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FACULTY OF LAW
Lund University
Ajda Cevc
Public Procurement of Goods as a
Tool for Transnational Promotion and
Advancement of Labour Rights
Graduate Thesis: JAMM06
Graduate Thesis, Master of Laws program
30 higher education credits
Supervisor: Radu Mares
Semester of graduation: Spring semester 2015
I. Contents
II. Summary..............................................................................................5
III. Abbreviations.......................................................................................7
IV. Preface.................................................................................................8
1. Introduction.............................................................................................9
1.1 Definitions and limitations.............................................................12
1.1.1 Public procurement........................................................................12
1.1.2 Labour rights..................................................................................13
1.2 Sources...........................................................................................13
2. Why linking labour rights to public procurement?...............................15
2.1 From public procurement to human rights through business.........15
2.2 Public procurement and human rights law?...................................20
2.2.1 What exactly are obligations of states under international human rights law?......................................................................................................21
2.2.2 Extraterritoriality............................................................................23
2.3 History of using public procurement to achieve goals beyond
purchasing.................................................................................................25
2.3.1 Public procurement as a correction of certain domestic social issues26
2.3.2 Public procurement addressing particular transnational situation 28
2.3.3 From then to now...........................................................................30
3. International trade policies overtaking the regulation of public
procurement..................................................................................................33
3.1 The EU procurement legislation....................................................33
3.1.1 Art. 18(2)........................................................................................38
3.1.2 Technical specifications..................................................................42
3.1.3 Contract award criteria..................................................................46
3.1.4 Contract performance specifications (disclosure of subcontractors)52
3.1.5 The outcomes of the new Directive................................................532
3.2 World Trade Organization’s General Procurement Agreement....56
3.3 ILO Convention concerning Labour Clauses in Public Contracts.61
4. Recent developments in public procurement of the US........................65
4.1 4.1 FAR and labour rights in general.............................................68
4.2 Amending FAR and Executive Orders..........................................70
4.2.1 Prohibition of Acquisition of Products Produced by Forced or Indentured Child Labor, Executive Order 13126............................................71
4.2.2 Strengthening Protections Against Trafficking in Persons in Federal Contracts, Executive Order 13627..................................................................76
5. Public procurement in practice – implementation aspects....................82
5.1 Local approaches, initiatives and lessons on socially sustainable
public procurement...................................................................................83
5.1.1 The Norwegian approach...............................................................83
5.1.2 Surgical instruments in Swedish hospitals......................................87
5.1.3 Sweatfree Purchasing Consortium.................................................89
5.2 Learning from private procurement and responsible supply chain
management – the IKEA case..................................................................91
6. Conclusion...........................................................................................100
7. Bibliography........................................................................................104
7.1 Literature......................................................................................104
7.2 Legislation and Treaties...............................................................106
7.2.1 UN................................................................................................106
7.2.2 EU.................................................................................................106
7.2.3 ILO................................................................................................107
7.2.4 WTO.............................................................................................107
7.2.5 US.................................................................................................107
7.2.6 Other............................................................................................108
7.3 Caselaw........................................................................................108
7.3.1 EU.................................................................................................108
7.3.2 Other............................................................................................108
7.4.1 UN................................................................................................108
7.4.2 EU.................................................................................................1093
7.4.3 US.................................................................................................110
7.4.4 Other............................................................................................110
7.5 Webpages.....................................................................................111
7.6 Interviews.....................................................................................112
7.7 News media..................................................................................112
7.8 Other............................................................................................114
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II. SummaryThe combined power of public purchases make public authorities some of
the largest buyers in the world, which means that purchasing decisions
influence market greatly. This thesis aims to explore the current legal
possibilities for transnational promotion and advancement of labour rights
through public procurement. This thesis will seek to answer whether current
international legal setup on transnational PP of goods is flexible enough to
successfully ensure respect for labour rights throughout the supply chain;
and, which are the provisions that support socially sustainable PP of goods
and which have limiting effect to it.
First of all, the thesis attempts to justify a necessity for respecting labour
rights in public procurement through international human rights obligations
of states, through alignment with international policies on sustainable
development and through coherency with business and human rights
discourse. Some historic perspective to using public procurement as a tool
contributing to wider societal policies is also given.
Then selected examples from current international legislation are evaluated.
The Directive 2014/24/EU, adopted in 2014, introduces several tools that
promote sustainable public procurement in the EU Member States. Further
international documents that regulate public procurement and thus are
relevant for analysis are the World Trade Organisation’s Agreement on
Government Procurement and the International Labour Organisation’s
Convention concerning Labour Clauses in Public Contracts. Due to the size
and global significance of the United States’ purchasing power, certain
aspects of federal legislation on public procurement are also scrutinized.
In the last chapter, practical examples are given in order to throw some light
on factual aspects of buying responsively. A short comparison with private
procurement is also given in the case of IKEA.
5
Key words: sustainable public procurement, socially responsible public
procurement, labour rights, rights at work, Directive 2014/24/EU, Federal
Acquisitions Regulation, United Nations Guiding Principle on Business and
Human Rights
6
III. AbbreviationsPP – public procurement
ILO – International Labour Organisation
UN – United Nations
SDGs – Sustainable Development Goals
GDP – Gross Domestic Product
CSR – Corporate Social Responsibility
EC, EU – European Community, European Union
TFEU – Treaty on the Functioning of the European Union
US – United States (of America)
UK – United Kingdom
WTO – World Trade Organisation
GPA – General Procurement Agreement
MEAT – most economically advantageous tender
Art. – Article
i.e. – id est
e.g. – exempli gratia
ibid. - ibidem
etc. – et cetera
et al. – et alli
USD – United States Dollars
EO – Executive Order
IMS – Indirect Material and Service
NGO – Non-Governmental Organisation
SB – Senate Bill (US)
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IV. PrefaceThis thesis would not have been possible without people around me on
whom I can depend on.
Many thanks go to Radu for support and encouragement during the studies
and for countless advices on my thesis.
Further, I would like to thank the teaching staff at Lund University for the
two years that I will never forget or regret. Knowledge of human rights that
I gained has challenged me, pushed me and, finally, changed me.
Special thanks go to Group Sustainability at IKEA, who enriched last
months of my studies and provided me with an invaluable opportunity to
bring theoretical knowledge of human rights into business environment.
To my dear classmates: getting to know you and your views while spending
time together in R-Dubz has been the most rewarding education that one can
get. This world is a brighter place since I know that such smart and
goodhearted people care for it.
And finally, an endless thank you to my family. Nothing in the world makes
me happier than making you proud and I can only hope that I will justify all
the faith that you have in me. I always got nothing but unconditional love
from you and you will always have mine.
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1. IntroductionDuring the last decades human rights have spread from traditional state
concern to legal fields that were beforehand not connected to them, e.g.
business. As a consequence of increased understanding that all actions and
operations within the society (in the private or public sphere) have impact
on human rights, one way or another, a holistic approach (meaning that in
addition to other aspect, human rights are also considered) is slowly being
implemented to various procedures. Despite tremendous progress in the
understanding of responsibility to respect human rights by business and
development of corporate social responsibility, we should not lose sight of
state’s responsibilities, as there are still various aspects of governance and
functioning of a state in which human rights are not taken in consideration
as they could and should be.
This thesis will discuss one such area, namely public procurement
(hereinafter: PP). For easier understanding of what PP has to do with human
rights we can portray a general example of a developed state X, where
citizens are enjoying high human rights standards. State X decides to buy
new computers for employees of several central governmental bodies.
Central purchasing body of the government X publishes request for tenders
for three thousand computers. After due date, the government chooses the
tender with the lowest price per product by company L. But the authorities
of State X disregard the fact that minerals which are used for production of
those computers were bought in State A from rebel groups, and are hence
directly funding an armed conflict. Wires used in these computers were
produced in State B with the help of child labour. In State C, where
computers were assembled, migrant workers in factories do not have
freedom of movement as their passports are confiscated by employers. And
finally, company L is also tightly cooperating with government of State Y,
which is known for its undemocratic regime, corruption and disrespect for
basic human rights of its people. The example demonstrates that State X is
unknowingly financing and thus to certain extent being linked to human
rights practices that are unacceptable in State X. PP can therefore contribute 9
to infinite number of violations of labour rights and other human rights that
can be affected by business activities. Forced labour, child work, bonded
work, unsafe and harmful working environment, wages below the
acceptable living wage, discrimination, denial of freedom of association,
denial of free time and degrading treatment are some of the worst violations
at work. If public authorities are in a position to facilitate these violations by
financially supporting them (through PP), it should also be possible for them
to transform this power into a positive force by taking more holistic
approach to purchasing.
In the example above we stumbled upon several human rights aspects, such
as the role of state to protect and respect human rights, the responsibility of
business to respect human rights, the extraterritorial application of human
rights standards etc. and, in a wider sense, politics of the international
community regarding market economy and human rights. PP potentially
involves numerous human rights issues, though this thesis will mainly focus
on labour rights.
There are several reasons for PP to be afforded greater attention in regard to
human rights. As we have seen, PP can be linked to human rights violations.
Since PP is conducted by states or better to say state’s actors, which are
primary duty holders in regard to human rights, this raises questions on
whether a state is not bound to respect human rights in every aspect of its
governance and conduct. Additionally, PP is carried out with tax payers’
money, which means that the authorities have certain accountability towards
its tax payers. Furthermore, human rights have become one of decision
factors in private procurement and in dealing with supply chains, which has
created certain inconsistencies as private procurement can (and in some
cases does) adhere to much higher social standards than poorly developed
public procurement. Bearing in mind that authorities have the primary role
in protecting human rights, it seems reasonable to explore PP as one of the
tools to promote and improve human rights.
The main objective that this thesis is pursuing is to discover what the
possibilities for socially sustainable PP within the current legislative
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framework are. The task will be twofold, as we will not only try to seek
options for respect for labour standards in relation to PP, but also for their
advancement and improvement. Since we will mainly focus on goods
coming from developing countries, the improvement is of utmost
importance, as holding on to the bare minimum is, first of all, contrary to the
nature of social rights which demand progressive realization, and, secondly,
poses a danger that due to already very low level of rights in developing
countries, solely demanding observance of the minimum requirements does
not create an environment conducive to improvement and possibly creates a
ceiling rather than a floor of rights. The aspect of sustainability that will be
discussed is labour rights.
The main questions that are to be answered through the analysis of this
thesis are following: is current international legal setup on transnational PP
of goods flexible enough to successfully ensure respect for labour rights
throughout the supply chain?; and, which are the provisions that support
socially sustainable PP of goods and which have limiting effect to it?
Partially we will also look into whether including labour clauses in PP of
goods can be effectively combined with the principles that govern modern
PP.
This thesis will first establish in more detail how PP can positively influence
labour rights transnationally and why the authorities should exercise their
activities in this direction. Both positive and negative aspects of including
labour clauses in PP will be evaluated. Furthermore, the possibilities for
promoting and improving labour rights within the current legislations,
national and international, will be explored. Undoubtedly, we will have to
consider and compare PP with procurement in private sector, which might
offer some valuable solutions. Various examples of purchasing practices
will provide the basis for drawing some conclusions on to what extent
labour standards are (or could be) included in PP in the current legislative
and political environment.
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1.1 Definitions and limitations
1.1.1 Public procurementFor the purpose of this thesis it will be sufficient to understand and use a
very simple definition of PP as a process by which public authorities, being
on a state, regional or local level, acquire services or goods on a market
following a special procedure.
The most typical PP procedure includes the following steps:
1. Recognition by the public authority (also contracting authority) that
a need for specific good or service exists.
2. Publication/announcement of invitation to tender (with potential
terms, price, technical specifications, etc.)
3. Bid submission by economic operators/tenderers.
4. Evaluation of tenders/bids by the contracting authority.
5. Awarding a contract to the successful economic operator/tenderer.
6. Project implementation or contract fulfilment.
It is important to stress that there are numerous variations to this basic open
procedure described. Other well-known and used types are, amongst others,
restricted procedure in which only selected candidates are invited to submit
a tender, the negotiated procedure in which the contracting authority
negotiates price and terms of contract with economic operators, and
competitive dialogue, in which solutions are discussed with economic
operators.1
We will not go into details of the PP process as it is not relevant to the
purpose of this thesis to discuss legal technicalities of PP. However, it is
important to keep in mind the different steps of the process, because this
will become relevant later on when we will be discussing stages of the
procurement process at which labour clauses should be included (e.g. setting
labour standards as one of the demands/aspirations in the publication step or
using labour standards as one of the award criteria).
1 Summaries of EU legislation: Rules on public works contracts, public supply contracts and public service contracts, applicable until 2016.
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We will mainly focus on procurement of goods and materials as they offer
better ground for exploring the issues of extraterritoriality and supply
chains.
Literature in PP field uses different adjectives to mark holistic approach to
PP, such as green PP (concentrating on environmental aspect), socially
responsible PP and sustainable PP. The latter is widely used and can entail
all aspects of sustainability. In this thesis socially responsible PP and
sustainable PP are used as synonyms and will signify
consideration/inclusion of labour rights into PP practices.
1.1.2 Labour rightsAs already mentioned, PP can influence various human rights, but this thesis
will focus on labour rights. This covers the entire International Labour
Organization’s (hereinafter: ILO) legal framework, but main emphasis will
be given to four fundamental rights at work (as to ILO Declaration on
Fundamental Principles and Rights at Work2), i.e. freedom of association
and the effective recognition of the right to collective bargaining, the
elimination of all forms of forced or compulsory labour, the effective
abolition of child labour and the elimination of discrimination in respect of
employment and occupation.
Naturally, we will not remain at this minimum level of protection of
workers when talking about developed countries, but in the circumstances of
developing countries where even the most basic rights are not respected, it is
reasonable to focus on those.
The terms labour clauses and social clauses in connection with PP will be
used as synonyms.
1.2 SourcesDuring the course of this thesis various legal sources will be used. The main
source will be international laws related to PP on the UN, ILO, WTO and
EU level. Naturally, secondary policies and supporting documentation will
be just as relevant to support the analysis of the legislation. As to the 2 ILO Declaration on Fundamental Principles and Rights at Work, 1998.
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national legislation on PP, the federal legislation of the US will mostly be
used, though certain examples will also be drawn from the legislative
examples of the EU Member States.
Apart from the legislation, work of academia and various stakeholders such
as NGOs and trade unions will be used to support and guide the analysis.
Last chapter is more practice-oriented and for this reason two interviews
were conducted.
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2. Why linking labour rights to public procurement?
This chapter will try to theoretically justify a necessity for public authorities
to involve labour rights into PP for reasons of coherence with policies
regarding corporate social responsibility, coherence with international
human rights law in general and sustainable development. Furthermore, we
will look into some historic examples of using PP for pursuing national and
transnational social justice. In the last decades PP has moved from being a
tool complementing domestic social policies to simply being a transparent
and internationally accessible process of acquiring goods (and services) for
the lowest possible price without much other consideration. We will outline
the principles of modern PP and evaluate the positive and negative reasons
for including labour clauses into such processes.
2.1 From public procurement to human rights through business
Development of world economy and increased power of international
corporations in the last decades has led to development in the field of
business and human rights. Due to the increasingly well documented
impacts of business operations on human rights the traditional dichotomy of
a relationship individual – state has been more or less successfully expanded
to include another subject, namely companies, which is evident from
unanimous support that UN Guiding Principles on Business and Human
Rights have received and from the subsequent movement towards beginning
negotiations on an international legally binding instrument on Transnational
Corporations and Other Business Enterprises with respect to human rights.3
This demonstrates that the usage of human rights is to a certain extent
progressing and expanding in line with the developments in other aspects of
the society and we will try to link these trends to PP.
3 More at: http://business-humanrights.org/en/binding-treaty, (3.3.2015).15
For the purpose of our argument, we will draw two main reasons or
rationales behind expanding the human rights debate to wider scope of
society actors and their activities.4 First reason would simply be the fact that
great power brings great responsibility.5 In 2011, 43 out of 100 largest
economies in the world were companies (based on gross domestic product
of countries and total revenue of companies).6 This means that companies
benefit greatly from the current socio-economical system in the world,
which consequently indicates that they also poses power to make change
and address the negative impacts in the society, maybe even the ones that
they are benefiting from. The unanimous support for UN Guiding Principles
on Business and Human Rights demonstrates that states (as other
stakeholders) are aware and concur with this notion.
Second argument is the holistic approach to sustainable development in
general and to human rights in particular, which has been much highlighted
and promoted on international level in the last decades, resulting, amongst
other, in Millennium Development Goals7 and now in Sustainable
Development Goals (hereinafter: SDGs).8 SDGs are intergovernmental
process, but are universally applicable and (try to) include all stakeholders.
The universal recognition of the principal priorities for humanity cannot
remain overlooked by business and market actors, especially in light of the
argument above (they have significant power to contribute to the cause). It
urges states to implement outlined aspirations to all aspects of governance,
which should not stay limited to traditional state actions only (as in the
scope of legislative, executive and judiciary role).9 Such holistic approach is
4 By this outline we do not try to diminish significance of other economic, societal, moral etc. reasons.5 This statement is by no means implying that only entities with great power have certain responsibilities. Nevertheless, UN Guiding Principles on Business and Human Rights clearly state that the responsibility to respect human rights applies to all companies (and other entities) irrelevant to their size.6 White, S., The Top 175 Global Economic Entities, 2011. Available at: http://dstevenwhite.com/2012/08/11/the-top-175-global-economic-entities-2011/, (7.3.2015).7 UN Millennium Goals. http://www.un.org/millenniumgoals/, (7.3.2015).8 UN Sustainable Development Goals. https://sustainabledevelopment.un.org/topics/sustainabledevelopmentgoals, (7.3.2015).9 The entire language of the SDGs refers to policies, strategies, approaches, measures etc. that states are supposed to use in order to achieve the goals set. E.g. target 8.7 suggest “immediate and effective measures” to eradicate forced labour, etc. Such broad language implies that states should use every tool in its power to support the objective concerned and
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a consequence of understanding that every decision in the society has an
effect on human rights (among others). With such stand it became obvious
that economic sector cannot go on with business as usual as it has a
significant role in the society.
Development and launch of the UN Guiding Principles on Business and
Human Rights can be understood as a logical effect of such holistic
approach.10 Due to its soft law nature it is obvious that the matter is still new
and needs time to get materialized in more specific instruments,11 but it
nevertheless signifies understanding that companies can through their
activities cause, contribute or be linked to adverse impacts on human
rights.12 It might seem hard to believe that half a century of human rights
development was needed for a proper policy level recognition of influence
that business (and other processes in the society not connected to
governance) have on human rights or rather to say for recognition that
solely relying on state’s (legislative, executive and judiciary) role of
protecting and fulfilling human rights will not be sufficient for adequate
fulfilment of universal enjoyment of human rights.13 Regardless the time
needed, the understanding is growing and now it is time to create effective
mechanisms for protection of human rights in all processes of private and
public sector that can affect human rights.
