Specifying sustainability criteria when defining the object of procurement

Unlimited freedom for contracting authorities? 

The right to determine performance allows the contracting authority to independently define the requirements and criteria that a product or service to be procured must fulfil (see our ‘Drawer 1’). In recent years, the topic of ‘sustainability’ has also become considerably more important in the procurement processes of contracting authorities. This raises the question of the extent to which contracting authorities have a ‘free hand’ in defining sustainability requirements for the object of the contract.

Legal framework conditions

Contracting authorities can incorporate sustainability aspects into the subject matter of the contract via the specifications, among other things. In principle, contracting authorities have a great deal of room for manoeuvre in this regard, as they can generally define the requirements for the subject matter of the contract themselves. Section 31 VgV and Section 7a EU Para. 1 No. 2 Para. 6 No. 1 VOB/A and Section 121 GWB must be observed. § Section 31 (3) VgV clarifies in this respect that technical requirements can also be set for the object of procurement that have an environmental connection. However, the prerequisite is that there is a connection with the subject matter of the contract. In addition, the characteristics must be proportionate in relation to its value and the procurement objectives. 

In addition, public contracting authorities are in many cases obliged to take environmental aspects into account when procuring road vehicles. The law on the promotion of clean and energy-efficient road vehicles is decisive here. Among other things, the implementation of the specified minimum targets - in particular compliance with specified emission limits - must be observed. 

Furthermore, Section 67 (2) VgV stipulates that contracting authorities should include various energy efficiency requirements in the specifications for energy-related supplies and services.

Restrictions due to case law of the public procurement review bodies?

The decision-making practice of recent years also shows that public contracting authorities have a great deal of room for manoeuvre when determining the subject matter of the contract. This can significantly promote the implementation of sustainability aspects in procurement processes. 

In a decision from 2014 (B. v. 07.05.2014 - Verg 46/13), the Higher Regional Court of Düsseldorf ruled that the use of environmentally friendly vehicles can be required by public contracting authorities. The subject matter of the procurement was the conclusion of a framework agreement for the towing and storage of vehicles parked in violation of the law. In accordance with the specifications from the contract award notice and the service description, the tow trucks used must have a green environmental sticker or an exemption licence in accordance with Annex 3 to the 35th BImSchV. The OLG came to the conclusion that the requirements for the environmental compatibility of the towing vehicles could not be used as a suitability criterion. This would put the bidders at an unreasonable disadvantage, as the vehicles with the required sticker would not have to be available to the bidders when the competition was held, but only at the start of the execution of the contract.

However, the environmental requirements in the form of additional requirements for the execution of the contract were permissible in accordance with Section 97 (4) sentence 2 GWB (old version) (‘execution criteria’). The background to this is that these are materially related to the subject matter of the contract.

The OLG Munich (decision of 9 March 2018 - Verg 10/17) also confirmed that environmental criteria can be taken into account in award procedures if they are objective and comprehensible. The background to the proceedings was a tender for the thermal utilisation/disposal of road demolition waste containing tar and pitch. The applicant was of the opinion that the obligation to send 100% of the road demolition waste for thermal utilisation/treatment was in breach of the provisions of the Closed Substance Cycle Waste Management Act (KrWG). In this respect, other measures should also have been permissible. The OLG came to the conclusion that the requirements of the KrWG must also be taken into account when determining the subject matter of the contract. It is true that the contracting authority has a wide margin of manoeuvre when determining the subject matter of the contract. However, the right to determine performance could be restricted by mandatory statutory regulations. The OLG also emphasised that the determination of the subject matter of the contract must be objectively justified and there must be comprehensible, objective and contract-related reasons for this. The determination must be arbitrary and non-discriminatory and must be documented accordingly. The Higher Regional Court of Frankfurt came to a similar conclusion in a comparable case (OLG Frankfurt a.M. B. v. 21.07.2020 - 11 Verg 9/19).

Conclusion

As a result of the extensive right of contracting authorities to determine performance, it is already possible to integrate requirements for the sustainability of the respective procurement object into an award procedure in the so-called ‘drawer 1’. The public procurement review bodies confirm the admissibility of such criteria. However, they emphasise the need for transparency and non-discrimination. Of paramount importance in this context is comprehensive and complete documentation of the considerations that are decisive for determining the subject matter of the contract. 

The current draft of the Public Procurement Transformation Act (VergRTransfG) also stipulates that contracting authorities should take at least one social or environmental criterion into account in the specification of services or at other stages of the award procedure (see Section 120 a (1) GWB of the draft law). However, it is currently unclear whether and when the law will come into force.

In the case of innovative and complex procurement processes, a negotiated procedure with a call for competition or a competitive dialogue (see Section 119 GWB and Section 14 (3) VgV) is generally also a good option in order to finally determine the subject matter of the service, taking into account the technical expertise of the bidders. It must be noted that minimum specifications for the subject matter of the service cannot usually be changed in the negotiations after the start of the award procedure.