requirements. The current proposal positively encourages key social and circular considerations on paper but risks perpetuating the status quo in its currency structure. This comes at the expense of key policy objectives as well as bidders readily available to offer solutions with clear societal benefits.
The legislative process has just begun. The proposal will now go to the European Parliament and the Council of the EU. RREUSE will remain actively engaged throughout the legislative process to ensure an enabling framework for social enterprises through socially responsible and circular public procurement.