And where does public procurement fit in? Solely by applying two
arguments outlined above (and forgetting for a moment the fact that we are
talking about public authorities being the subject), we can presume that
PP could definitely be such tool.If we look at SDGs even broadly, beyond states and its authorities and functions, it is clear already from the preamble to the SDGs that this global agenda’s success depends on partnership of all stakeholders and all people, therefore including all actors in the society, including business.10 And, consequently, an effect of clear evidences of numerous cases in which gross human rights violations by businesses go unremedied.11 Ruggie, J., A UN Business and Human Rights Treaty? An Issues Brief., Harvard Kennedy School, 28.1.2014.12 A/HRC/17/31. Report of the Special Representative of the Secretary- General on the issue of human rights and transnational corporations and other business enterprises. Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework. 17th Session, 21.3.2011, (hereinafter “UN Guiding Principles on Business and Human Rights”). Principle 13.13 There were soft law documents on corporate social responsibility dating as early as 1976 (The OECD Guidelines for Multinational Enterprises), but none before has received universal recognition and support by all stakeholders.
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certain responsibility to respect human rights exists: we are talking about a
major actor on the international market (e.g. almost 20% of gross domestic
product (GDP) in the European Union is spent on public procurement14) and
as such it should make sure to contribute its part to common quest for
sustainable development.
Due to the arguments above, it would be highly incoherent to talk about
human rights and business without including actions and role of the states in
a private market sphere. For this reason, one of the three pillars of UN
Guiding Principles on Business and Human Rights is clarifying state’s role
to protect human rights. This duty to protect is expanded to areas of state’s
functions and actions that are not commonly addressed by human rights law,
e.g. state-owned companies, privatizing state services, public procurement
etc.
Principle 5 of the UN Guiding Principles on Business and Human Rights
affirms a well-established notion that privatizing public services cannot
result in impacting the enjoyment of human rights that those services are
providing or affecting. This is relevant as a state might chose service
providers through some kind of procurement process, but this thesis focuses
on procurement of goods, so we will not further elaborate on services.15
Principle 6 urges states to “promote respect for human rights by business
enterprises with which they conduct commercial transactions.” Commentary
to Article 6 recognizes that PP represents “unique opportunities to promote
awareness of and respect for human rights by those enterprises, including
through the terms of contracts.” It might come as a surprise that such
insubstantial wording as “promoting awareness and respect” is used in this
case,16 where it could say that public procurement is an opportunity to
14 European Commission, Public Procurement Indicators 2010. Available at: http://ec.europa.eu/internal_market/publicprocurement/docs/indicators2010_en.pdf, (7.3.2015).15 See generally: Hallo de Wolf, A. G., Reconciling Privatization with Human Rights. Antwerpen: Intersentia, International Law Series, 2011.16 Certain level of inconsistency might even be present when comparing Principles 6 and 13, since there is a difference in expectations from PP officers/authorities on the one hand, and state authorities in a general sense and from private companies on the other hand. The latter two have clearly defined responsibilities in regard to human rights, whereas the responsibilities within PP are not so clear.
18
ensure that business enterprises respect human rights and even contribute to
the increase of standards. Nevertheless, a soft law document should have
aspired to standards higher than those that could realistically be expected in
the current hard law. But bearing in mind, for the most part, this document
is introducing ideas that even a decade ago appeared more like a science
fiction, it seems that pragmatic approach had to be taken in order to get the
necessary support.
Further interesting point in the commentary to the Principle 6 is the
statement that terms of PP contract (through which states could promote
awareness of and respect for human rights) have to consider States’ relevant
obligations under national and international law. This will become relevant
in the following chapters of this thesis where we might stumble upon a fact
that certain international obligations of states can prevent effective inclusion
of labour rights in PP, especially international obligations regarding free
market and trade. If certain inconsistencies amongst pursuits of
economic/trade agreements and transnational social sustainability are
discovered, this might very well open the debate of hierarchy of values and
priorities in international law and policies in general. PP is indeed an area
where human rights are trying to enter the playground; so far, it has only
entailed predominantly economic tools, so introducing human rights might
turn out not to be in line with the economic pursuits of PP established
throughout history. Nevertheless, human rights law and e.g. international
trade law developed relatively separately and without significant interaction
for decades also on international level.17 This might be a further reason why
the UN Guiding Principles on Business and Human Rights remain rather
restrained in its wording and as such truly represent only “an end of the
beginning.”18
17 See generally: Schlemmer-Schulte, S., Fragmentation of International Law: The Case of International Finance & Investment Law Versus Human Rights Law, Pacific McGeorge Global Business & Development Law Journal, 2012. Vol. 25 Issue 1, p. 409-424.; Benvenisti, E., and Downs, G. W., The Empire's new clothes: Political economy and the fragmentation of international law, Stanford Law Review, 2007. Vol. 60 Issue 2, p. 595-631.; Jensen, H. B., From economic to sustainable development: Unfolding the concept of law, Systems Research and Behavioural Science, 2007. Vol. 24 Issue 5.18 UN Guiding Principles on Business and Human Rights. Introduction, para. 13.
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Some attention has to be given to the coherency of public policies on
business and human rights or corporate social responsibility (hereinafter:
CSR). As demonstrated above, the topic has received a lot of attention on
international level in the last years, but it did not stay just on the
international level as several states are considering (or have already
developed) national action plans on implementation of strategies in
domestic legal orders.19 If states do not develop similar mechanisms for PP,
they will find themselves in a rather paradoxical situation: states would
require companies to go beyond the demands of law (by including
environmental and human rights factors), whereas they would not do the
same in PP.20 We will further elaborate on this topic in the following
chapters, for now it is sufficient to outline this issue as one of the reasons
for inclusion of labour rights in PP.
2.2 Public procurement and human rights law?We have established that public authorities in their market subject capacity
should respect human rights at least equally as other subjects on the market
because of their size and effect and furthermore for the reason of coherency
and legitimacy of policies on human rights and business. Further fact that
we are talking about public authorities – representatives of a state, which is
a primary duty holder in regard to human rights – and not merely one of the
subjects on a market, supports this theory even more.
This leads us to the question whether it would be possible to advocate for
labour clauses in PP (with an intention of transnational improvement of
workers’ situation or prevention of violations) as part of states’ obligations
under international human rights law.
Looking at it strictly from a legal standpoint, hardly. We will look into
several aspects of international human rights law that turn out to be
19 More at: http://www.ohchr.org/EN/Issues/Business/Pages/NationalActionPlans.aspx, (10.3.2015).20 McCrudden, C., Public Procurement and Corporate Social Responsibility; in McBarnet, Voiculescu, and Campbell (eds.), The New Corporate Accountability: Corporate Social Responsibility and the Law. Cambridge University Press, 2007. P. 93-118.
20
questionable when speaking about a duty of public authorities to include
labour clauses in PP under international human rights law.
2.2.1 What exactly are obligations of states under international human rights law?
To start on a very general level, international human rights treaties create
obligations for ratifying states, but not for public authorities of these states.
Government is obliged to implement human rights standards and principles
into national legislation at all relevant levels and areas. Public authorities
are therefore bound by these laws, which should reflect principles from
treaties. But in which laws and procedures regarding public authorities
should human rights principles be implemented? Only into those in which
public authorities exercise official functions and act in official capacity, or
into all laws and regulations that regulate all aspects of their functioning
(e.g. procurement, maintenance, technical services, administration etc.)?21
The Committee on Economic, Social and Cultural Rights is of the opinion
that a State Party should “use all the means at its disposal to give effect to
the rights recognized in the Covenant.”22 We argued above that PP is a
powerful tool due to its size and consequent effect, thus it can be used to
improve labour rights. Of course, PP is naturally not a typical tool for
achieving social policy goals or exercising authority, but because of its
effect it could and should be recognized as additional tool to secure respect
for relevant human rights.23 In its Discrimination (Employment and
Occupation) Recommendation No. 111 ILO advises that “government
agencies should apply non-discriminatory employment policies in all their
activities.”24 It goes even further and, as one of the methods to promote the
observance of the Convention (Labour Clauses, C94), explicitly mentions
21 For the purpose of section 3.2.1 we dismiss the existence of problematic extraterritoriality factor.22 UN Doc. E/1999/22. The Committee on Economic, Social and Cultural Rights, Report on the 18th and the 19th session. General Comment n.9, section A, para. 2.23 At this point we are talking about the PP as “a tool” for achieving social policy goals, but one has to keep in mind what was mentioned earlier – that UN Guiding Principles on Business and Human Rights consider PP actions having the same responsibility regarding human rights as a private entity – responsibility to respect.24 ILO Recommendation no. 111 Discrimination (Employment and Occupation), 1958. Art. 2(c).
21
“making eligibility for contracts involving the expenditure of public funds
dependent on observance of the principles.”25 The Committee on the Rights
of the Child specifically noted in its General Comment No. 16 under the
title ‘The obligation to respect’ that States
“... should not engage in, support or condone abuses of children’s rights when it has a business role itself or conducts business with private enterprises. For example, States must take steps to ensure that public procurement contracts are awarded to bidders that are committed to respecting children’s rights.”26
Further justification might be found by combining two principles relevant to
social rights – progressive realization of social rights and international
assistance and cooperation in achieving them.27 The Committee on
Economic, Social and Cultural Rights established that just legislation is not
enough28 and that ‘any tool/steps’29 should be taken in order to reach
progressive realization. “All States parties”… should … “take steps,
individually and through international assistance and cooperation, especially
economic and technical”… to achieve full realization.30 The Committee
concludes that the Covenant read together with UN Charter31 suggests that
“international cooperation for development and thus for realization of
economic, social and cultural rights is an obligation of all States.”32 As it is
obvious from Committee’s opinion, term “cooperation” is not limited to
developmental cooperation, but includes wider range of activities of state.33
According to Künnemann, the term co-operation “has been reduced to and
identified with development aid” in recent years.34 A modernized view of
state’s obligation of international cooperation and assistance under the
25 Ibid. Art. 3(b)(iii).26 CRC/C/GC/16. UN Committee on the Rights of the Child, General comment No. 16 (2013) on State obligations regarding the impact of the business sector on children’s rights. Adopted by the Committee at its sixty-second session, 2013.27 UN General Assembly, International Covenant on Economic, Social and Cultural Rights. United Nations, Treaty Series, vol. 993, 16.12.1966. Art. 2(1).28 U.N. Doc. E/1991/23. UN Committee on Economic, Social and Cultural Rights, General Comment 3, The nature of States parties' obligations. 5th Session, 1990. Annex III at 86 (1991), para. 4.29 Ibid. Para. 8.30 Ibid. Para. 13.31 1 UNTS XVI. United Nations, Charter of the United Nations, 24.10.1945.32 Supra n. 28. Para. 14.33 Künnemann, R. The Extraterritorial Scope of the International Covenant on Economic, Social and Cultural Rights. Forum for a New World Governance, 2001. Available at: http://www.world-governance.org/article48.html, (13.3.2015). Page 4.34 Ibid. Page 10.
22
International Covenant on Economic, Social and Cultural Rights therefore
could entail social clauses in PP as one of the tools to contribute to
progressive realization of social rights.
However, except for several general provisions of non-mandatory nature
(General Comments to the Covenant and ILO Recommendations), we
cannot find anything more tangible in the human rights treaties that would
create an obligation of states to implement human rights/labour clauses in
PP under international human rights law.
2.2.2 ExtraterritorialityBy the nature of international law, human rights treaties generally create
obligations for states in regard to their territory and subjects within its
jurisdiction. The International Covenant on Civil and Political Rights in
Article 2(1) specifically refers to “to all individuals within its territory and
subject to its jurisdiction.”35 The International Covenant on Economic,
Social and Cultural Rights does not mention territory or subject specifically,
but talks about taking steps “individually and through international
assistance and co-operation,” which, as we mentioned above, might be
understood as adding some kind of ‘transnational dimension of the
realisation of economic, social and cultural rights.’36 Lack of extraterritorial
application of international human rights law is probably one of the biggest
impediments to effectiveness of the system. Human rights system is based
on a paradigm of a person as a right holder on the one side and a state as a
duty holder on the other, which implies that mutual existence is necessary.
The right exists only if there is a duty and vice versa.
Further consequence is also justiciability of the right or better to say legal
redress in the case of its violation. If a right and a parallel obligation exist,
there has to be a corresponding legal remedy for the enforcement of the
right. A Mexican worker, whose core rights at work have been violated, has
35 UN General Assembly, International Covenant on Civil and Political Rights, United Nations, Treaty Series, vol. 999, 16.12.1966. P. 171.36 Coomans, F., Application of the International Covenant on Economic, Social and Cultural Rights in the Framework of International Organisations, Max Planck Yearbook of United Nations Law, 2007. Vol. 11, p. 359-390.
23
remedies available only towards Mexican authorities.37 In no circumstance
has this worker remedies based on human rights law available towards e.g.
German government, which procured products that were produced in his
factory. This by no mean suggests that German authorities should not make
everything possible to try to prevent and mitigate violations, as this thesis
tries to argue, but it does imply that such action by German authorities is
legally not part of their international human rights obligations.
Having said all that, if we move out of the limited scope of international
legal obligations and turn to international policy and goals, it is possible to
draw certain conclusions that suggest that states nevertheless should not be
careless while procuring.
The Charter of the UN has established in preamble that one of the goals and
purposes of creating UN is “to employ international machinery for the
promotion of the economic and social advancement of all peoples.”38
On a more current note, decent work for all will be one of the SDGs, the
post 2015 global agenda. The Open Working Group on SDGs emphasizes
each countries’ “primary responsibility for its own economic and social
development.”39 At the same time other countries should be active by
“significant mobilization of resources from a variety of sources and the
effective use of financing.”40 Sustainable PP can represent a strong example
of how states can through effective policies achieve significant impact
directly in its supply chain and also indirectly through transformation of the
market as a whole. This is also the only way for states to achieve a policy
coherence – adopting measures for social development would not have the
same impact, if simultaneously PP would be undermining these primary
measures by financing bad practices.
This seems to be exactly the same conclusion and approach that Special
Representative John Ruggie took, as he “concluded that the extra-territorial
37 Of course, after and if the violations of worker’s rights would not have been remedied in a case against the private employer.38 UN, Charter of the United Nations, 1945.39 Open Working Group proposal for Sustainable Development Goals, Introduction, para. 12. Available at: https://sustainabledevelopment.un.org/sdgsproposal, (15.3.2015).40 Ibid.
24
dimension of the state duty to protect human rights in relation to business
entities remains unsettled in international law,” and rather “shifted the
emphasis of debate from states extra-territorial obligations under human
rights law to states policy rationales to protect human rights in their
international relations.”41 And this is what the perspective that this thesis is
pursuing – using socially sustainable PP policies through which public
authorities can and should contribute to respect of labour rights
transnationally without getting trapped to territorial and other legal restraints
of international human rights law. The normative part (should) in this
standpoint is based on the recognition of certain level of responsibility of
public authorities in PP by the Guiding Principles on Business and Human
Rights; and, as we will see later on in the part 3.1, on the fact that the EU
adopted the same view by establishing the respect for core labour rights
(amongst others) as a mandatory component of PP.
2.3 History of using public procurement to achieve goals beyond purchasing
Now we are moving from the theoretical underpinnings of using PP in a
way to achieve human rights effect and will look towards actual examples
of using PP beyond its primary role, which is acquiring necessary goods or
services. We will thus demonstrate the effects that PP can have on a market
and society in practice.
In this section we will present a short overview of several historical
legislative examples which used PP for various human rights related
purposes. Examples will be divided into two groups: those in which PP
served as a corrective to specific domestic social situation, and those in
which PP was used to address particular situation of transnational injustice.
At the end we will turn to present and draw out principles of PP that have
41 Augenstein, D., and Kinley, D., When human rights ‘responsibilities’ become ‘duties’: the extra-territorial obligations of states that bind corporations, in Bilchitz and Deva (eds.), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? Cambridge University Press, 2013; Sydney Law School Research Paper No. 12/71.Also look at: A/HRC/11/13. Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises. Human Rights Council, Business and Human Rights: Towards Operationalizing the “Protect, Respect and Remedy” Framework. 11th Session, 22.4.2009. Para. 15.
25
been established through the development of market economy. This will
give us a chance to evaluate positive and negative aspects of using PP to
transnationally advance respect and fulfilment of labour rights. It will
furthermore help us to evaluate current (legislative) practices in the
following chapters.
2.3.1 Public procurement as a correction of certain domestic social issues
Since the market economy system can leave out certain groups of people,
usually the marginalized ones, states have often used PP as one of the means
to include them in the market or to increase their participation. People with
disabilities, indigenous groups, unemployed people, women, rural
population, veterans, minority racial groups, young people etc. have
benefited from various PP policies.
One of the earliest examples is the Fair Wages Resolution,42 which was
passed by the UK’s House of Commons in 1891, recognizing
“That in the opinion of this House it is the duty of the Government in all Government contracts to make provision against the evils which have recently been disclosed before the House of Lords’ sweating committee, and to insert such conditions as may prevent the abuses arising from subletting, and make every effort to serve the payment of the rate of wages generally accepted as current for a competent workman in his trade.”43
This act granted the workers labouring for private employers under public
contracts wages that were generally accepted for the certain type of work. It
demonstrated awareness of the authorities that due to its significant size PP
could cause negatives effect on the wages. In the terminology of socially
responsible PP that we are trying to argue here, we can explain this example
as the government recognizing the adverse impacts that subletting of
services had caused for workers and acting on it in order to nullify these
effects.
Workers with disabilities have often benefited from various favourable PP
provisions. In the US, the Wagner-O’Day Act in 1938 established a
Committee on Purchases of Blind-made Products, and for other purposes,
42 Brodie, D., A History of British Labour Law 1867-1945, Hart Publishing, 2003. Page 50.43 Ibid. Also: Committee on Government Contracts, Fair Wages Resolutions, 1897.
26
which set the prices of brooms and mops and other suitable products
produced by the blind in non-profit institutions.44 The Act demanded that
any Federal department or agency has to buy these products (with certain
limitations to price and availability).45 This and similar policies reached as
much as 155,000 workers with disabilities in 3,000 workshops until 1976.46
Such policies were especially typical after wars, where large numbers of
people were excluded from the market of work.47 Similar ‘set-asides’ and
price advantages for certain groups of people are still part of some national
legislations and are also allowed to certain extent by international
legislation/agreements on PP.48
A significant part of social goals supported by PP has regularly been status
inequalities. Better to say, to achieve de facto non-discrimination of a
certain group in a society, PP was and still is used as one of the tools to
diminish differences and secure higher presence of the group on the market.
