Tenders to concentrate on environment and social responsibility

The so-called Superministry building in Tallinn.
The so-called Superministry building in Tallinn. Source: Siim Lõvi /ERR

The Ministry of Finance has sent out for public consultation new strategic principles for public procurements according to which public tenders should in the future concentrate more on the environment, social responsibility and fostering innovation, instead of simply favoring the lowest bidder.

If so far 87 percent of public procurements have been picked based on the lowest price and total cost in Estonia, authors of the new strategic principles said this situation needs to change. They believe the public sector should spend €4-5 billion annually on meeting strategically important goals.

The Finance Ministry notes that public tenders should in the future follow a list of principles where the sparing use of resources would be towards the bottom, with environmental aspects, social responsibility, innovation and legal certainty given a higher priority. The price criterion only comes before quality and cooperation.

The ministry refers to corresponding tenders as value-based. A value-based tender considers socially or environmentally responsible conditions, is based on nonpecuniary evaluation criteria or affords the opportunity to support innovative solutions.

The ministry expects 20 percent of all tenders and 50 percent of their financial volume to be environmentally sparing by 2035.

It is found that greater public sector demand for environmentally conscious products can stimulate the market, cause the private sector to offer more such products, which will eventually cause them to become the norm and improve availability.

A large part of tenders should also become socially responsible, with the desired figures set at 10 percent for number of tenders and 20 percent in terms of volume by 2035.

This requires the contracting entity to make sure that workers have fair conditions throughout the supply chain and ensure socially sustainable action.

The ministry lists supporting job opportunities for young people; the elderly; unemployed; homeless; victims of discrimination; people with disabilities; foreign workers; racial, religious and national minorities; less fortunate and socially ostracized people. Such tenders should also work to reduce gender segregation in different fields and the labor market in general.

Regarding both environmentally and socially conscious tenders, compliance with relevant conditions needs to be monitored throughout the tender process.

Public procurements that support innovation should make up 5 percent of all tenders and 10 percent of volume. Such tenders should be aimed at new or considerably improved products or solutions, which are not yet available on the wider market.

Next comes the principle of the state as a trustworthy contracting entity, So-called trustworthy tenders aimed at improving security would have to account for 1.5-2 percent of all tenders and 5-10 percent of volume. Finally, there is the sensibility of making use of public resources, or the price criterion, the relative importance of which should fall to 45 percent of tenders and 70 percent of volume.

The authors also point out that a lot of tenders could aim for the best price-quality ratio instead but fail to explain how that should work. The analysis states that employing all of these values either separately or in conjunction will "take public procurements to a new qualitative level by maximizing social well-being and public services standards."

The ministry finds that [tender] guidelines in different ministries' administrative areas should be centralized and a single value-based tendering guidebook put together to integrate instructions and example criteria.


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Editor: Marcus Turovski

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