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FAIRTRADE
A GUIDE FOR PUBLIC SECTOR
PROCUREMENT STAFF
CONTENTS
3
Introduction to public procurement and Fair Trade
4 European Union rules and Fair Trade procurement:
an evolution
5
The 2012 North Holland Ruling by the CJEU
6
Implications of the North Holland ruling
7 Future outlook in the revised public
procurement directives
8
The case for Fairtrade certified cotton
10
Fair Trade cotton certification
11
Case study: London School of Economics
12
How to procure Fair Trade
13
Engaging with suppliers
14
Pre-qualification questionnaire (PQQ)
16
Case study: City of Paris
18
Technical specification
19
Evaluation of bids
20
Award criteria and contract performance conditions
21
Case study: Sheffield University
22
Supplier list and further links
23 References
Buying Social
The European Commission (EC) published
the Buying Social Guide in 2011, which
focuses on Socially Responsible Public
Procurement. This is described by the
Commission as procurement operations
that take into account [] employment
opportunities, decent work, compliance
with social and labour rights [] taking
account of sustainability criteria, including
ethical trade issues []5.
IMPLICATIONS OF THE
NORTH HOLLAND RULING
ON THE TENDER PROCESS
Technical specifications
As mentioned earlier, the CJEU
considered that the reference to the Max
Havelaar label was not a valid technical
specification because its content applies
to the conditions under which the supplier
acquired them from the manufacturer13
and not to the characteristics of the
product itself.
Conversely, the EKO label was considered
characteristic of the product concerned, i.e.
coffee and therefore fell within the concept
of technical specification.
The implication of this ruling is that only
environmental characteristics of Fairtrade
products (such as the use of pesticides
and no Genetically Modified Organisms)
can be subject to technical specifications,
whereas the social and economic
characteristics that are inherent to
the Fair Trade concept cannot.
Verification
The court in the North Holland case
interpreted Article 23.6 of Directive
2004/18/EC in such a way as to ensure
there is an obligation for the contracting
authority to expressly mention the detailed
environmental (or social) characteristics it
intends to impose even where it refers to the
characteristics defined by an eco-label.
Global context24
People farm cotton in more than 80 countries worldwide
by 50-100 million farmers on about 2.5% of the worlds
arable land, with the largest producers being China,
India, the USA and Pakistan. Yields vary from place
to place, but globally they are increasing. The largest
consumer countries (importing cotton for processing)
are China, India, Pakistan and Turkey. Over 150
countries are involved in the export or import of cotton,
but as many of the top producing countries are also top
consumers, overall trading is on average less than onethird of world output and represents only 0.1% of total
world product exports. The expanding textile industry in
Asia has led to it becoming the leading importing region.
The US has been the worlds largest cotton exporter
since 1834, followed by India which has become the
second largest exporter in the past five years.25
The plight of cotton farmers in the South
The current situation of the so-called C4 countries26
(Benin, Mali, Chad and Burkina Faso) shows the drastic
injustice at the heart of the global trade system, an
imbalance that the World Trade Organizations Doha
round of talks has not been able to address properly.
In these four West African countries cotton is grown
more cheaply than anywhere else because the climatic
conditions allow sustainable production, with low water
and pesticide use, and a smaller ecological footprint.27
Furthermore, African cotton has the advantage of an
intrinsic long lasting fibre quality and is harvested
by hand.28
With 80% of the population working in agriculture
and an average GDP per capita below $1,500, the C4
countries rely on cotton to guarantee basic livelihoods
and to build roads and other necessary infrastructures.
Almost 50 million families in developing countries
depend on cotton29, yet faced with a declining world
price over the past 60 years, and huge subsidies by
American, Chinese, and to a lesser extent European
governments, they struggle to compete in a deeply
unfair world market.30
10
11
12
EU Procurement Thresholds
The European Public Contracts Directive
describes certain financial thresholds
below which its provisions do not apply
and public procurement is subject to
national law. Currently the threshold for
supplies is 173,934 and for small lots
is 69,574. Though it is likely that many
cotton procurement exercises would
fall beneath this threshold, the basic
principles of EC law (equal treatment,
non-discrimination, transparency and the
fundamental freedoms) still apply.46
13
PRE-QUALIFICATION
QUESTIONNAIRE (PQQ)
14
15
CITY OF PARIS:
STAFF WORKWEAR MADE WITH
FAIRTRADE CERTIFIED COTTON
Introduction
In 2008, Paris, operating within its
sustainable development policy, issued an
open tender for ethical clothing (including
Fair Trade cotton) for nearly 5,000 of its
technical agents.
The city first checked that the technical
performance of the clothing met its
demands. It verified that the supply chains
were reliable and that the guarantees for
Fairtrade cotton were transparent and
guaranteed that a fair price had been paid
to the producers. Once these requirements
were confirmed, the city awarded a public
contract for Fairtrade cotton for three years.
The contract was renewed in 2012 and
has been extended to 9,000 agents. This
contract amounts to more than 1 million.
16
Verification
The technical specifications specified the
requirements in terms of social progress
and environmental and health protection
as follows:
1 The fabric dyes must not contravene
European Directives on health and
environmental protection
2 Limit environmental pollution using better
techniques and processes
3 List all the organisations in the
production line to ensure traceability
4 Implement all necessary procedures to
ensure compliance with the eight core
ILO Conventions regarding the principles
and fundamental rights to work, adopted
in 1998
5 Agree to be monitored on the above
points by an independent nongovernmental organisation approved
by the administration.
17
TECHNICAL SPECIFICATION
Technical specifications must only include criteria
which determine the characteristics of the finished
product not the conditions under which a supplier
purchases them and not simply require a specific
label, such as the FAIRTRADE Mark.