One such example can be found in Malaysia, where tensions among native
Malays or Bumiputera and Chinese have existed since the British colonial
days. Bumiputeras were severely economically disadvantaged and in 1969,
tensions escalated to riots.49 The path that the Malaysian government has
taken to secure better economic participation of Bumiputeras on the market
is rather unusual as the preferential treatment for disadvantaged
Bumiputeras is even constitutionalized.50 Based on Article 153 of the
Constitution, exclusive Bumiputera programs in various areas (education,
licensing) and quotas in education, employment and ownership were
introduced.51 One of the principal measures was a preferential system in PP,
awarding government contracts to the majority Bumiputera-controlled
44 McCrudden, C., Buying Social Justice, Oxford University Press, 2007. Page 61.45 Ibid. See also: PL 739, Wagner-O'Day Act.46 McCrudden, Buying Social Justice, 2007. From: Burkhauser, R. and Haveman, R., Disability & Work: The Economics of American Policy, The Johns Hopkins University Press, 1982.47 See McCrudden, Buying Social Justice, 2007. Pages 56-62.48 Ibid. Also: Directive 2014/24/EU of the European Parliament and of the Council on public procurement and repealing Directive 2004/18/EC. Article 20.49 McCrudden, Buying Social Justice, 2007. Page 234.50 Malaysia: Federal Constitution, 31.8.1957. Art 153.51 Lee, H., Racial Inequality and Affirmative Action in Malaysia and South Africa, University of Massachusetts Dissertations, Paper 291, 2010. Page 68-71.
27
companies.52 This measure, together with equity quotas in companies,
boosted the process of wealth equalization, which improved overall equality
between the groups.
The Malaysia example demonstrates how important economic presence and
equality on the market is for general equality and equity in the society. It
furthermore shows how PP can positively influence human rights by
creating a more balanced market. It does not come as a surprise that similar
redistributive PP policies were used to advance equality in several countries
(indigenous peoples in Canada, African-Americans in US, black in South
Africa after apartheid, religious groups in Northern Ireland etc.).53
2.3.2 Public procurement addressing particular transnational situation
In addition to contributing to enforcement of domestic policies that we
mentioned above, PP has, though in rare cases, been used to address
particular political and social situations outside of a state that has adopted
measures. We will mention two such examples, both originating from the
US.
First are the MacBride Principles54, which addressed religious and ethnic
discrimination in the Northern Ireland. The Principles primarily addressed
the US companies that were doing business or were otherwise involved in
the economic activities in the Northern Ireland to respect nine fair
employment principles.55 The Principles became law at the federal level56 in
October 1998 and part of the campaign was also to lobby federal states and
cities to adopt laws, implementing the Principles into their purchasing of
goods and services.57 Such laws have been passed in 16 States; and have
been passed or endorsed by over 40 Cities.58 In the terms of UN Guiding
Principles, the US Government recognized that economic activities of its 52 McCrudden, Buying Social Justice, 2007. Page 236.53 See generally McCrudden, Buying Social Justice, 2007.54 The Macbride Principles, by Father Sean McManus, President, Irish National Causus, December 1997.55 For more information about the MacBride Principles and the text, see: https://www1.umn.edu/humanrts/links/macbride.html, (10.9.2015).56 Omnibus Appropriations Act for Fiscal Year 1999, 105th Congress Public Law 277.57 McCrudden, Buying Social Justice, 2007. Page 271.58 Supra n.54.
28
authorities and business subjects are contributing and are linked to (amongst
other) employment discrimination in another country. By such legislation
the US added additional economic pressure that contributed to the effect of
political pressure. Similar principles were created in the US for South Africa
in the time of apartheid as well, though the Sullivan Principles59 were not
part of the legislation and were therefore voluntary-based.
Second example of transnationally addressing human rights violations and
undemocratic regime is the Massachusetts Burma Law. The Law was
enacted by the Commonwealth of Massachusetts in 1996 and limited state
entities from procuring goods or services from companies which were doing
business in or with Myanmar (then Burma).60 This upset the companies that
were included on the so called restricted list that was gathered by the
Commonwealth. The National Foreign Trade Council representing
companies took this legislation to the US Supreme Court, where it argued
that the law infringed federal government’s authority regarding international
affairs and trade. The Court affirmed these allegations and nullified the law
as it was in the breach of the US Constitution.61 Business community was
not the only one to oppose this law, as the US also faced complaints at the
World Trade Organization (WTO) disputes panel by the European
Community (hereinafter: EC) and Japan. The EC was of the opinion that the
US were in breach of the WTO’s General Procurement Agreement (GPA)62
by imposing condition on a tendering company, which were not essential for
fulfilment of the contract (Article VIII(b)); by imposing qualification
criteria that were politically based rather than economic (Article X); by
expanding interpretation of the award criteria under Article XIII(4)(b) to the
point of allowing political instead of economic considerations; and finally,
by breaching non-discrimination and equal treatment under Article III.
59 About: Roth, M., Sullivan Principles, news article, The Encyclopedia of Greater Philadelphia, Rutgers University, 2013. Available at: http://philadelphiaencyclopedia.org/archive/sullivan-principles/, (24.3.2015).60 McCrudden, Buying Social Justice, 2007. Page 271.61 Crosby v. National Foreign Trade Council, 530 U.S. 363 (2000). More about the political environment around the case; See: Massachusetts Burma Procurement Law Challenged at WTO, article, Public Citizen, Washington, 1999. Available at: https://dev.citizen.org/our-work/globalization-and-trade/articles/massachusetts-burma-procurement-law-challenged-wto, (28.3.2015).62 WTO, Agreement on Government Procurement, GPA/W/313, 16.10.2010.
29
Since the law was nullified by the Supreme Court, the EC and Japan
suspended their WTO challenge, so the disputed violations of the articles
were never interpreted.63
The Massachusetts Burma Law example unfolds the main issue that will be
in the centre of our focus in the following chapters: is international market
and trade legislation on PP flexible enough to successfully achieve
transnational respect of labour rights?
The historic examples have taught us several valuable lessons, namely how
significant a factor PP is for achieving equality in a society; that PP can
have an effect big enough to influence other actors on a market; and that PP
can partly contribute to the international pressure in the cases of
undemocratic regimes and human rights violations. At the same time, we
already noticed certain legal difficulties with using PP to promote social
goods abroad (e.g Massachusetts law). Anyhow, we should keep in mind
that however useful the historic examples are, they are fundamentally
different from the objective of this thesis as these examples were addressing
particular situations or flaws in a domestic or international arena, while this
thesis will pursue PP regulations that would ensure respect for fundamental
ILO labour rights abroad.
2.3.3 From then to nowSo far we have viewed PP theoretically and through examples from the
perspective of human rights. But PP as we know it in current legislations is
very far from having a human rights perspective, since we generally speak
about a highly bureaucratized technical procedure, which serves a
fundamental purpose – to provide necessary services or goods to the public
bodies efficiently. By combining this with the factor of market economy, we
can outline the principles of modern PP.
The principles of PP that have been developed and emphasized through the
last decades such as transparency, good management, prevention of
corruption, effectiveness, efficiency, competition, integrity, accountability,
63 Massachusetts Burma Procurement Law Challenged at WTO, 1999. 30
fairness, etc.,64 interpreted in the framework of free market and trade rules,
leave us with a very rigid administrative procedure, which at a first sight
does not seem to be a very welcoming ground for human rights. Human
rights and environmental aspects are certainly not alien to PP, but their
coherency and balancing with principles mentioned above remains an open
question in legal debate.
It is quite obvious that it might turn out to be very difficult to effectively
include demands on labour standards to PP while at the same time
respecting the above mentioned principles. Some of the potential issues
prompted by the inclusion of labour rights into PP process are:
respect for rights at work as a criteria cannot be simply put into
numbers to be compared between the tenderers,
extensive supply chains are preventing effective control over respect
for rights,
companies operating in high risk countries would be more exposed,
elusive demand for respect for rights at work might open a window
of opportunity for corruption in PP procedure,
proving respect for rights at work might raise the costs of the
companies and consequently of the price of the product, so the
outcome of such responsible PP process might turn out to be not the
most economically advantageous tender
new demands would increase length and costs of a PP process as
well, etc.65
The development in PP in the recent decades has been based almost
exclusively on optimizing procedure with the purpose of ensuring its
maximum economic outcome and securing transparency and openness of
the procedure. As it is easy to outline some possible downsides of including
64 See generally: OECD, OECD Principles for Integrity in Public Procurement, 2009. United Nations Commission on International Trade Law, UNCITRAL Model Law on Public Procurement, 1.7.2011. Lynch, G., Public Procurement: Principles, Categories and Methods, e-read, 26.7.2013. Available at: https://leanpub.com/procurementintroduction/read, (25.3.2015).65 See generally: Martin-Ortega, O., Outhwaite, O., and Rook, W., Buying power and human rights in the supply chain: legal options for socially responsible public procurement of electronic goods, The Int. Journal of Human Rights, 2015. Vol. 19 no. 3, p. 341-368.
31
labour clauses in PP, it becomes clear that the main challenge will be how to
effectively combine them with the modern principles of PP in a way that
labour standards are respected as well as PP process maintains its efficiency,
transparency and fairness.
In this chapter we have established the link between PP and rights at work
and why we should pursue it, and what the possible challenges we might
encounter are. In the next chapter we will look into international legislation
(EU, WTO, ILO66) to see whether promotion and advancement of labour
rights in PP is possible within the current legislative framework.
66 ILO does not issue documents regulating PP, but as a major UN organization adopting international legislation and standards on work, its recommendations might offer a valuable counterbalance to economically driven EU and WTO legislation.
32
3. International trade policies overtaking the regulation of public procurement
In the previous chapter we concluded that legislative developments in PP
during the last decades were aimed at securing fair and transparent
procedure. On international level, however, the emphasis has been on
ensuring openness of the market to foreign goods and services, that being on
regional (e.g. EU) or international level (WTO’s Plurilateral Agreement on
Government Procurement (GPA), ILO). Due to its significant size, US PP
will be dealt with as well in the following chapter.
In this chapter we will portray current international legislative framework
relevant to PP and try to identify provisions under which labour clauses
could transnationally ensure respect of rights at work and improve labour
standards. Indeed, actual and potential obstacles will be addressed.
At the end of the previous chapter we outlined the main challenge that we
will encounter throughout the investigation, i.e. balancing and reconciling
the principles of free trade and market competition on the one hand and
labour rights on the other. Nevertheless, the primary role of the EU and the
WTO, which both regulate PP, are economic/market related.67 Paving up the
way for labour clauses into such areas needs time and compromises what
following analysis intends to demonstrate. For the contrast, we will also
look at the ILO’s policy on labour clauses in public contracts.
3.1 The EU procurement legislationIn April 2014, the EU Parliament adopted new set of directives regulating
public spending, namely the Concession Directive on the award of
concession contracts,68 the Public Sector Directive69 and the Utilities
67 https://www.wto.org/english/thewto_e/whatis_e/inbrief_e/inbr00_e.htm, (22.4.2015); and Consolidated version of the Treaty on the Functioning of the European Union. OJ 2008 C 115/47, 9.5.2008, (hereinafter ‘TFEU’). Art. 3.
68 Directive 2014/23/EU of the European Parliament and of the Council on the award of concession contracts.69 Directive 2014/24/EU of the European Parliament and of the Council on public procurement and repealing Directive 2004/18/EC.
33
Directive,70 which replaced the old set of directives from 2004.71 We will
only focus on the Public Sector Directive (hereinafter ‘the new Directive’),
which regulates PP.
As we noted above, the primary role of the EU is market related. The
purpose of PP regulation in the EU is thus to open up PP market in order to
secure four economic freedoms.72 However, such market freedoms have to
be considered in a wider perspective and therefore cannot be absolute.
Common EU policy goals are not just market-related and entail
sustainability, respect for human rights and social progress.73 Art. 138 of the
Treaty on the Functioning of the European Union (TFEU) stipulates that the
EU and the Member States should have as their objectives, amongst others,
improved living and working conditions, proper social protection, dialogue
between management and labour and combating of exclusion. Such
objectives should not be excluded from PP, which is one of the main
enforcement mechanisms of the common EU policy goals, and the new set
of directives is, as we will find out in this chapter, a step in a way of more
socially sustainable procurement. Recital n. 2 of the new directive even
classifies PP as a key role player in the Europe 2020 strategy.74
Quest for socially responsible PP in the EU (previously European
Community) is by no means a new idea, as these concepts were slowly
developing and with every new directive, more and more other aspects to
buying were included.75 Nevertheless, the main principle has remained the
70 Directive 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sector and repealing Directive 2004/17/EC.71 Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors. Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts (hereinafter ‘the old Directive’).72 Crown Commercial Service, A Brief Guide To The EU Public Contracts Directive, publication, 2015. Para. 3.1.Four economic freedoms being freedom movement of goods, services (Art. 49 and 56 TFEU), capital (Art. 63 TFEU) and workers (Art. 49 TFEU).73 TFEU, 2008. Preamble and Art. 8-11.74 European Commission, Europe 2020 Strategy for Smart, Sustainable and Inclusive Growth. Available at: http://ec.europa.eu/europe2020/index_en.htm, (10.6.2015).75 European Commission, Interpretative Communication 2001/C 333/08 of the Commission on the Community law applicable to public procurement and the possibilities for integrating social considerations into public procurement, 2011.
34
same – those other considerations cannot be such to endanger four market
freedoms (e.g. cause unequal treatment of economic operators). The same
principle goes for the PP contracts for which the directive do not apply (i.e.
are below the threshold set by the directive) – they are still subject to
transparency, equal treatment, non-discrimination, proportionality and the
principle of mutual recognition that derive directly from TFEU.76
However, we must also keep in mind that these market principles are not
static and are constant subject of change steered by political will, which is
enshrined in the evolving European and domestic case law, European
Commission communications, new and revised Public Contracts Directives
etc.77 Through such evolvement, social considerations have an opportunity
to expand. Of course, under the condition that political will for such
development exists.
In that view, a ten year period between the two directives should not be seen
as a homogenous era (in regard to PP principles), but as a constant playing
field of several interests trying to curb public spending in a way that would
support a certain goal or policy. By understanding this, it will come as less
of a surprise to see the substantial number of shifts and evolvements in the
interpretation of basic principles of PP which occurred in the last decade
within a single directive.
To give an example, which portrays such switches of principles that affect
human rights, we can look at the adoption of 2004 PP directive itself (and
reflected throughout the EU legislation), as it represented a move to a more
neo-liberal, free market thinking, whereas before, liberalization was limited
with other (social) considerations to a greater extent. Morton portrayed this
on an example of posted workers, which are often part of PP discussion as
Also Steurer, R., Berger, G., Konrad, A. and Martinuzzi, A., Sustainable Public Procurement in EU Member States: Overview of government initiatives and selected cases. Final Report to the EU High-Level Group on CSR, Vienna, October 2007.76 However, it is a discretion of Member States to apply the PP directive also to the purchases below the threshold, as Sweden did. Interview with Jörgen Hettne, 11.8.2015, Lund, Sweden.77 Crown Commercial Service, A Brief Guide To The EU Public Contracts Directive, publication, 2015. Para. 1.4.
35
freedom to provide services in the EU has skyrocketed transnational (though
within the single market) service provision, also as a part of PP.78
The ECJ followed this ‘neoliberal’ trend with a series of judgements (Laval,
Viking and most significantly Rüffert that concerns posted workers), which
supported above mentioned policy tendency. This has attracted numerous
critiques from academia and civil society, since market freedoms were given
a greater weight than social considerations.79 Due to the constant critique
and the ECJ’s unchanged practice, the European Commission was trying to
solve the issue of posted workers and finally managed to do so in 2014 with
enforcement directive,80 which is aligned with the new set of procurement
directives and is intended to advance the protection of posted workers and
better social protection in general. However, it remains problematic that a
court, established for the protection of principles of economic union, can
follow those principles so rigorously that social consideration becomes of a
secondary importance, even despite the fact the ECJ has previously
recognized European Social Charters81 as sources of the fundamental
78 Morton argued that after a switch of focus and priority from European Social Model to European Single Market, the effect of collective bargaining (amongst others) of posted workers was seriously undermined and thus their situation was significantly worsened (even compared to domestic workers doing the same job). The ECJ decided that imposing all domestic labour standards on posted workers under PP would be an impediment to (single) market access as foreign economic operators would lose their comparative advantage (low labour costs), but failed to recognize that unequal treatment of domestic companies, which had to adhere to a much stricter labour rules. Not to even mention the effect of dumping of labour standards within EU market.Morton, A., EU Reform of Transnational Posted Workers Law and the Place of Working Eights and Collective Agreements within the Single European Market, European Public Services Briefings 5. European Services Strategy Unit, 2013.See more in: Vinterskoug, J., The Scope of Labour Law Requirements in Public Procurement - at the ILO, EU and Swedish Level. Master Thesis, Lund University, 2011. Ch. 3.4.79 See, for example, Koukiadaki, A., The Far-Reaching Implications of the Laval Quartet: The Case of the UK Living Wage, Industrial Law Journal, 2014. Vol. 43 Issue 2, pp. 91-121; Syrpis, P., Reconciling Economic Freedoms and Social Rights - The Potential of Commission v Germany (Case C-271/08 Judgment of 15 July 2010). Industrial Law Journal, 2011. Vol. 40, p. 222-229; Barnard, C., A Proportionate Response to Proportionality in the Field of Collective Action, European Law Review, 2012. Vol. 37 no. 2, p. 117-135; Dølvik, J. E., and Visser, J., Free movement, equal treatment and workers’ rights: can the European Union solve its trilemma of fundamental principles?, Industrial Relations Journal, Blackwell Publishing Ltd., 2009. Vol. 40 No. 6, p.491–509.80 Directive 2014/67/EU of the European Parliament and of the Council of 15 May 2014 on the enforcement of Directive 96/71/EC concerning the posting of workers in the framework of the provision of services and amending Regulation (EU) No 1024/2012 on administrative cooperation through the Internal Market Information System.81 Council of Europe, European Social Charter, 18.10.1961, ETS 35; and Council of Europe, European Social Charter (Revised), 3.5.1996, ETS 163.
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principles of the EU law.82 Several scholars claim that had the same cases
appeared in front of European Court of Human Rights, the outcome would
have been quite the contrary.83
PP within the EU has thus far reaching economic and political impact, so
the future ECJ’s decisions will have to enshrine more commitment to social
sustainability. A step in that direction was already done by the Commission,
which included social (and environmental) consideration on several stages
of the new PP Directive.
