Paving the way for job creation through public procurement

Mon, Sep 24, 2012, 01:00

LEGAL OPINION:PUBLIC PROCUREMENT rules focus on procedures that involve the use of taxpayers’ money. The underlying theme is to ensure that government procurement reflects the principles of equality and non-discrimination. As such, discrimination on a local (in this context, Irish) basis only is prohibited.

This does not mean, however, that public procurement rules prohibit job creation; the contrary in fact is true. In 2004, the introduction of the Procurement Directive explicitly clarified the fact that the use of social criteria (such as job creation) was perfectly permissible. It is all about finding the right balance between the prohibited “hire local” provisions and the permitted social requirements.

There is a fine line between what is, and is not, discriminatory. For example, it is acceptable to encourage participation of small- and medium-sized enterprises and maximise employment opportunities, but it is not permissible to target local firms, quantify an amount of local spend or restrict the source of recruits to local residents.

Like all balancing acts, this exercise is difficult. I am of the opinion that a multi-disciplinary team of expert advisers would be required to strike the right balance. Such a multi-disciplinary team would have to be led by a legal public procurement expert.

Arguably, the lack of a considered and developed job creation template (and, indeed, the fear of costly procurement challenges), are the main reasons why contracting authorities have under-used public procurement to achieve social benefits. There is a need for a clear and consistent roadmap which maximises employment potential for State-funded ventures.

This is where Minister for Transport Leo Varadkar could champion the use of public procurement as a valid tool to create jobs. The €875 million worth of road projects, which were announced as part of the €2.25 billion stimulus package last month, could represent an opportunity to not only create jobs for these specific road projects, but also to create the long-awaited benchmark that will strike the right balance in favour of job creation.

This template would assist procurement officers of various Irish contracting authorities in properly using public procurement to create even more jobs in different projects other than roads. The spin-off effect of such templates would be hugely beneficial to the job market.

The difficulty in developing this template is that the procurement process is an ongoing, systematic, objective and documented process; it is not a static one. Consequently, social afterthought will not work. That is to say, it is unlikely that simply including a standalone labour clause in the tender contract will be permissible, as the procurement principle of non-discrimination will be, more likely than not, breached.

The social requirements must be knitted throughout the procurement process (from the notice, prequalification, instructions to tenderer, award of contract, and monitoring of the contractual obligation).

Where social requirements are part of the subject of the competition, they can validly be used as selection and/or award criteria and as contractual conditions, provided that they were clearly mentioned in the notice in the European Official Journal – better known as the OJEU Notice.

The social agenda must be addressed prior to issuing any OJEU Notice. The said notice could, for example, include the relevant CPV (common procurement vocabulary) code for labour requirement and could further include as “other information” a statement explaining that the tenderer will be required to actively participate in achieving special social policy objectives with reference to the specific social policies.

The tender documents can target specific groups (eg people who have been unemployed for over six months) without, however, limiting same to a specific locality.

This complies with EU procurement rules and gives a clear signal to tenderers that the contracting authority will welcome (Irish) employment – a nod is as good as a wink. The tender documents should also specify that employment opportunities have to be published in local agencies. All of this must be established in an overall job creation procurement strategy.

These Irish roads projects could become the European showcase for public procurement practice if the right balance is found and wise decisions are taken. By combining the right approach with a strong and ambitious plan to create jobs, the end result will be the motorway to success.

Bruno Herbots is a partner in Beauchamps Solicitors

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