18
Subject matter
The subject matter of the procurement
exercise (the product which is being
bought) is the most important aspect in the
tendering process because it determines
how and where criteria can be allocated
with regards to fairly traded goods from
suppliers. The European Fair Trade
Association (EFTA) advocates using a Fair
Trade title to illustrate the subject matter
of the contract such as Fair Trade coffee
supply or Fair Trade Catering Service
and cites the example of the City of Madrid
publishing a call for tender entitled, Supply
of Fair Trade T-shirts to promote Madrid as
the site of the Olympic Games.49
However, this approach has not been tested
before the courts and carries with it a risk
of breaching regulation 9(16) of the Public
Contracts Regulations. Before doing this,
we would advise taking legal advice on the
most up-to-date position with respect to
subject matter of procurement exercises.
EVALUATION OF BIDS
TWO AWARD BASES
The Most Economically Advantageous Tender
(MEAT) award basis is the only option in
which public bodies can specify fairly traded
products. The lowest price award basis can
only be evaluated on price.
19
20
Weighting criteria
The contract will be awarded to the
most economically advantageous offer
determined by the criteria established
by the contracting body in the contract
documents.
Public bodies should set the weighting of
criteria for awarding contracts, taking into
account the number of potential offers
and sustainable development goals, while
keeping in mind proportionality with regards
to more conventional criteria.
The weighting of social and environmental
criteria, may for example, account for
between 10-20%, with more conventional
criteria such as price, quality and technical
criteria accounting for the rest.
Conditions for Performance
of Contracts
Providing it is clear from the outset
(in the contract notice or specifications)
that ethical criteria will be a contract
performance requirement, it is possible
to require that suppliers provide ethically
sourced products or review their
implementation of codes of conduct as
part of contract performance conditions.
Asking for evidence of how suppliers ensure
compliance with local labour laws or ILO
conventions is also allowed for the same
reason. Other issues then arise: defining
standards; what evidence it is reasonable to
expect and whether evidence is requested
or required. In practice such matters form
part of a process of engagement with
suppliers, adapted to market conditions
for particular product categories.
Smaller lots
Suppliers with high ethical standards
may be able to provide competitively
priced products for some items without
being able to supply the whole range.
In these cases, there may be a possibility
of dividing contracts into separate, smaller
lots to enable smaller and/or more ethical
companies to bid for them. This might
increase the chances of being able to
select more ethically sourced products on
the grounds of cost and quality, within the
legal requirement to achieve best value.
It would also fit other objectives, including
to avoid discriminating against SMEs and
to encourage social and ethical enterprises.
Under UK Procurement Regulations, the
combined value of the smaller lots will need
to be aggregated and taken into account
when deciding whether the procurement
is above threshold.
SHEFFIELD UNIVERSITY
21
SUPPLIERS
It is recommended to make all existing suppliers aware of your
Fair Trade requirements when sourcing products in any type of
procurement. For a full list of all suppliers, wholesalers and contract
caterers offering Fairtrade, use the National Fairtrade Purchasing
Guide available at fairtrade.org.uk/business.
Fairtrade cotton
workwear suppliers:
Further links:
Alvastone
alvastone.com
Cotton Roots
cottonroots.co.uk
Fairtrade Foundation:
fairtrade.org.uk
David Luke
davidluke.com
Epona
Eponaclothing.com
Kool Skools
koolskools.co.uk
Tarameen
tarameen.com
22
REFERENCES
European Commission, Proposal for a Directive
of the European Parliament and of the Council
on public procurement COM (2011) 896 1
http://eur-lex.europa.eu/LexUriServ/LexUriServ.
do?uri=COM:2011:0896:FIN:EN:PDF
1
www.fairtrade.net/standards.html
21
37
http://www.europarl.europa.eu/sides/getDoc.
do?type=TA&language=EN&reference=P7TA-2011-586
22
38
23
2
24
EUROPEAN COMMISSION
Buying Social: A Guide to Taking account of
Social Considerations in Public Procurement,
2011
Ibid
25
http://www.ideascentre.ch/documents/
Newsletter101-Lastbutnotleast-EN_000.pdf
26
27
Ibid
Client Earths briefing The link to the subject
matter a question of importance for
sustainable public procurement; January 2013
10
28
http://www.cotton-made-in-africa.com/en/
cmia-news/news/detail/article/cotton-madein-africa-conserves-water-and-reducesgreenhouse-gas-emissions-1.html
http://www.befair.be/sites/default/files/all-files/
brochure/En%20version_0.pdf
11
29
http://www.solidaridadnetwork.org/cotton
12
30
13
31
14
15
16
17
18
19
20
http://www.tradingeconomics.com/india/
gdp-growth
32
http://www.igidr.ac.in/pdf/publication/WP2012-014.pdf, http://farmersforum.in/policy/
study-on-socio-economic-impact-assessmentof-bt-cotton-in-india/
33
http://www.tompietrasik.com/2011/01/24/
india-cotton-farmers-suicide-trade-debt/
34
35
36
39
40
41
Source: http://www.fairtrade.net/cotton.html
42
Ibid
43
44
http://www.fairtrade-advocacy.org/ftaopublications/press-releases/390-europeancourt-confirms-possibility-to-demand-fair-tradecriteria-in-public-procurement
45
EFTA, p19
46
47
FTA, p20
E
Ibid, p19
50
Ibid, p20
48
49
http://www.befair.be/sites/default/files/all-files/
brochure/En%20version_0.pdf
http://www.cotton-made-in-africa.com/en/
cmia-news/news/detail/article/cotton-madein-africa-conserves-water-and-reducesgreenhouse-gas-emissions-1.html
23
www.fairtrade.org.uk