EU has taken up the project of new procurement legislation for several
reasons: simplification of rules and procedures, achieving greater
accessibility of the European procurement market (especially for small and
medium enterprises), strategic usage of PP to achieve common EU policy
goals and ensuring sound procedures.84 Strategic usage of PP entails the
pursuit of environmental, social and economic objectives.85
Member States have two years (until 16 April 2016) to implement the
principles of the new directive in their national legislation.86 It is important
to understand that a directive creates an obligation to achieve results
outlined in it, but Member States have discretion to decide how they are
going to carry it out. However, one must not forget that these rules are
intended to have a harmonizing effect. According to Hettne, for
harmonising rules (i.e. common to all EU Member States) directives are
usually used. However, directives can be very different amongst each other
– some can lay down just general principles and therefore leave plenty of
operative freedom to Member States, and some are so detailed that there is
only little choice left.87 The new Directive falls closer to the latter, because it 82 Study on Precarious work and social rights Carried out for the European Commission, (VT/2010/084), Working Lives Research Institute, London Metropolitan University. Page 147.83 Syrpis, Reconciling Economic Freedoms and Social Rights - The Potential of Commission v Germany, 2011; and Barnard, A Proportionate Response to Proportionality in the Field of Collective Action, 2012, etc.84 European Commission, Green Paper on the modernisation of EU procurement policy; Towards a More Efficient European Procurement Market. COM(2011) 15 final, 27.01.2011.85 Ibid.86 This process is called transposition. Art. 90 of the new Directive.87 Hettne, J., Sustainable Public Procurement and the Single Market – Is There a Conflict of Interest? EPPPL 1, 2013.
37
prescribes PP procedure in detail. Yet, we will see that it is also possible to
claim quite the contrary for the provisions relevant for our topic, as most of
them are of a voluntary nature.
Since the deadline for transposition is 2016, at the time of writing this it is
not clear how Member States will transpose articles that are relevant to the
purpose of this paper. Since this topic was not discussed extensively within
the academia so far,88 we will outline all the relevant provisions of the new
directive and compare them to provisions in the old directive and the
relevant case-law if necessary.89 The content of conducted interviews will
also be used. By using all these sources, we will get a better picture of the
extent to which labour rights could be enforced transnationally through the
EU legislation on PP.
Apart from the general provision on respect for labour rights (Art. 18(2)),
there are three main stages of PP procedure at which labour clauses could be
used – in technical specifications (requirements for tenders), by setting the
award criteria, and under contract performance specifications. We will look
into each stage separately.
3.1.1 Art. 18(2)First and perhaps the most important is Art. 18, which outlines the general
principles of PP for public authorities – treating economic operators equally
and without discrimination, and acting in transparent and proportionate
manner. Apart from the proportionality, these basic principles represent no
novelty, as they were the main guidance already in the old directive (Art. 2).
Adding proportionality might be the first indication of PP moving beyond
the sole consideration of economic aspects of a deal. Though Arrowsmith
noted that proportionality is a general principle of EU law and was not only
implied under the old directive, but often referred to in the ECJ’s
jurisprudence.90
88 Apart from few articles, which will be used and mentioned hereinafter.89 Though ECJ’s case-law relating to our topic is very scarce – searching ECJ’s database (CURIA) of last five years shows that cases concerning PP mainly deal with procedural aspects, assessment and rejection of tenders, clarification of award criteria, principle of equal treatment etc. None of those are fundamentally related to labour standards.90 Arrowsmith, S., The Law of Public and Utilities Procurement, 3rd edition, Sweet & Maxwell, 2014. Page 628, section 7-24.
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In the second paragraph the most promising provision for our cause follows:
“Member States shall take appropriate measures to ensure that in the performance of public contracts economic operators comply with applicable obligations in the fields of environmental, social and labour law established by Union law, national law, collective agreements or by the international environmental, social and labour law provisions listed in Annex X.”
Certainly, this provision is auspicious, as it implies an obligation to ensure
that labour and social law is respected in regard to the PP. We will analyse
this provision from the point of view of enforcing respect of labour rights
transnationally.
Apart from environmental standards, Annex X includes eight core ILO
conventions,91 therefore representing some kind of minimum that needs to
be respected. This significantly improves chances on the first part of our
quest – ensuring respect for labour laws in developing countries, but is not
as such is not appropriate for the second part of the objective of this thesis –
promotion of improvement of labour standards.92 Since the level of respect
for labour rights and standards in developing countries’ legislations is
typically very low, solely demanding their respect might not effectively
contribute to anything positive for the workers, if the national laws are
deficient from international perspective. In this sense Art. 18(2) is good for
creating a minimum common ground ensuring respect for core labour rights
based on ILO core conventions.
Furthermore, such provision is useful as it circumvents the inability or
unwillingness of developing state’s authorities (legislators, labour
inspectors, courts, etc.) to ensure respect for labour rights, as their respect is
demanded from the economic operator, without consideration whether the
authorities demand it and enforce it or not.
91 ILO Convention no. 111 Discrimination (Employment and Occupation), 1958; ILO Convention no. 29 on Forced Labour, 1930; ILO Convention no. 87 on Freedom of Association and Protection of the Right to Organize, 1948; ILO Convention no. 98 on Right to Organize and Collective Bargaining, 1949; ILO Convention no. 100, on Equal remuneration, 1951; ILO Convention no. 105 on Abolition of Forced Labour, 1957; ILO Convention no. 138 on Minimum Age Convention, 1973; ILO Convention no. 182 on Elimination of the Worst Forms of Child Labour, 1999.92 The aspect of improvement of labour standards will be more relevant for the following provisions.
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In theory, this equips purchasing authorities with a substantial operating
tool. We might say even more than a tool, as it lays out an obligation for
Member States to ensure that economic operators comply with applicable
rules. Unfortunately, in regard to practical enforcement of this provision, the
obstacles might be too difficult to overcome, at least for our purpose. First
of all, Art. 18(2) itself does not offer any guidance on responsibility for
respect for labour (and other) laws in the supply chain.93 The practical effect
of this provision might therefore not be great and the principle will remain
aspirational. Secondly, this provision (in its labour part) should not cause
difficulties within the EU, as the respect for rights in general is quite high
and the authorities of Member States have established channels of
communication, so finding out whether labour rights are respected by
certain economic operator might not be that demanding, whereas finding out
whether labour standards are respected in developing countries might turn
out to be extremely difficult.94 Furthermore, if we talk about products with
extensive supply chain and products that in some part traditionally involve
informal economy, we stumble across an insurmountable task.95
It might be possible to presume that this provision was mainly intended to
be used for services and not so much for goods, and more specifically, their
production. However, there is nothing in the text of the Article that would
prevent it to be read and used in that way. This is furthermore supported by
the logical reading of the text, as in the opposite way (not including goods)
we might stumble upon paradoxical situation, in which labour laws would
have to be respected in regard to services purchased through PP, but
purchased products could be produced e.g. by forced labour.
Additional potential complication that was insinuated above, is the problem
of practical transposition of this provision into national legislation. Art.
93 In contrary to the Guiding Principles on Business and Human Rights that specified in Principle 13 what business entities are responsible for in their supply chain. Whereas Art. 18(2) only talks about authorities making sure that the laws are respected. In this way, the issue of supply chains and outsourcing remains untouched.94 Furthermore, the availability of the information depends on the location – labour standards on fishing boats in Thailand or remote forests of Siberia are tougher to investigate and less likely to be supervised by the NGOs.95 Especially if we talk about certain industries, in which it is practically impossible to trace products down to the supply chain back to the raw materials (e.g. metals).
40
18(2) solely imposes an obligation for Member State to ensure respect for
labour laws, but it does not give any instruction on how it should be done.96
If purchasing authorities or the economic operator have to check or prove
compliance, numerous problems would be encountered. PP officers’ lack of
knowledge about typical problems related to specific products, lengthy and
costly process, lack of staff, disinterest of economic operators to take part in
PP under such stringent conditions, economic operators might be
discouraged to participate at PP, as they would potentially need to adhere to
a much higher standard than on the market etc. are just some of them.97 Not
to mention that in practice this would result in achieving exactly the
opposite effect regarding one of the purposes of the new Directive –
simplification of rules and procedures.98
Last but not least, we cannot overlook the position of this obligation within
the Directive – it is placed in the same article as the main principles of PP,
which certainly expresses its importance and emphasis. Placing it among
general articles also indicates that respect for labour law cannot be limited to
certain level or aspect of PP, but can be evoked at any point. This is the only
way that human rights in general can achieve effectiveness – embedding
them into principles at the highest level means that these principles will
have to be enshrined and confirmed in every matter related to the subject.
However, not everyone is of the opinion that respect for labour, social and
environmental standards belong to article on general principles of PP.
Arrowsmith mentions that such provision has the character of more of a rule
than of a general principle, which could be used for interpretation and
development of the Directive. 99 But such stand has not been supported by
the European Commission, which has confirmed in several documents that
PP should be used to achieve horizontal goals.100 If PP is to be used for 96 This is understandable, since this is a directive, which only creates on obligation to achieve a given result, but not on the means of accomplishing it.97 See more on this in: Martin-Ortega, Buying power and human rights in the supply chain: legal options for socially responsible public procurement of electronic goods, 2015. More about practical issues will also be explained in the last chapter through examples.98 See also Semple, A., The Link to the Subject-Matter: A Glass Ceiling for Sustainable Public Contracts?, European Law Conference at University of Oslo, 2014.
99 Arrowsmith, The Law of Public and Utilities Procurement, 2014. Page 628, section 7-29. 100 European Commission, Green Paper on the modernisation of EU procurement policy; Towards a More Efficient European Procurement Market, 2011. Pages 3-5.
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achievement of common societal goals, it only seems rational to include
respect for social, labour and environmental laws to the level of the very
basic principles of PP, in order to secure their position as one of such.
Corresponding to Art. 18(2), which creates an obligation, are Articles 56
and 57, which outline the grounds for the exclusion of economic operators
due to the failures on their behalf. We will analyse it under contract award
criteria section.
3.1.2 Technical specificationsTechnical specifications lay down specifications required of a product (or
service).101 It is necessary for technical specifications to be linked to the
subject-matter of a contract and proportionate to its value and its
objectives.102 This is the first stage where we encounter the concept of the
link to the subject-matter, the concept which was only included in technical
specifications and the award criteria in the old Directive, but was expanded
to the other stages of PP in the new Directive. The link to the subject-matter
of the contract had limiting effect for social considerations in the old
Directive,103 so applying this condition to other stages could have negative
consequences for enforcement of labour standards through PP. It mostly
depends on how wide the scope of the link to the subject-matter is
interpreted.
The old Directive outlined rules regarding technical specifications in Art. 23
whose text does not offer much ground for setting ethical requirements
under technical specifications.104 Nevertheless, the possibilities have been
expanded, which is obvious not only from the text of the new Directive, but
Also: Communication of the Commission, The Europe 2020 strategy for smart, sustainable and inclusive growth, 2010.101 Art. 42 of the new Directive.102 Ibid.103 Semple, The Link to the Subject-Matter: A Glass Ceiling for Sustainable Public Contracts?, 2014.104 In the Max Havelaar case, the ECJ noted that fair trade criteria “do not correspond to the definition of the concept of technical specification […] given that that definition applies exclusively to the characteristics of the products themselves, their manufacture, packaging or use, and not to the conditions under which the supplier acquired them from the manufacturer” (paras. 73 and 74). In the ECJ’s view, compliance with those criteria “does fall under the concept of ‘conditions for performance of contracts’ within the meaning of Article 26 of that directive” (para. 75). Case C-368/10, European Commission v. Kingdom of the Netherlands. (‘Max Havelaar case’).
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also from ECJ’s jurisdiction. From 1999 Concordia case, in which ECJ was
considering whether noise and gas emission requirements are linked to the
subject-matter of the contract related to public transport, and all the way to
the so called Max Havelaar case in 2012, in which the Court established that
criteria of a fair-trade label (or certificate) could be used as conditions for
performance of contracts105 - the expansion in the interpretation of the link
to the subject matter is evident. This case was enshrined in the Art. 43 of the
new Directive on labels, which gives the authorities the option to require
specific label as means of proof that the product (or works) satisfy certain
environmental, social or other characteristics. Moreover, such demands can
be required within technical specifications, the award criteria or the contract
performance conditions.106 In general, the process and tools of
standardization should also be used more on the level of social and labour
standards.107 Nevertheless, it is “a key instrument for consolidating the
Single Market and facilitating cross-border trade.”108 However, we cannot
ignore the fact that social standards109 are much more complex to develop,
keep up with, and monitor than technical ones. We also cannot forget the
principle that the ECJ laid out in the Max Haavelar case, specifically
demanding that social certificates/standards have to be specific and cannot
simply refer to socially responsible conduct of the economic operator in
general.110 This means that simply referring to or demonstrating systematic
general human rights due diligence (in the terms of UN Guiding Principles
on Business and Human Rights) in the company’s processes cannot be
applied in technical specifications.
105 Ibid. Para. 94.106 Art. 43 of the new Directive.107 Standardization could contribute greatly to simplification of PP processes, as it would secure a common approach and benchmarks, as well as equal treatment. Governments are also likely to accept internationally established standards. For PP, such document might be forthcoming standard on Sustainable Purchasing of the International Organization for Standardization, ISO/CD 20400. See more at: http://www.iso.org/iso/home/news_index/news_archive/news.htm?refid=Ref1873, (5.7.2015).108 https://www.cen.eu/you/EuropeanStandardization/Pages/default.aspx, (2.5.2015).109 The example of social standard is ISO 26000 of the International Organization for Standardization, which provides guidance on how business operators can operate is socially responsible way. More at: http://www.iso.org/iso/home/standards/iso26000.htm, (2.5.2015).110 Supra n. 104. See more at: http://gavclaw.com/2012/06/27/use-of-fair-trade-labels-in-procurement-decisions-court-of-justice-of-the-eu-in-max-havelaar/, (2.5.2015).
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The expansion of the link to the subject-matter of the contract to other
stages has another consequence according to Semple – technical
specifications are still more stringent and tightly regulated than the award
criteria and contract performance clauses, which means that those are more
appropriate for enforcing minimum standards as the authorities are obliged
to reject tenders that do not comply with them, whereas other two stages
offer more operating space for the authorities and therefore being more
appropriate for targeting the best possible option (i.e. going beyond the
minimum requirements).111 In terms of our quest of promotion and
advancement of labour rights, technical specifications are more appropriate
for requirements of minimum standards (therefore enforcement of minimal
labour rights), whereas award criteria could be convenient for awarding a
contract to a tenderer with higher standards (therefore advancement of
standards in rights at work). Though the ECJ might not find such
explanation in accordance with the principles of single market, as the
Rüffert case demonstrated.112
For that reason, the usage of labels is restricted with five conditions that a
label needs to fulfil in a specific case:
“(a) the label requirements only concern criteria which are linked to the subject-matter of the contract and are appropriate to define characteristics of the works, supplies or services that are the subject-matter of the contract;
(b) the label requirements are based on objectively verifiable and non-discriminatory criteria;
(c) the labels are established in an open and transparent procedure in which all relevant stakeholders, including government bodies, consumers, social partners, manufacturers, distributors and non-governmental organisations, may participate;
(d) the labels are accessible to all interested parties;
(e) the label requirements are set by a third party over which the economic operator applying for the label cannot exercise a decisive influence.”113
111 Semple, The Link to the Subject-Matter: A Glass Ceiling for Sustainable Public Contracts?, 2014.112 The ECJ basically denied public authorities to demand salaries higher than minimal ones for posted workers working on public contracts, since this would nullify the comparative advantage of foreign economic operators – their low costs. Such reasoning might protect single market freedoms, but at the same time effectively creates a ceiling for progress of social rights in connection to public contracts. C-346/06 Dirk Rüffert v Land Niedersachsen. More at: http://www.etuc.org/r%C3%BCffert-case-judgment-summary, (27.4.2015).113 Art. 43 of the new Directive.
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These conditions effectively prevent authorities to use a general CSR policy
of the economic operator as a consideration, because only facts relevant to
the specific product are to be considered (link to the subject-matter of the
contract). In practice this might create problems, since many certificates
indicate general nature of conducting business at organizational level114 and
do not necessarily define characteristics of specific products.115
Further problem with using social labels could be their (non)widespread
presence. A domestic court in the Netherlands (in the case of Douve
Egberts, which we know at the ECJ as a Max Havelaar case) allowed such
certification as a requirement, because it was easily applied without
discrimination, since there were numerous domestic and foreign suppliers
that had the relevant certification.116 The consequence of such reasoning is
that non-discrimination is still likely to have the advantage and in the case
that only very small number of economic operators could be able to satisfy
certain social certification, it might not be applied for certain public contract
due to its discriminatory effect. Consequently, standards would have to be
lowered to ensure possibility for widespread participation and economic
operators applying lower social standards would be awarded for their low
standards with the possibility to participate. PP should serve as a field for
promoting best practices on horizontal level, but such domination of free
trade principles does not serve such goal; quite the contrary, it can oppose it.
3.1.3 Contract award criteriaAmong the tenders which satisfy technical specifications (and other
requirements under the Directive), the contracting authority will chose an
offer based on the determination of ‘the most economically advantageous
tender (hereinafter MEAT) from the point of view of the contracting
authority.’117 MEAT is
114 Semple, The Link to the Subject-Matter: A Glass Ceiling for Sustainable Public Contracts?, 2014.115 E.g. Fairtrade Labelling Organizations International, Equal Exchange, Ethical Trading Initiative, Ethical Tea Partnership, etc.116 Thrasher, R., On Fairness and Freedom: The WTO and Ethical Sourcing Initiative. GEGI Working Paper Series, Global Economic Governance Initiative, 2014.117 Art. 67 of the new Directive.
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“…identified on the basis of the price or cost, using a cost-effectiveness approach, such as life-cycle costing in accordance with Article 68, and may include the best price-quality ratio, which shall be assessed on the basis of criteria, including qualitative, environmental and/or social aspects, linked to the subject-matter of the public contract in question.”118
The old Directive had two options as the contracting authority also could
have decided to base the award solely on the lowest price criteria.119 This
development is in line with intended sustainable aspect of the Directive as
deciding solely based on the lowest price is outdated.120 Nevertheless,
Arrowsmith argues that the lowest price criteria has only been removed
from the new Directive superficially, as the phase MEAT now covers “both
awards that include non-price criteria and awards that are based solely on
price.”121
‘MEAT from the point of view of the contracting authority’ involved
several criteria (incl. environmental) in the old Directive, but not the social
one,122 which is included in the new Directive though. Arrowsmith,
however, noted that a list of criteria that might be used is ‘purely
illustrative.’123 In any case, the use of social and environmental criteria for
the award of contracts is entirely voluntary for contracting authorities.124
In general, the ECJ allowed social considerations as criteria for the award of
public contract, but only as long as they do not create barriers to free
movement (four economic freedoms).125 If the ECJ will maintain the same
standard, the usage of social considerations would still be very limited, as
was demonstrated above in regard to Rüffert case.
118 Thrasher, On Fairness and Freedom: The WTO and Ethical Sourcing Initiative, 2014. Art. 67 of the new Directive.119 Art. 53 of the old Directive.120 Based on the fact that other costs, such as social or environmental, are not counted in price.121 Arrowsmith, The Law of Public and Utilities Procurement, 2014. Page 737, section 7-168.122 However, it was included in the recital 46 of the preamble to the old Directive. See also: Opinion of Advocate General Kokott delivered on 15 December 2011. Case C-368/10, European Commission v Kingdom of the Netherlands. Para. 85.123 Supra n.121.124 Semple, The Link to the Subject-Matter: A Glass Ceiling for Sustainable Public Contracts?, 2014.125 Bercusson, B., European Labour Law, 2nd edition, Cambridge University Press, 2009. P. 431.
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As noted above, in the new Directive contract award criteria is additionally
limited with the link to the subject-matter requirement. Whether this poses a
significant impediment to inclusion of labour clauses is dependent on how
wide the interpretation of link to subject-matter of the contract is. Recital 97
gives guidance for these criteria to be:
“... in any respect and at any stage of their life cycles from extraction of raw materials for the product to the stage of disposal of the product, including factors involved in the specific process of production, provision or trading and its conditions of those works, supplies or services or a specific process during a later stage of their life cycle, even where such factors do not form part of their material substance.”
This clearly settles the above mentioned notion that the ECJ accepted in the
Max Haveelar case. The Court approved that specific fair trade compliance
can be a valid criteria.126 By this, the legislator has also denied the view that
the Commission had at certain point – that such (social) criteria can be used
as deciding award criteria only when tenders are otherwise equal.127
Further point that opens up the possibilities in regard to goods is addition
“any stage of life cycle,” as it emphasizes that the entire life process of
goods is applicable, no matter the number of stages and legal segmentation
of a supply chain. It also poses no restraints to the location, which
significantly improves possibilities to demand respect for labour standards
outside of the EU.128
Another potentially useful, and yet mostly overlooked aspect, is the addition
to the MEAT criteria of the clarification that it has to be evaluated from ‘the
point of view of the contracting authority’, which could be read as balancing
the economic aspect of the PP since public authorities have overall wider
societal objectives and their choice of economic operator based on this view
might be different. However, deciding based on such a loose and unclear
factor would also signify a certain level of arbitrariness and non-
126 That consequently means that a general CSR policy and commitment of the economic operator cannot be an award criteria, as it is not sufficiently linked to the subject matter. Note, however, that in Max Havelaar case fair trade compliance was accepted as a contract performance condition.127 Arrowsmith, The Law of Public and Utilities Procurement, 2014. Page 746, section 7-178.128 At this point the actual achievability of respect for labour standards in developing countries through PP is not debated, but only legal possibility to apply such criteria.
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transparency, which is inconsistent with basic principles of (European) PP
and is addressed in Art. 67(4).
3.1.3.1 Exclusion of tenders and participants
In Art. 56, which lays out general principles of award of contracts, there is
an option for contracting authorities not to award a contract to a tenderer
submitting the MEAT where they have established that tender does not
comply with the applicable obligations referred to in Art. 18(2). It is not
clear what exactly ‘establish’ entails.
Part of qualitative selection of tenders is also exclusion of certain economic
operators from participation, based on the grounds outlined in Art. 57,
which concern past or present situation or actions of the economic
operators.129 This article offers the main enforcement tool for the general
provision on respect for labour rights (Art. 18(2)). Art. 57 in the first
paragraph lays out circumstances under which economic operator shall be
excluded from the participation. One of such circumstances is when
authorities have established, by verifying in accordance with Articles 59, 60
and 61 or are otherwise aware of a conviction of economic operator by final
judgment for child labour and other forms of trafficking in human beings. In
the second paragraph of Art. 57 the circumstances under which an economic
operator may be excluded from the participation are laid out. One of the
options is when the contracting authority can demonstrate by any
appropriate means a violation of applicable obligations referred to in Article
18(2). By this, the obligatory nature of Art. 18(2) is somehow diminished,
which has already drawn some criticism.130 Art. 18(2) expresses a necessity,
an obligation for labour standards to be respected, but Art. 57 does not
express an obligation to exclude violators and only gives an option to do so.
This might eventually lead to unequal practice within the EU, as some
countries that are more advanced in sustainable PP could apply stricter use
of exclusion of tenderers based on labour law violations, while some
countries would not use it at all.
129 Semple, The Link to the Subject-Matter: A Glass Ceiling for Sustainable Public Contracts?, 2014.130 Ibid. See also: European Trade Union Confederation, ETUC Key Points for the Transposition of the Directive 2014/24/EU, ETUC Publication, 2014.
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Further point of this article that diminishes its effectiveness for protection of
labour rights is the fact that for the first paragraph, conviction or other proof
from official records is needed (Art. 60). Among authorities of the EU
Member States such exchange of information should not be problematic, but
with third countries, especially developing, this could be an issue.
Furthermore, in practice we will hardly find European companies that have
been accused of using child labour or of human trafficking as it is more
likely that they are connected to such unlawful practices through their
transnational supply chain. Due to separate legal personalities, economic
operators bidding for EU tenders are not themselves convicted and therefore
cannot be excluded for such connections based on this article. Second
paragraph that offers a possibility for an economic operator to be excluded
for violations of Art. 18(2) has a less strict condition, as the contracting
authority only has to “demonstrate [the violation] by an appropriate means”.
What exactly could ‘appropriate means’ be remains unclear. E.g. is
internationally published report by a local NGO on labour violations in a
country where labour inspection and judicial system are inadequate
appropriate means? What about findings of non-judicial grievance
mechanisms, such as OECD’s National Contact Points;131 or perhaps
national human rights institutions? The points made offer extensive grounds
for consideration and it is likely that the ECJ will have to specify
‘appropriate means’ if challenged.
A quick comparison of Articles 56 and 57 demonstrates that Art. 56 talks
about exclusion of a tender, if established that it does not comply with
obligations from Art. 18(2), whereas Art. 57 talks about exclusion of
participants due to their past or present actions. First observation of this
difference is that grounds for exclusion of participants are not necessarily
linked to the subject-matter of the contract, which means that a window for
addressing potential violations of labour law is wider. But on the other hand,
as we mentioned above, since our aim is to tackle violations in developing
countries outside of the EU, the effectiveness of this provision is diminished
by legal reasons as violations were very likely conducted by suppliers at the 131 See more about National Contact Points at: http://www.oecd.org/investment/mne/ncps.htm, (12.9.2015).
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lower levels of supply chains, for what economic operator/bidder in Europe
cannot be held responsible.132 In that way, Art. 56 that is connected to the
tender (therefore the product) could be able to avoid the issue of separate
legal personality, as the exclusion ground is linked to the subject-matter of
the contract, independent of the economic operator.
Both options have its pros and cons, but we have to keep in mind that
legislators, when drafting these articles, were most likely mainly trying to
secure fair competition within the EU and that lower labour standards, their
respect or their enforcement in some Member States would not cause social
dumping; whereas the issue of violations of basic labour standards down the
supply chains remained inadequately addressed.133 We must note that the
new or old Directive nowhere explicitly excludes clauses concerning social
and labour standards from applying to commercial goods, which is in
contrary to the ILO and the US federal regulation of PP, which we will see
in the following sections. However, nothing in the text of the Directive
prevents us from applying these provisions to the situation of
products/goods partly or entirely originating outside of the EU. The ECJ
will sooner or later have to come up with answers on how to address
violations of core labour rights throughout the supply chain of products that
are competing for public contracts.
3.1.3.2 Abnormally low tenders
Another relevant provision concerns abnormally low tenders, for which
contracting authorities could require economic operators to explain the price
or costs and consequently reject them.134 The explanation of price or costs
may in particular relate to compliance with obligations referred to in Art.
18(2).135 If the contracting authority have after the assessment of
information established that the tender is abnormally low because it does not
comply with obligations from Art. 18(2), it shall reject the tender.136 This
132 At least not strictly legally looking. However, it would be interesting to see practical implications of implementing responsibility for causing-contributing-linkage to human rights violations from the UN Guiding Principles on Business and Human Rights.133 Which is a wider legal problem and not just one concerning PP.134 Art. 69 of the new Directive.135 Art. 69(2.d)136 Art. 68(3).
50
provision is one of the most substantial advancements from the old
Directive, as it basically creates an obligation for contracting authorities to
reject an abnormally low tender in cases where the contracting authority
establishes that price or costs is so low due to failure to comply with
national legislation or international labour law provision.137
Yet, such obligation for contracting authorities arises only when they find
that low price is due to violations of labour rights.138 The question is whether
in day-to-day business public officers will be willing to investigate in order
to establish reasons for low price. An opportunity to reject abnormally low
tenders due to violations of international labour laws could be very useful
for our purpose, though strong practical impediments are probable. Not just
whether public officers will be willing to investigate the background of the
price or costs, but also are they able and equipped to do so. In order to
assess what an abnormally low price for specific product is, public official
running the procedure needs to have certain prior knowledge of the product
market, the process of its production, typical places of production, the origin
of materials etc. Furthermore, solely the final price itself, which is a factor
of deciding whether economic operator should provide explanation about it,
may not tell much about standard of and respect for labour rights. Prices of
tenders among two participants can, for example, be practically the same,
but the labour standards under which these products were produced might
have been very different. Therefore the concept of abnormally low tenders
might not be applied as price cannot be reliable and sole factor for
evaluating respect for rights at work.139
3.1.4 Contract performance specifications (disclosure of subcontractors)
Further stage of PP process, in which labour clauses can be enforced, is
contract performance specifications. On this stage, the economic operator
has been chosen and contract performance specifications lay out the 137 Van Der Abeele, E., Integrating Social and Environmental Dimensions in Public Procurement: One Small Step for the Internal Market, One Giant Leap for the EU?, European Trade Union Institute (ETUI), 2014. Page 19.138 Ibid.139 Of course, practice of a company might be scrutinized under other provisions of the new Directive, but under Art. 69 it might remain undiscovered.
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conditions linked to the subject-matter, under which the contract has to be
fulfilled. Art. 70 specifically mentions that these conditions can include
social or employment-related considerations. Interestingly, the scope of this
provision is narrower in relation to the old Directive, as the latter also
allowed the possibility to include social considerations, but without the link
to the subject-matter of the contract, which means that social clauses could
have been wider than under the new Directive.140 Again, we can assume that
this provision was intended for procurement of services, since those are
about to happen after the contract was signed, whereas good were usually,
though not necessarily, produced prior and irrespectively to the outcome of
specific PP.141
Another important provision regulates subcontracting which is very relevant
to the purpose of this thesis. Art. 71 states that observance of the compliance
with Art. 18(2) by subcontractors is ensured through competent national
authorities. This is a normal standard regarding rights at work and it more or
less works properly in the EU, but in our case of developing countries the
system of inspection and enforcement might not function adequately
However, even if the contracting authority might not be able to exercise
control over the place of performance of the contract, this does not in any
way diminish application of the relevant legislation.142 This provision
certainly clarifies that observance of Art. 18(2) is a strict obligation in
subcontracting,143 no matter the geographical, operational or legal situation
of the subcontractor. The second paragraph gives a possibility to a
contracting authority to require of the tenderer to indicate whether he plans
140 Art. 26 of the old Directive. However, Attorney General Kokott in Max Havelaar case noted that he agrees with the Commission that Article 26 of Directive 2004/18 does not permit the contracting authority to exercise unlimited influence over the purchasing policy of its future contractor. Its requirements in respect of that purchasing policy must relate specifically to the subject-matter of the public supply contract. Opinion of Advocate General Kokott delivered on 15 December 2011. Case C-368/10, European Commission v Kingdom of the Netherlands. Para. 76-81.141 Unless we speak about products that have been produced specifically for a public contract. For example, ILO and US procurement provisions related to social and labour matters cover only such products. See the relevant chapters.142 Van Der Abeele, Integrating Social and Environmental Dimensions in Public Procurement: One Small Step for the Internal Market, One Giant Leap for the EU?, 2014. Page 20.143 Ibid.
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to subcontract any part of the contract to third parties and give their names
(or suggestions).
Again, this article seems to be written for the purpose of providing services
or at least producing products for a specific tender – paragraph 2 grants an
option to a Member State or a contracting party to ask a tenderer to disclose
any intended subcontracting, which clearly implies for an object of the
contract to be performed or produced in the future. Commercial products
(like electronics or food) are typically produced beforehand, so tenderers
should be able to provide entire list of subcontractors in advance anyway.
Paragraphs 6, 7 and 8 do offer some discretion to Member States in how
they can avoid breaches of the obligations referred to in the Article 18(2),
but they are of a nature that clearly presupposes that are both the main
contractor and subcontractor situated in Member States, which does not
apply to the case of generically produced goods with extensive supply
chains outside of the EU.
3.1.5 The outcomes of the new DirectiveIt is too early to talk about the effects of the new Directive on enforcement
and advancement of labour rights. By comparing the new and the old
Directive it is clear that more tools of social nature were added, or better to
say, the possibility to use such tools has expanded, though it remains
uncertain to what extent they will actually be applied in national legislations
and later in practice.
First of all, respect for and advancement of labour rights in PP depends on
transposition into national legislations of the Member States. We need to
draw a distinction between the general Art. 18(2), which is the only one that
is obligatory, and other provisions on different stages of a PP process, which
merely give an opportunity to use labour standards as one of the
specifications, criteria, conditions etc. The functions of Art. 18(2) and other
provisions are therefore very different. Art. 18(2) creates overall obligation
for Member States to ensure respect for labour legislation during the
performance of the contract that is independent from the process of
evaluating and choosing tenders, in which labour standards can be one of
53
the factors. It the terms of the purpose of this thesis, Art. 18(2) could
accommodate the compliance part (respect for minimal labour standards –
the eight core ILO conventions) and the other provisions could contribute to
improvement of labour standards in developing countries by i.e. granting a
public contract to the economic operator with better standards (and not just
the minimal ones, which would be guaranteed by Art. 18(2)). However, as
we noted above, Art. 18(2) does not offer any specification on the
responsibility scheme and in practice the issue of global supply chains
remains unsolved under this article.
As demonstrated above, all mentioned provisions, except for Art. 18(2), are
of a voluntary nature, at least in the social consideration part. This means
that transposition could go either way – social considerations being fully
implemented or entirely overlooked. It is reasonable to predict that the
transposition will not be extreme in either direction, but will take a moderate
approach, depending on a political will.144
However, a mere transposition of labour law related optional provisions into
national legislation itself does not secure its effective use. Public authorities
have to use these options and this depends greatly on political will, but also
on the awareness and knowledge of the purchasing authorities.145 This is an
area where the European Commission could contribute to with promotional
and cohesive activities.146 Practical aspects of socially sustainable PP will be
discussed more in detail in the last chapter.
144 UK Government was the first to introduce new PP legislation in March 2015, which attracted loads of criticism due to its minimal involvement of social and environmental criteria. The Government rather chose a minimal-regulation approach with the emphasis on a price. It is likely that the law was passed so quickly (a year before the deadline in April 2016) due to upcoming General elections in the UK a month later. See more at: Public Dykes, M., Contracts Regulations: Government getting it badly wrong on public procurement, blog. http://touchstoneblog.org.uk/2015/03/public-contracts-regulations-government-getting-it-badly-wrong-on-public-procurement/, (14.7.2015).Roche, A., Why we must put the new Public Procurement Regulations on hold. http://leftfootforward.org/2015/02/why-we-must-put-the-new-public-procurement-regulations-on-hold/, (14.7.2015). The law (The Public Contracts Regulation 2015) is available at: http://www.legislation.gov.uk/uksi/2015/102/contents/made, (14.7.2015).145 Practical aspects of inclusion of social considerations into PP on a national level will be dealt with in the last chapter. 146 The Commission has already issued documents on sustainable PP under the old Directive. See: European Commission, Buying Social, A guide on taking account of social considerations in public procurement, 2011.
54
Since socially sustainable PP has until now mostly been “backed by a
number of initiatives on the regional and local levels,”147 the differences in
practical (non)implementation of labour clauses within and among Member
States are vast. As most of such provisions in the new Directive are of a
voluntary nature, it is possible that differences between States or particular
purchasing authorities will remain big or even expand. Member States or the
authorities that already make efforts in this field will be able to strengthen
their processes under the new Directive, but those States or purchasing
authorities, which do little or nothing will be pretty much able to continue to
do so under the new Directive, since they do not need to apply voluntary-
natured social considerations.
Lastly, we should not overlook the role that the ECJ will have for
effectiveness and a scope of labour related provisions. The ECJ will have to
consider all aspects, functions and general principles of the new Directive.
One of the problematic areas could be the fact that most of socially related
provisions complicate and slow down the PP process, which is a directly
opposite effect to the one that the new Directive tries to achieve (amongst
others) – a more simple and faster process. The ECJ will probably have to
balance these opposing goals/effects.
Further aspect that the ECJ will have to balance is forever present “clash”
between economic freedoms and social rights, which has been a constant
unavoidable subject of the Court’s judgements. Since the Commission has
sent numerous messages of importance of social considerations for
sustainable development, we can anticipate that the Court will endorse this
view and balance the two more wisely. Nevertheless, a consensus that
sustainable PP does not limit free market/trade and allow social rights to be
an important factor in PP is rapidly growing in the international, national
and local levels and the Court cannot remain detached from these
developments.148 Hettne is actually of the opinion that the truly challenging
147 Kahlenborn, W., Moser, C., Frijdal, J. and Essig, M., Strategic Use of Public Procurement in Europe, Final Report to the European Commission MARKT/2010/02/C. Adelphi, 2011.148 ILO, Summary Report, 2014 Interagency Roundtable on CSR, Sustainable public procurement as a tool for promoting responsible business, 19 November 2014, Geneva.
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cases that would force the Court to consider the impact of economic
freedoms on labour and other social rights are yet to come.149
3.2 World Trade Organization’s General Procurement Agreement
Further international regulation of PP has been created within the WTO –
Agreement on Government Procurement (GPA), which is in fact the only
supranational regulation of PP.150 GPA is a plurilateral agreement, which
means that the accession to GPA is voluntary and not linked to the accession
to the WTO. Its purpose is to secure “open, fair and transparent conditions
of competition in the government procurement markets.”151 However, it
does not lay out detailed rules on the procedure, but rather provides a
framework to impede discrimination of economic operators based on their
nationality and to foster transparency.152 All EU Member States signed the
GPA, which means that both the EU directive and the GPA simultaneously
apply to PP situations in EU Member States.153 Apart from the EU Member
States, there are only 14 signatories of the agreement, majority of which are
countries with developed economies.154 This short section will, similarly as
the EU chapter, explore to what extent labour or social clauses can be used
within the GPA framework.
The role of the GPA is, naturally, to secure the free trade in public
purchasing. The new, revised GPA came out in 2014 and did indeed follow
some recent trends by including few non-economic considerations.
Unfortunately, they are far below the standard that was set by the new EU
Directive. Of course, we cannot ignore the fact that the EU directives
regulate a very specific market/area, where social sustainability is not
149 Interview with Jörgen Hettne, 11.8.2015, Lund, Sweden.150 WTO, Agreement on Government Procurement, GPA/W/313, 16.10.2010.151 See: https://www.wto.org/english/tratop_e/gproc_e/gp_gpa_e.htm, (9.5.2015).152 Tosoni, L., The Impact of the Revised WTO Government Procurement Agreement on the EU Procurement Rules from a Sustainability Perspective, European Public Private Partnership Law Review, 2013. Issue 1, pp. 41-48.153 Of course, for the cases in which applicable thresholds are met. Thresholds of the GPA are higher than of the new EU directive, so not all public purchases that fall under EU regulation are bound by the GPA.154 List of signatories available at: https://www.wto.org/english/tratop_e/gproc_e/memobs_e.htm, (12.5.2015).
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exactly a novelty, whereas the GPA is a global instrument that has to take
into consideration different levels of development and types of public
purchasing in which social and even environmental aspect might not exist.
However, this should not prevent the document to entail at least a possibility
for such consideration, or even worse, to prevent such consideration in the
name of the lowest bid and/or efficiency.
The first provision that could potentially be of relevance for our cause is a
general exception in Art. III.2(b) which provides that “…nothing in this
Agreement shall be construed to prevent any Party from imposing or
enforcing measures (...) b. Necessary to protect human, animal or plant life
or health.” This provision is certainly powerful, but at the same time hardly
plausible for promotion of core labour standards, because necessity is
legally very demanding level to adhere to, especially since there is likely
that less trade-restrictive means of achieving social goals exist.155 However,
some authors did try to explain this in the wide framework of the WTO or
even international law. Tosoni argues that many provisions contained in the
wider legal framework allow or even impose non-restrictive interpretation
of the GPA rules.156 In that fashion, the very first paragraph of the preamble
of the Marrakesh Agreement,157 which concerns also the GPA, states that
Parties to the agreement recognize
“... that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world’s resources in accordance with the objective of sustainable development, ...”158
However, one might notice a certain level of inconsistency of such
statements by the WTO, which are compatible with global policy trends,159
but are somehow overlooked on the level of legal documents like the GPA.
Such documents could and should offer practical solutions to support the
155 Thrasher, R., On Fairness and Freedom: The WTO and Ethical Sourcing Initiatives . GEGI Working Paper Series, paper 4. Global Economic Governance Initiative, 2014.156 Tosoni, The Impact of the Revised WTO Government Procurement Agreement on the EU Procurement Rules from a Sustainability Perspective, 2013.157 WTO (Marrakesh) Agreement Establishing the World Trade Organization, 1867 UNTS 154, Apr. 15, 1994.158 Ibid.159 See Chapter 2.
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pursuit for sustainable development. Anyway, the revised GPA lacks such
practical provisions or options. Therefore making a legal reasoning which is
justified solely on the aspirations of the preamble establishing the
international organisation is weak and unlikely to serve its intent.
Kaufmann, on the other hand, tried to argue that the GPA might allow
human rights clauses in PP already under the old GPA, which allowed
exceptions to the rules if it was necessary for the protection of public
morals, order or safety.160 She contests that due to the relatively consistent
international practice on the content of the public order (referring to the
international human rights), state could justify unilateral measures in the
interest of public order if the measure are based on international human
rights law. Furthermore, part of public order is also states ensuring
regulatory consistency within its territory. “If a state is a party to
international human rights treaties, importing goods that are produced in
violation of these treaties would undermine the domestic legal order and
ridicule the democratic Rechtsstaat.”161 Despite running into the obstacle of
necessity that is a condition for such exemptions, the author sees a potential
in using proportionality test. Of course, strict scrutiny of such test would
prevent protectionist measures to be used, but there would still be relatively
broad margin of discretion in the pursuit of human rights policies.162 “Such
approach would not only reflect the basic philosophy of the GPA to
concentrate on governmental procurement policies that threaten
international trade, but also acknowledge the authority of national
governments to determine the level of social and human rights policies for
their countries in compliance with international law.”163
Second provision that is potentially connected to social causes is Art.
II.3(e), which excludes PP that is linked to international development
assistance, including international development aid, from the scope of the
GPA. The purpose of this thesis is to seek tools that would secure respect
for core labour rights or even promote their improvement and this should be 160 Kaufmann, C., et al., Globalisation and labour rights: the conflict between core labour rights and international economic law. United States Institute of Peace Press, 2007.161 Ibid.162 Ibid.163 Ibid.
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the norm for every single public purchase if we want to achieve sustainable
outcome. Thus such policies cannot be successfully pursued under the title
of charity and development aid.
We will continue with couple of more provisions that do not directly
mention social aspects, but are of certain relevance to them. Under technical
specifications governments are allowed to include specifications for
environmental protection (Art. X.6), but there is no mentioning of labour
specifications at all. If we consider this from the perspective of the
development of corporate responsibility and governments’ actions in this
area, inclusion of environmental specifications can be seen as a stepping
stone towards social factors in the next edition of the GPA, as
environmental considerations were typically implemented before the social
ones.164
A significant impediment to using labour clauses in PP is Art. VIII, which
lays out conditions of participation and says that:
“A procuring entity shall limit any conditions for participation in a procurement to those that are essential to ensure that a supplier has the legal and financial capacities and the commercial and technical abilities to undertake the relevant procurement.”
This provision somehow brings us to the core of the problem – the WTO’s
regulation of PP is trying to achieve transparency and non-discrimination
among the members and by no means will we argue that such pursuit is
faulty. However, the mechanisms of achieving it do become faulty if they
are of such nature that they exclude all other considerations, even the ones
that might come higher on a scale of values of humanity and justice, which
are outlined in the basic international treaties and, nevertheless, in the above
mentioned first paragraph of the Marrakesh Agreement. This suggests that
we again embarked upon a dilemma of open market vs. labour rights, in
which including conditions related to labour (or social) rights into public
procurement might be deemed as an obstacle to international trade as levels
of respect for those rights differ greatly among states.
164 Supra n. 155.59
Linarelli argues that reasons for such disordered international legal system
is the lack of constitutional order – in domestic constitutional system,
human rights prevail or override market liberalization (at least on paper, i.e.
in theory).165 But in the world trade system, human rights concerns do not
have such strong position and can be simply swept aside.166
Another important aspect of Art. VIII is its potential inconsistency with the
provisions of the new EU Directive, which is of a great significance in cases
when both documents apply. The number of differences between the new
EU Directive and the GPA (focusing on social ones) are too extensive to be
analyzed in this thesis, but for the sake of demonstrating the potential
difficulties, we can have a look at Art. 57 of the new Directive and Art VIII
of the GPA. Art. 57 of the new Directive lists exclusion grounds which are
wider (and more detailed) than the conditions of participation laid out in
Art. VIII of the GPA. Amongst others, Art. 57 4(a) authorizes contracting
authorities to exclude an economic operator who violated obligations
referred to in Art 18(2). In practice, this means that contracting authorities
of an EU Member State could exclude an economic operator from the US
from participating in a procurement procedure, whose value is above the
threshold needed for application of the GPA (meaning that both documents
apply), if the authorities can demonstrate by any appropriate means that the
economic operator has violated, for example, freedom of association (a core
labour right). Whether this exclusion ground is compatible with the GPA
depends solely on how wide its interpretation is.
All in all, GPA is primarily and mostly concerned with securing the
transparency and openness of the procurement market. Consequently, and as
demonstrated above, it could be difficult to apply it simultaneously with the 165 Linarelli, J., How Trade Law Changed: Why It Should Change Again, Mercer Law Review, Vol. 65, Issue 3, 2014, pp. 621-668.166 Linarelli further suggests that moving regulation of PP from the level of domestic regulation, where human rights are or should be of primary consideration, to the level of international (trade) legislation, in which human rights are “often seen as illicit or inappropriate”, opens up a playing ground. Such playing ground is limited only by the fact that nothing within it can limit the free trade. Such system is indeed problematic, as it is clearly taken outside other international system or group of national systems and placed beyond it, namely beyond human rights. One might think that placing it out and above national systems is done precisely for the reason to avoid restraints of justice and human rights. See more in: Linarelli, How Trade Law Changed: Why It Should Change Again, 2014.
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documents that are trying to secure (socially) sustainable PP. However,
there is a glimpse of hope for the GPA if we consider the WTO’s preambles
and different policy statements, which are much more supportive of wider
societal goals of sustainable development than the actual legal texts. The
interpretation of the GPA is therefore determinative for whether this
document will have a limiting effect on the usage of social clauses in PP or
whether it will (silently) allow social clauses in PP.
3.3 ILO Convention concerning Labour Clauses in Public Contracts
Labour Clauses in the Public Contracts Convention, 1949 (No. 94)167 and
Recommendation (No. 84) are the oldest international documents related to
socially sustainable PP. In fact, Convention No. 94 is still the only
international binding treaty concerning labour rights in regard to PP. Since it
only applies to the services168 and not to the goods of standard production,169
it is not directly applicable to the matter of this thesis, but can, anyway,
contribute to the cause and could offer lessons for future developments.
Lack of applicability can be understood by considering the fact that in 1949,
when the convention was adopted, the world economy (of goods
manufacturing) did not function through global supply chains, and was
therefore not putting pressure on labour standards in the ways we know it
today.
Convention No. 94 is currently ratified by 93 countries,170 but only a quarter
of those is substantially implementing it (and not just depending on national
labour legislation to be sufficient).171
167 ILO Convention no. 94 on Labour Clauses in the Public Contracts, 1949. Text of the convention available at: http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::P12100_INSTRUMENT_ID:312239, (10.5.2015).168 Arrowsmith, S., Linarelli, J. and Wallace, D.: Regulating Public Procurement: National and International Perspectives, 1st edition, Kluwer Law International, 2000. Page 281.169 However, it does apply to the cases, where production is undertaken exclusively for a public buyer, usually for large quantities.170 The complete list of ratifying states is available at: http://www.ilo.org/dyn/normlex/en/f?p=1000:11300:0::NO:11300:P11300_INSTRUMENT_ID:312239, (7.5.2015).171 ILO, Labour Clauses in Public Contracts, International Labour Conference 97th Session, 2008. Page xiii.
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The ILO Committee of Experts claims that Convention No. 94 has been
misunderstood since its beginning and it is still not gaining the attention it
should have. The twofold objectives of the Convention are, first, to prevent
labour costs being used as an element of the competition among bidders (by
demanding that they all respect locally established minimal standards), and
secondly, to ensure that public contracts do not create a downward pressure
on wages and working conditions (by placing a standard clause in a public
contract regarding wages and working conditions).172
Interestingly, the ILO Committee of Experts observed that not just that the
Convention is not as widely received as it should be, but that even its
message has been more and more underpinned in the last years by what is
seems to be the primary objectives of the PP policy – the unrestricted
competition and “value for money.”173 Such direction has been,
nevertheless, seen through judgements of the ECJ174 that we addressed in the
EU chapter, in which the ECJ had to balance between economic freedoms
and social rights and mainly protected the former on the account of the
latter. Bruun et al. argued that the contested law of the German federal state
of Lower-Saxony in the Rüffert case was precisely complying with the
obligation from ILO C94 (to oblige companies under public contract to pay
their workers at least the rates set by collective agreements). However, the
ECJ found it being in violation with freedom to provide services (TFEU).175
The EU rules and the Convention are not in direct conflict, but this
judgement did put them in opposing ends.176 The Court’s decision is
furthermore problematic if we take into consideration its decision in the
Levy case and link it to other EU Member States that did ratify C94. In the
Levy case, the Court established that Member State can refrain from
172 Ibid. For examples of such laws see section 2.3.173 Ibid.174 Cases like Laval, Viking, Ruffert. See above in the EU section.175 Bruun, N., Jacobs, A. and Schmidt, M.: ILO Convention No. 94 in the aftermath of the Ruffert case, European Review of Labour & Research, Vol. 16 Issue 4, p473-488, 2010.It is important to stress that Germany has not ratified ILO C94, but a significant number of other EU Member States have.176 Vinterskoug, J., The Scope of Labour Law Requirements in Public Procurement - at the ILO, EU and Swedish Level. Master Thesis, Lund University, 2011.However, it is important to stress again that ECJ’s decision would likely be different in such case under the new set of PP Directives and Transposition Directive for posted workers. See EU chapter for more details.
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applying certain EU provision if it is conflicting with the obligation deriving
from a treaty that has been ratified with a non-member state prior to
ratifying TFEU.177 Despite the unfortunate Rüffert178 decision that widely
opened the floor for social dumping within EU,179 Schulten argues that pay
clauses in PP are experiencing renaissance within Germany and Europe.180
Similarly, despite the downturns of the recent decades that were noted by
the Committee in 2008, it could also not overlook that this topic received
major attention during the last years. Nevertheless, the new EU Directive
reflects increasing influence of social aspect of PP.181 Interagency
Roundtable on CSR,182 which is a joint initiative co-organized by the United
Nations Conference on Trade and Development, the Organization for
Economic Co-operation and Development and the ILO, started the report of
its 2014 meeting by recognizing that landscape in sustainable PP is
changing and that the last decade has brought remarkable transformation of
views regarding sustainable PP, especially its social aspect.183 Some
speakers even argued that we have now reached “near universal consensus
that SPP is fully compatible with free trade and an important part of public
policy.”184 We can certainly not argue that the awareness has spread, but a
lot more will be needed for practical implementation of these principles and
ideas, since practical execution of PP and politics of e.g. ECJ have been far
from fully recognizing and embracing it.
177 ECJ, Case C-158/91 Ministère public et Direction du travail et de l’emploi v. Jean-Claude Levy. Para. 22.178 See supra n. 112.179 European Commission reacted to this by Transposition Directive, which should prevent the faults of social dumping that were created by the Posted Workers Directive and ECJ’s narrow interpretation of its provisions. See infra n. 179 and supra n. 78.180 Schulten, T., Renaissance of Pay Clauses in German Public Procurement and the Future of the ILO Convention 94 in Europe. Global Labour Column, Number 91, 2012. Available at: http://column.global-labour-university.org/2012/01/renaissance-of-pay-clauses-in-german.html, (18.5.2015).181 Directive 2014/67/EU of the European Parliament and of the Council of 15 May 2014 on the enforcement of Directive 96/71/EC concerning the posting of workers in the framework of the provision of services and amending Regulation (EU) No 1024/2012 on administrative cooperation through the Internal Market Information System.182 More at: http://www.csrroundtable.org/, (7.5.2015).183 ILO, Summary Report, 2014 Interagency Roundtable on CSR, Sustainable public procurement as a tool for promoting responsible business, 19 November 2014, Geneva.184 Ibid.
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And Convention No. 94 could certainly be a significant factor in this
pursuit. By more rigorous promotion and enforcement, the social aspect
could get a stronger voice in PP and would represent a balancing tool
opposed to economic/trade oriented EU and WTO documents, especially
since Convention No. 94 is the only binding, universal and systematically
supervised document.
However, for the purpose of this thesis, inclusion of standardly produced
goods should be added to the scope of the convention. The Commission
itself noted that it is perhaps necessary for Convention No. 94 and
Recommendation No. 84 to be reconsidered, in order to support pursuit for
socially sustainable PP.185
185 ILO, Labour Clauses in Public Contracts, 2008. Page xiv.64
4. Recent developments in public procurement of the US
It is far beyond the scope of this thesis to give a comprehensive presentation
of the US PP system, especially since it is considered to be nothing less than
a regulatory labyrinth.186 Anyhow, the combined US public purchases are
worth between 350 and 500 billion USD, which makes US the single largest
purchaser in the world187 and, for the reasons of leverage presented in the
first chapter, worth looking into. We will portray a very general overview of
the PP system and outline several selected points that will offer some idea of
how socially sustainable PP of the US is, and offer some general grounds
for comparison to the EU system.188
Firstly, short introduction of the US PP system is necessary. Reference to
legal labyrinth are partly made due to decentralized model of PP – federal,
state and local governments each have their own legislation and procedure
regarding PP. In this sense, the US procurement is fundamentally different
to the EU one, which is harmonized with the set of directives.189 We will
mostly focus on the Executive branch on the federal level, which entails
three main legal instruments: the Armed Services Procurement Act, the
Federal Property and Administrative Services Act, and the Federal
Acquisitions Regulation (hereinafter: FAR)190 which regulates PP of
different executive agencies. The FAR consolidates public laws adopted by
the Congress, the executive orders by the President and the treaties that are 186 Alvarez-Fernandez, A. and Brandstrup, P., The access of third countries to the European Union’s public procurement market, student working paper, Maastricht University, Maastricht Centre for European Law, 2013, (hereinafter “Alvarez-Fernandez, The access of third countries, 2013”).187 Stumberg, R., Ramasastry, A. and Riggensack, M., Turning a Blind Eye? Respecting Human Rights in Government Purchasing, International Corporate Accountability Roundtable, September 2014, (hereinafter “Stumberg, Turning a Blind Eye, 2014”).US federal government itself is the world's single largest consumer. Additionally, US state and local governments purchase twice as much as the federal government.188 Social sustainability aspects of the US federal procurement regulation cannot be analysed in the same way as the EU directive was (each stage of the procurement process separately). For this reason, the two cannot be directly compared.189 The legislative measures during last years actually demonstrate tendency towards harmonization. It is also not impossible that federal Congress would in the future pass a harmonizing comprehensive legislation. Alvarez-Fernandez, The access of third countries, 2013.190 Federal Acquisition Regulation, 48 C.F.R.
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directly enforceable in the US. Yet the federal agencies have the authority to
create their own rules as supplement to the FAR, as long as those rules do
not contradict the FAR.191 The FAR’s length (over 2000 pages) and
complexity (over 50 parts) make it extremely hard to amend generally, as it
applies to a great variety of agencies. However, there are some examples in
the form of executive orders and we will mainly focus on two that are
relevant to this thesis.192
Apart from the length and the complexity of the legislation, the process of
PP in the US is furthermore complicated and fragmented due to roles of
different actors involved in a particular matter. When, for instance, an
interstate highway is to be build, several regulatory and non-regulatory
executive agencies, alongside with state and local authorities, are involved
in such project. This also severely hinders the objective of this thesis as it is
unlikely that all involved actors would have unified social objectives.193
Situation regarding relevant provisions that would ensure social
considerations within the PP process on the federal level is similar. There is
no comprehensive regulation or at least reference to the respect for labour
rights (or other human rights). During the last years, several scattered
documents regulating specific violations of fundamental labour rights were
issued, but there is no reference to respect for internationally recognized set
of human rights194 or at least to core labour rights.
The International Labor Rights Forum pointed out in its recommendations
for the new US National Action Plan on Business and Human Rights that
such incomplete regulation creates large inconsistencies already within the
US international policy as the US trade policy (international agreements,
unilateral import prohibitions and international development programs) aims
to secure workers a broader set of rights.195 This situation is quite interesting
191 Stumberg, Turning a Blind Eye, 2014. Page 18.192 Prohibition of Acquisition of Products Produced by Forced or Indentured Child Labor, Executive Order 13126, and Strengthening Protections Against Trafficking in Persons in Federal Contracts, Executive Order 13627.193 Alvarez-Fernandez, The access of third countries, 2013.194 Such as it recognized in the Principle n.12 of the UN Guiding Principles on Business and Human Rights.195 Generalized System of Preferences (Trade Act, 1974) requires beneficiaries to respect internationally recognized workers’ rights – apart from four fundamental rights also
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and perhaps surprising since in previous chapters trade law and other market
related regulation were more or less an impediment to labour clauses in PP,
but in this case, trade law covers a wider set of rights than the PP system is
able to secure.196
Prior to the upcoming National Action Plan, the US Government Approach
on Business and Human Rights was published in 2013. It entails a short
paragraph on PP, which is interestingly placed among “New and Emerging
Tools” section. The paragraph acknowledges the significance of the size of
the US procurement on a global market and as such, the authorities should
be aware of the human rights impacts of its purchasing decisions.197 One
cannot help but feel surprised and perhaps perplexed by the fact that the US
government comprehends the fact of being the largest purchaser in the
world and yet PP does not have a clear social policy or at least a
commitment to such development. Instead, all the attention in the Approach
is given to companies, advising them on what to do to manage their supply
chains in responsible way. Perhaps the US National Action Plan on
Responsible Business Conduct, which is currently being drafted, is an
opportunity to set the future PP policy into more socially sustainable way, at
least on a federal level.198
We will briefly analyse FAR from a labour rights perspective (namely two
relevant executive orders (EOs)) in order to obtain some insight into the
extent to which labour rights are and can be promoted and advanced within
the current legislative framework on the federal level.
acceptable conditions of work regarding wages, hours of work and occupational health and safety. From: The International Labor Rights Forum, Protecting Human Rights through Government Procurement, Recommendations for Responsible Supply Chain Management, Corporate Accountability, and Worker Access to Remedy in US Government Procurement, May 2015. See also: Stumberg, Turning a Blind Eye, 2014.See more also in Simpson, F., Labour Rights Protections within International Trade: A study of Free Trade Agreements and Generalised Systems of Preferences, Master Thesis, Lund University, 2015. Section 3.3.196 Stumberg, Turning a Blind Eye, 2014. Page 25.197 United States Department of State, Bureau of Democracy, Human Rights, and Labor, U.S. Government Approach on Business and Human Rights, 2013.198 Supra n. 195.
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4.1 4.1 FAR and labour rights in generalBefore moving to labour related topics in the FAR it seems logical to
quickly overview principles that guide PP on the federal level. Section 1.102
lays down the principles that guide US federal procurement:
Delivering the best quality products or services on a timely basis
while maintaining the public trust and fulfilling policy objectives.
Maximising the use of commercial products and services.
Using contractors who have a demonstrated record of superior past
performance.
Promoting competition.
Conducting procurement with business integrity, fairness, and
openness.
Fulfilling public policy objectives (such as promoting small business
and maximising use of products from the US and from qualifying
countries with which the US has open trade agreements).
Exercising sound business judgement.199
These principles cover typical components of the economic efficiency
oriented PP. Sustainable or socially responsible PP is not mentioned (likely
due to complicated and lengthy amending process of the FAR), however, it
could be included under fulfilling public policy objective. In contrary to
Art. 18(2) of the new Directive, FAR does not specifically emphasize or
demand respect for human or labour rights by the contractors, as it assumes
that other relevant legislation and authorities, such as courts, inspection and
tax services, will take care of this.200 Since numerous companies that have
been breaking labour law even within the US keep receiving public
contracts and this discussion has been alive for decades, it does not seem
that this system is successful.201 Such stand in general is in deep
199 Duvall, R., Elling, T. and Taylor, T., Public procurement in the United States: overview, Holland & Knight LLP, 2013. Available at: http://us.practicallaw.com/3-521-7446?q=&qp=&qo=&qe, (19.8.2015).200 Stumberg, Turning a Blind Eye, 2014. Page 24.201 Already in 2000, after heavy criticism that federal contractors are amongst the largest law-breakers, FAR Council authorized, though not require, contract officers to find out whether potential contractor complies with applicable legislation. This decision was under heavy criticism by business groups and was removed under President Bush. More at: Borenstein, S., Congress Debates Whether Lawbreakers Should Receive Contracts Many
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contradiction to the developments in the international arena. The very
reason for the start of a debate on business and human rights and its intense
development lies in a recognition of a fact that national systems of
protection of human rights are simply not sufficient anymore (if they ever
were), especially since business operations delivering goods and services
have spread globally through complex and far reaching value chains.
Following this, we need to find new ways and mechanisms to achieve
companies’ respect for human rights apart from just relying on national
authorities to do their job properly. In this aspect, the US regulation of PP
can be designated as regressive and clearly unable to secure socially
sustainable PP. This is even more valid in the terms of this thesis that strives
to ensure transnational respect for labour rights in PP. If the US federal
authorities are not able to avoid contracting with, or exercise leverage over,
labour-law breaking companies within its jurisdiction,202 how can we even
expect them to do better with companies that violate labour law abroad?
President Obama did issue an EO in July 2014,203 authorizing agencies to
exclude contractors that violate thirteen US domestic laws that the EO lists.
In the context of this thesis, this would effectively mean that there is no
restrictions for contractors that violate core labour rights abroad or have
such violations occurring in their supply chain.204
Still Get Government Money Despite Guilty Pleas Or Settlements. Strict Interpretation Of The Rules Could Disqualify 23 Of The Top 25. Article, Inquirer Washington Bureau, 22.7.2000. Available at: http://articles.philly.com/2000-07-22/business/25610736_1_contractors-joshua-gotbaum-violations-of-federal-tax, (23.6.2015). Also: Nakashima, E., Clinton Contractor Rule Is Suspended, article, The Washington Post, 31.3.2001. Available at: http://www.washingtonpost.com/archive/politics/2001/03/31/clinton-contractor-rule-is-suspended/98aeef4a-99d8-4d3b-901a-c1665db6585c/, (23.6.2015).202 The investigation by the Health, Education, Labor, and Pensions Senate Committee found that almost 30 percent of the top violators of federal wage and safety laws were also current federal contractors. United States Health, Education, Labor, and Pensions Senate Committee: Acting Responsibly? Federal Contractors Frequently Put Workers’ Lives and Livelihoods at Risk, Majority Committee Staff Report, 11.12.2013. Full report is available at: http://www.help.senate.gov/imo/media/doc/Labor%20Law%20Violations%20by%20Contractors%20Report.pdf, (23.6.2015).203 Prohibiting Discrimination Based on Sexual Orientation and Gender Identity, Executive Order 11246.204 With the exception of the two EOs that we will analyse later in this chapter.
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4.2 Amending FAR and Executive OrdersBefore moving to the analysis of the two EOs, a short explanation of a legal
situation around creating the EOs in PP is necessary. As we mentioned, the
EOs are one out of three sources of rules in the FAR (the other two being
laws adopted by the Congress and directly applicable international treaties),
and are issued by the President, who is the head of the Executive branch.
This makes an EO the least complicated way to amend the FAR (in relation
to congressional laws and ratified treaties) and the federal procurement
policy.205 However, the EOs can also be seen as the weakest source of law as
they can be re-sended or changed by any new President.206
In any case, the President cannot just arbitrarily determine the content of an
EO, especially if such order would pursue deeper socio-economic goals, as
this would constitute an infringement of the Congress’ authority.207
Presidential authority to issue EOs has to come from an act of the Congress
or from the Constitution.208 The foundation in the Constitution derives from
Article II, meaning that it contains military related issues and topics related
to foreign policy, which entails the authority to negotiate treaties.209 The
congressional authorization derives from the Federal Property and
Administrative Services Act of 1949, which gives the authority to the
President to establish policies or directives necessary to advance “economy”
or “efficiency” in federal procurement.210 However, the scope of EOs based
on the Federal Property and Administrative Services Act of 1949 that are
trying to set human rights standards in PP is limited to international human
205 Stumberg, Turning a Blind Eye, 2014. Page 18.206 Nancy Gillis, Guidelines on Sustainable Public Procurement by U.S. Government, speech from 26.4.2012, Youtube. Available at: https://www.youtube.com/watch?v=zMCvWUYoDJQ, (12.6.2015).207 Stumberg, Turning a Blind Eye, 2014. Page 18.208 Ibid.209 Article II, US Constitution. Available at: https://www.law.cornell.edu/constitution/articleii, (20.6.2015).210 Federal Property and Administrative Services Act, 40 U.S.C. §§ 101. See also: Burrows, V. and Manuel, K., Presidential Authority to Impose Requirements on Federal Contractors, Congressional Research Service Report for Congress, 14.6.2011.The example is the Fair Pay and Safe Workplaces, Executive Order 13673, which specifically referred to FPASA as a source of President Obama’s authority. However, this EO is explicitly applicable only to the US territory, so it cannot be used for transnational promotion and advancement of labour rights that this thesis is arguing for. Stumberg, Turning a Blind Eye, 2014. Page 19.
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rights, to which the US are bound by ratified treaties, or to the rights that
derive from domestic legislation.211 The facts that the US have ratified only
a small number of treaties and that they are especially weak in regard to
social and economic rights212 leave a very limited space for potential
introduction of social clauses in PP on the federal level.213 This is even more
significant in the light of this thesis, which discusses extraterritorial respect
for labour laws down the supply chain if we consider the strong
presumption against the extraterritorial application of the US statues.214
Yet couple of EOs protecting some core labour rights have been issued and
we will now take a look at them.
4.2.1 Prohibition of Acquisition of Products Produced by Forced or Indentured Child Labor, Executive Order 13126
Child labour is perhaps the topic with the longest history of transnational
action on social issues through PP in the US. In 1999, President Clinton
issued EO 13126 (Subpart 22.15 of the FAR),215 which requires the US
Department of Labor to maintain a list of products and their countries of
origin that are likely to be produced by forced or indentured child labour.216
Federal contractors that supply products from the list have to certify that
they made an effort in good faith to determine that forced or indentured
child labour was not used for production of items supplied and that they are
unaware of any such use of child labour.217 Such demand on contractors is
certainly better than none, however, it does not create any strong obligation
to prevent the occurrence of forced and indentured child labour in one’s 211 Stumberg, Turning a Blind Eye, 2014. Page 19.212 First big impediment is non-ratification of ICESC. Furthermore, US has ratified only two out of eight core ILO conventions (C105 on forced labour and C182 on the worst forms of child labor).213 For the chronological list of all executive orders that used PP to address human rights issues look: Supra. Stumberg, Turning a Blind Eye, 2014. Page 20.214 US laws apply abroad only if they explicitly state so, e.g. in U.S. Foreign Corrupt Practices Act, 15 U.S.C. § 78dd(1)-(3), 1998. From: Stumberg, Turning a Blind Eye, 2014. Page 20.215 Prohibition of Acquisition of Products Produced by Forced or Indentured Child Labor, Executive Order 13126.216List of Products Produced by Forced or Indentured Child Labor, Bureau of International Labour Affairs, 1.12.2014. Available at: http://www.dol.gov/ilab/reports/child-labor/list-of-products/index-country.htm, (25.5.2015).217 Ibid.
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supply chain. Certifying in good faith is the weakest form of due diligence
and together with the lack of government’s oversight of supply chains only
little effect can be expected of such forceless demands.218 According to the
text of the EO, the contractor has to provide “reasonable access to the
contractor’s records, documents, persons, or premises, if reasonably
requested by authorized officials of the contracting agency.”219 And
responding to that, if the contracting agency has a reason to believe that
forced or indentured child labour was used and that the contractor did not
make good faith effort to determine whether the prohibited products were
used, “the head of the executive agency shall refer the matter for
investigation to the Inspector General of the executive agency […].”220 The
head of the executive agency can terminate a contract, debar or suspend a
contractor from eligibility for Federal contracts, and include the name on the
List of Parties Excluded from Federal Procurement and Nonprocurement
Programs.221 Such provisions leave a lot of operational freedom, as a
contracting officer has to have a reason to believe that forced or indentured
child labour has been used. Online research and the reports of the United
States Department of Labor on this topic do not give any account on the
usage of this procedure in practice, so it is hard to assess the effectiveness of
this EO in day-to-day procurement activities. The text itself certainly gives
some possibilities to prevent some forms of child labour in certain
industries/sectors, though its actual application in practice could not be
confirmed at this point.
An important theoretical aspect to this EO, which we are able to comment
on, is the term forced or indentured child labour. Section 6(c) of EO 13126
(22.1501 FAR) defines it as all work that is:
218 International Labor Rights Forum, Dignity and Justice for Workers Worldwide, PowerPoint presentation, 2015. Available at: http://www.laborrights.org/publications/government-procurement-and-rights-workers-contractors%E2%80%99-supply-chains, (26.6.2015).219 EO 13126, Sec. 3(a)(2); from Van Daele, A., International Labour Rights and the Social Clause: Friends Or Foes, 1st edition, Cameron May, 2005. Page 521.220 EO 13126, Sec. 3(b).221 EO 13126, Sec. 3(a)(2); from Van Daele, International Labour Rights and the Social Clause: Friends Or Foes, 2005. Page 521.
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“… (1) exacted from any person under the age of 18 under the menace of any penalty for its nonperformance and for which the worker does not offer himself voluntarily; or
(2) performed by any person under the age of 18 pursuant to a contract the enforcement of which can be accomplished by process or penalties.”
Such definition is problematic due to the scope of the definition. Child
labour has been one of the major international topics for decades and the
ILO’s definition of child labour is more or less universally accepted.222 It
would not be so problematic if only linguistically different definition was
adopted, which would still cover the same cases of child labour. But
changing the definition so drastically that many cases fall out of its scope, is
indeed a cause of concern. The definition of the EO basically covers only
cases where children are forced or deceived into work. To portray an absurd
example: by reading solely the text of definition, minerals that would be
extracted by 11 year-olds in Bolivia, who do mining since this is their only
way to earn money in order to survive, is not eligible to be placed on a list,
since there is a factor of force or deceit missing. Such definition by far does
not cover all forms of child labour as defined by the ILO and not even all
types of the worst forms of child labour.223
There are certainly many positive aspects to such regulation, especially
since it is being the first of the kind to address violations of labour rights
outside the US territory (down the supply chain) through PP in the US. The
list of products has been growing throughout the years and currently entails
54 products.224 Further positive fact is that the EO does not make any
distinction based on legal situation of the supply chain: “It is important to
clarify that the EO List does not […] distinguish between products produced
in a main/final establishment versus products produced by suppliers and
contractors further down the supply chain.”225 It also has the same effect no
222 UNICEF did form a slightly different definition, but both definitions more or less cover the same type of work. For details see e.g.: http://www.un.org/en/globalissues/briefingpapers/childlabour/intlconvs.shtml, (25.6.2015).223 World Vision, Creating Markets for Child-Friendly Growth, Addressing child labour through G20 public procurement, Policy report, April 2014. Page 31.224 Supra n. 216.225 United States Department of Labor, Office of the Secretary of Labor, Notice of Final Determination Updating the List of Products Requiring Federal Contractor Certification as to Forced or Indentured Child Labor Pursuant to Executive Order 13126, 75 FR 42164. Available at: http://www.humanrights.gov/notice-of-final-determination-updating-the-list-of-products-requiring-federal-contractor-certification-as-to-forced-or-indentured-child-
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matter at what stage or in what quantity the products from the list have been
in part or wholly included in the supply chain.
If we draw a general line under this EO, it could be marked as a good first
step towards socially responsible PP. It is the first in the US to take into
consideration labour rights outside of the US in relation to PP. And it is not
surprising that the first document relates to child labour, as its prohibition is
one of the most universally accepted ideas of human rights.226
However, the usability of this EO for achieving socially sustainable PP
according to today’s standards is questionable. After the UN Guiding
Principles on Business and Human Rights we talk about holistic approach –
all companies, all human rights, on all levels. We could understand this list
of products as emphasizing the most egregious and widespread violations
(as Principle 24 is instructing), but this is certainly not sufficient, since there
is a general rule (a prohibition to use child labour for all contractors and
subcontractors) missing. According to the legislation as it is, PP regulation
on a federal level implies that the authorities are only concerned about
forced or indentured child labour of certain products (and trafficking, which
we will analyze below). And even if we focus only on forced and indentured
child labour it is questionable whether such list approach really prevents it.
It surely establishes some additional requirements of care for products with
the highest risk of child labour occurrence, but such regulation offers no
guarantee for its actual elimination. On the other hand, we cannot ignore the
political and economic pressure that such “black list” can create, and certain
countries that want to represent themselves as human rights respecting
countries might take additional measures to eliminate child labour in order
to satisfy foreign buyers and investors.
At this point, we will not mull over the reasoning behind this legislation,
because reason being whatever it is, it should lead to the same goal.
Considering that it was adopted in 1999, when the idea of socially
responsible PP was at its earliest stages, makes this piece of legislation quite
labor-pursuant-to-executive-order-13126.html, (15.7.2015).226 Child labour is prohibited all around the world and Convention on the Rights of the Child is the most widely ratified human rights convention.
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unique and groundbreaking. On the other hand, we cannot claim so much
for its aftermath. One might expect the emergence of new documents
tackling other labour violations and preventing taxpayers’ money supporting
them, but, apart from EO 13627,227 none came. This document was a
promising start to socially responsible PP, in which the US could be a front-
runner, but it turned out to be an isolated attempt. Other countries (e.g. some
EU Member States) have in this time developed far more complex and
wholesome mechanisms to deal with labour rights in PP, while the US
stayed behind for over a decade with this single EO. Even the progress that
was achieved in human rights and business with the UN Guiding Principles
on Business and Human Rights has not brought any changes so far. In the
terms of the Principles, the US are taking a piecemeal approach, embarking
upon only selected labour issues instead of demanding respect for all
(applicable) labour rights.228 And for this, we cannot name this EO anything
more than a good first step. Such it is, but the international development in
this area has been so intense that sticking with the same initial step for over
15 years is simply insufficient.
To look at it from the US perspective, the picture could be quite different.
Some might argue that just keeping this piece of legislation is a success,
given the fact that any legislative attempt that lays out certain (human rights
related) obligations and limitations on business finds itself under the most
severe attacks by the representatives of business and (usually) conservative
politicians, which have a historically strong tendency to protect business
from state restrictions and interference.229 In a political climate where liberal
market is at a core of society’s values any pursuit for strong labour rights is
likely to be attacked as a limitation to the market and entrepreneurs.
227 See the next section.228 The further aspect that we did not go into is the extent of the actual enforcement of the laws.229 We mentioned an applicable example above – Bush administration removed heavily criticized Clinton's rule that prevented businesses, which violate applicable labour legislation, from obtaining federal contracts. The rule was again reinforced under President Obama, which demonstrates how heavily dependent on current political situation any such legislation is.
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4.2.2 Strengthening Protections Against Trafficking in Persons in Federal Contracts, Executive Order 13627
Executive order on strengthening protection against trafficking in persons in
federal contracts was issued by President Obama in 2012 and can, as
opposed to the EO on prohibition of acquisition of products produced by
forced or indentured child labour, serve us as an example of a much more
elaborate piece of legislation that demands concrete steps on preventing
trafficking and forced labour by federal contractors or subcontractors.
This EO can also be seen as one of the stepping stones towards ‘zero
tolerance approach/policy’ on human trafficking and forced labour as the
US federal government is promoting it.230 This legislation complements and
strengthens already existing Trafficking Victims Protection Act of 2000231,
which prohibits Government employees and contractors from engaging in
trafficking in persons. FAR Council has implemented this EO and the
Ending Trafficking in Government Contracting of the National Defense
Authorization Act for Fiscal Year 2013 in the FAR (under subpart 22.17)
after public consultation in 2013.232
FAR 22.17 imposes a variety of prohibitions on contractors and
subcontractors, which usually constitute or may lead to some form of
trafficking (commercial sex, forced labour, fraud, worst forms of child
labour).233 Such prohibited activities are: charging recruitment fees to
employees; using misleading or fraudulent recruitment practices; providing
housing that fails to meet the host country and safety standards; failing to
provide a written contract in the employee’s native language; destroying,
concealing, confiscating, or otherwise denying an employee an access to
230 See more at: https://www.whitehouse.gov/the-press-office/2012/09/25/fact-sheet-executive-order-strengthening-protections-against-trafficking, (29.7.2015).231 22 U.S.C. 7102.232 Farhat, V., Shepherd, W. and Canale, J., United States: Proposed Anti-Human Trafficking Rule Could Significantly Affect Contractor Compliance Programs, newsletter, January 8, 2014, Holland & Knight LLP. Available at: http://www.hklaw.com/publications/proposed-anti-human-trafficking-rule-could-significantly-affect-contractor-compliance-programs-01-08-2014/, (1.8.2015).233 FAR 22.1702.
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his/her identity documents; etc.234 There are also subsequent requirements,
such as: contractor has to protect and interview all employees suspected of
being victims or have witnessed prohibited activities requirements, or that a
contractor has to self-report to the Inspector General of the pertinent agency,
and law enforcement, if applicable, if a contractor finds out or is aware of
any violations.235
Very relevant for this thesis is also a special requirement for large overseas
contractors and subcontractors – i.e. combined contracts or subcontracts
abroad exceeding 500,000 USD. They have to maintain an appropriate
compliance program, which has to include activities taken to prevent human
trafficking. Such compliance plan has to be published on company’s
website. If they do not have a website, it has to be sent to anyone that
requests it. However, we encounter the same limitation as we encountered
with the ILO convention – this requirement does not apply to contracts and
subcontracts for solely commercially available of-the-shelf items.236
Unfortunately, this means that industries that are highly susceptible to
different forms of human trafficking, e.g. garment factories, electronics
industry or agriculture can be exempt from the compliance plan
requirement. Nevertheless, all other requirements apart from the compliance
plan are still applicable also for such contracts. Department of Justice
subjected false certification in government contracts to liability under the
False Claims Act237 and damages can be substantial.238
234 See FAR subpart 22.17. More in: International Corporate Accountability Roundtable, Executive Order on Trafficking in Persons. Available at: http://hrdd.icar.ngo/content/executive-order-trafficking-persons, (28.7.2015).235 Ittig, K. and Witten, S., Preparing for New Anti-Human Trafficking Rules for Federal Contractors and Subcontractors: What Companies Need to Know about Obligations, Implementation, and Enforcement, PowerPoint presentation, March 12, 2014, Arnold & Porter LLP. Available at: http://www.arnoldporter.com/events.cfm?action=view&id=924, (1.8.2015).236 Commercially available of-the-shelf items are defined in FAR rule 2.101. It is de facto the same rule as we met in the ILO section. It basically means that FAR applies only to (apart from the services, which are by their nature done for a specific purpose) products that are produced specifically for a public contract or are at least modified fort this reason. Therefore products that are sold in substantial quantities in the commercial market fall out of the scope of this legislation.237 31 U.S.C. §§ 3729–3733238 Supra n. 235.
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Apart from the exemption noted above, the rules of the FAR subpart 22.17
affect all government contractors and subcontractors, regardless of the size
of contract or subcontract. This is a huge step forward, if compared to the
EO on child labour. It is also aligned with the UN Guiding Principles, which
places the obligation to respect human rights on every company, regardless
of its size, sector, operational context, ownership and structure.239
Potential violations of the requirements in the subpart 22.17 can result in:
requiring the contractor to remove a contractor employee or
employees from the performance of the contract;
requiring the contractor to terminate a subcontract;
suspension of contract payments;
loss of award fee, consistent with the award fee plan, for the
performance period in which the government determined contractor
non-compliance;
termination of the contract for default or cause, in accordance with
the termination clause of this contract;
or suspension or debarment.240
Overall, EO 13627 gives a much more complete regulation of the topic as
the forced or indentured child labour one. This EO builds on and
supplements already existing legislation on prevention of human
trafficking.241 Naturally, there are 13 years between these two acts and the
difference between the depth and nature of the obligations they impose on
239 Principle 14 of the UN Guiding Principles on Business and Human Rights.240 As prescribed in 22.1705(a), see 48 U.S.C. 52.222-50.241 One of the relevant legislation that has not been mentioned so far is the California Transparency in Supply Chains Act, SB 657, but it is a state level legislation, only applicable in California. There is currently a bill in the Congress (The Business Supply Chain Transparency on Trafficking and Slavery Act of 2015) that would secure the same requirements nation-wide, however, it is unclear at this moment whether it has sufficient political support to pass.See: Wheeler, L., House bill would force businesses to detail anti-trafficking efforts, article, 27.7.2015, The Hill. At: http://thehill.com/regulation/249328-house-bill-would-force-businesses-to-report-anti-trafficking-policies, (2.8.2015); and Altschuller, S., H.R. 3226: New Bill Calls for Transparency on Trafficking and Slavery in Corporate Supply Chains, newsletter, 4.8.2015, Foley Hoag LLP. Available at: http://www.csrandthelaw.com/2015/08/04/h-r-3226-new-bill-calls-for-transparency-on-trafficking-and-slavery-in-corporate-supply-chains/, (6.8.2015).
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government contractors demonstrates the progress in the field of public
procurement and human rights.242
Human trafficking could serve as an example for other human rights areas
that could make use of a more systematic legislative approach (and also
being covered by PP). At the same time we need to keep in mind that such
piecemeal approach is not in line with the UN Guiding Principles on
Business and Human Rights. What is missed, hence, is a general rule that
would oblige companies competing for federal contracts to respect human
rights anywhere they operate and to secure the same in their supply chains.
To be clear, this chapter has not presented a systematic analysis of the FAR
as it was done for the new EU Directive.243 As we mentioned at the
beginning of this chapter, the same analysis would not even be possible,
since the EU directive implemented social concerns on almost every level of
PP procedure (see EU chapter), whereas the US approach on a federal level
is, as already stated, piecemeal.244 It deals with specific human rights issue
and is not really part of the PP process in the sense that it would make an
impact on actual outcome of the process.245 The US requirements are more
like necessary prerequisites that need to be in place for every company
wanting to bid for federal contracts. In the EU, social aspects may influence
the outcome of the process – e.g. it can be one of the contract award criteria.
Another difference is that EU system is harmonizing the entire PP within
the Union, whereas FAR only applies to agencies on a federal level.
242 This progress is by far not even close to the progress of environmental aspect in public procurement in US. In this thesis it is not possible to give a comprehensive explanation to why environmental aspects are so much more included into PP than social ones, however some reasons stand out as obvious – climate change is scientifically proven and will significantly impact economies in the future; it is somehow less political than human rights; it affects everyone, which is not so with human rights violations abroad.See more on future environmental plans in US PP at: https://www.whitehouse.gov/the-press-office/2015/03/19/executive-order-planning-federal-sustainability-next-decade, (3.8.2015).243 For more details on FAR and human rights, see the report: Stumberg, Turning a Blind Eye, 2014.244 FAR prohibits forced or indentured child labour (FAR 22.15), several types of human trafficking (FAR 22.17) and discrimination within US territory. We did not analyse the last part since it has no extraterritorial implications.245 E.g. FAR stipulates that commercially available off-the-shelf-products bids can be chosen based upon »only price and the price-related factors included in the invitation.« FAR 14.10 and 14.408-7.
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As we mentioned above, the US public purchasing system relies on relevant
legislation and its execution to secure respect for human rights and for this
reason does not places additional requirements in PP rules. Such stand is
clearly unfit for this day and age when a consensus on international level is
obvious – national institutions and laws are detriment to securing respect for
human rights, but due to weaknesses of national legal frameworks
(especially in developing countries), and/or the pressures to which they are
subjected by international economic interdependencies, market competition
and misconduct by powerful actors, need to be supplemented by including
human rights protection safeguards in new areas, such as new areas of law
(like PP), new actors (e.g. private actors) or across jurisdictional borders.
Human rights cannot be secured solely by national institutions, especially
when private parties can have such a huge influence on everyday aspect of
everyone’s life. The entire international business and human rights debate
started over the realization that traditional governmental tools alone are not
sufficient for securing respect for human rights, but the US PP system is still
stuck in this old paradigm. Changes are happening which is clear with the
EO 13627; however, a more systemic reform is needed instead of adding
individual requirements to certain “hot” topics. Certainly PP is not the only
area that can and needs to evolve in the direction of supporting labour
rights, but it surely has to play its part (together with other protective
channels mentioned above) in a new and more complex legal labour/human
rights architecture.
The EU approach is definitely more appropriate for the purpose of this
thesis – promotion, and also for the advancement of labour rights – as it
contains provisions/tools to satisfy both (to certain extent). Firstly, general
Art. 18(2) covers the compliance part (economic operators need to respect
minimal rights) and secondly, the procedure is designed in a way that can
reward the best practices to certain extent and, therefore, facilitates the
advancement. This second part is not covered in the current US legislation,
which only demands compliance with certain human rights standards for all
competing companies. Without any incentive and stimulus to do better than
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the minimum that is required, it is unlikely that competing companies would
do more.
However, it would be unfair and unsubstantiated to just designate US
legislation as less socially sustainable, considering that we only dealt with
certain pieces of the federal legislation. Not being limited by single market
principles such as equal treatment and non-discrimination like their counter-
parts in the EU, the US state and local governments have been able to apply
various methods and initiatives that promote various social and
environmental objectives.246 One of the most established ones is Sweatfree
Purchasing Consortium which will be explained more in detail in the
following chapter.
246 List some examples. Sweatfree Purchasing Consortium, http://buysweatfree.org/, (12.9.2015); San Francisco Food Policy, Executive Directive No. 09-03; Environmentally Preferrable Purchasing Programme, http://www.epa.gov/greenerproducts/about-environmentally-preferable-purchasing-program, (12.9.2015).
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5. Public procurement in practice – implementation aspects
In the previous chapter and its sections, we made an overview of the
legislative framework in regard to labour rights in PP in the EU, at the ILO
and WTO level, and in the US. Many challenges and obstacles, but also
opportunities for socially sustainable PP in legislation were presented. In
this chapter, we will take a more practical approach and identify some good
practices and examples from both European states and the US.247
Particularly on a local level there have been various initiatives and
approaches that could offer valuable lessons for future legislation and
policies. We will look at the unique approach to socially sustainable PP that
Norwegian authorities have taken; the lessons learned after Swedish NGO
Swedwatch published their report on child labour in the production of
surgical tools that Swedish health authorities are purchasing; and Sweatshop
Purchasing Consortium in the US. From these examples we will try to
excerpt features and characteristics of sustainable procurement practices
such as, specific knowledge of procurement officers, common approach,
cooperation of public purchasers, etc. which could serve as a basis or
otherwise good examples for future legislative solutions.
In the last part we will examine the business case for conducting socially
sustainable PP. This thesis began with the idea of business and human rights
– there is increasing pressure on companies to act socially (and
environmentally) responsible. If companies have found different (more or
less successful) approaches and techniques to do so, should not public
authorities consider the companies’ approaches and apply certain measures?
An example will be given on the case of IKEA, a Swedish furnishing
company which developed specific instruments and procedures to purchase
indirect services and products. Naturally (and logically), there are great
247 “In the EU Member states, local authorities have slightly more legislative space to conduct socially responsible PP in the case of falling under the applicability threshold of the new Directive (depends on a state legislation). In US, local authorities' hands are even freer to regulate PP, as they are not bound by federal legislation.” Jörgen Hettne interview, Institutionen för handelsrätt, Lund University, 11.8.2015, Lund, Sweden.
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differences between public and private purchasing, which we will have to
lay out though at the same time we will find many similarities. Despite the
undeniable fact that private operators are, due to lesser legislative restraints
than public authorities, able to apply methods of procurement that are far
more advanced and fitted to serve the purpose of securing sustainable
supply chain, it should be very useful to explore the ways of private
purchasers as certain methods might come as highly useful for PP.
5.1 Local approaches, initiatives and lessons on socially sustainable public procurement
5.1.1 The Norwegian approachNorway has managed to implement several innovative approaches, tools and
processes that secure socially responsible PP. All this was done with
Norway implementing the EU directives on PP into national legislation.
This serves as a valuable reminder that the PP procedure harmonized by the
EU still leaves a certain level of operative space for public authorities to
secure respect for core labour rights and purchase in a socially responsible
way, if they are willing to do so. We will look into some Norwegian
measures and actions taken which are outlined in the guide Walk the Talk:
Ensuring Socially Responsible Public Procurement.248
The Norwegian Ministry of Equality, Children and Social Inclusion issued
this guide in order to make social responsibility “a natural and integrated
part of public procurement in Norway.”249 The report explicitly refers to the
Principle 6 of the UN Guiding Principles.250
The first distinctive feature is the list of high risk products for which human
rights risk assessment is needed.251 The list includes product categories for
which numbers of human and workers’ rights violations are high and
248 Norwegian Agency for Public Management and eGovernment (Difi), Walk the Talk: Ensuring Socially Responsible Public Procurement, 2014. Available at: http://www.anskaffelser.no/samfunnsansvar/sosialt-ansvar/information-english, (12.8.2015).249 Ibid. Page 2.250 See section 2.1.251 Norwegian Agency for Public Management and eGovernment (Difi), Walk the Talk: Ensuring Socially Responsible Public Procurement, 2014. Page 12.
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systemic.252 The list is also not exhaustive and categories can be removed or
added at any time, based on the current situation. Currently, it includes
coffee, tea and cocoa, construction materials (natural stone and timber), cut
flowers, electronics and information and communication technology,
furniture, stationary items, surgical instruments, textiles, work wear and
footwear industry, toys and sporting goods, and tropical fruit. Each category
includes a description of the most common violations and regions, as well as
the list of certificates and initiatives that deal with the specific category.
This list serves both public authorities and suppliers. The former use it as
information about risks at the planning stage of the procurement process. In
such way, public officers responsible for the particular purchase can
recognize potential risks and adapt the process accordingly. Some of these
risks might already be part of initial discussions with existing and potential
suppliers, or perhaps used for the designing of an award criteria that will
take into consideration the identified risks. The supplier can, on the other
hand, determine in advance which products public authorities will have
additional human/labour rights related standards or demands and they can
then act preemptively. It has to be kept in mind that this is still a soft law
tool and does not create any obligation. However, if public officers are
instructed to include this in every relevant procurement it could be of
similar effect. This demonstrates how important the actual procedure in
reality is. It might be that the legislation allows a consideration of social
factors (amongst others),253 but there might be no one using them. However,
one might wonder where is the limit to such optional consideration of social
aspects in relation to non-arbitrariness and value for tax payers money. An
evaluation of social aspects would have to be highly rigorous, otherwise it
could quickly come to a point where an EU lawyer would claim that the
process has contradicted the principles of transparency and proportionality,
not to even mention the extra costs. This implies that public officers using
voluntary social considerations in PP procedure at risking the process later
on being challenged as, for example, dis-proportionate. So the main
252 Current list is available at: http://www.anskaffelser.no/sosialt-ansvar/information-english/high-risk-products, (12.8.2015).253 E.g. like the new EU directive, in which most of labour/social provisions are of voluntary nature.
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challenge of the usage of (voluntary) social consideration is to bring it to the
level that satisfies other principles of modern procurement. We will not go
into further debate on feasibility of such quest at this point.
The next relevant feature is dialogue with existing and potential suppliers
about human/labour rights at all stages of the PP process.254 Since socially
responsible PP/business is a novelty for many business operators, it is
essential to foster cooperation and information sharing.255 The Guide also
encourages public authorities to include this topic in Prior Information
Notices, through which it is announced to the market that SRPP
requirements will be included in future tenders. In such way future bidders
can take specific measures and adjustments prior to bidding. In addition,
tender conferences, seminars and workshops are excellent ground for
discussing socially responsible PP which in turn could even stimulate
cooperation and joint action amongst business operators.
Another interesting tool that serves as part of a verification process after
choosing a tenderer is the self-assessment questionnaire.256 The self-
assessment tool ensures that the supplier’s supply chain meets the
requirements of the social contract performance clauses.257 Submitting this
questionnaire is actually obligatory and if it is satisfactory no further action
is needed.258 If the results of the questionnaire do not sufficiently satisfy the
required standards, a corrective action plan must be created and a given time
frame within which the supplier has to fulfill the requirements of the
corrective action plan allocated. Such tool is more useful in the case of
continuous supplies (e.g. hospital material or stationery), than in the case of
one-time purchases (one-time service or purchase).
Another specific feature is the possibility of visits of suppliers’ factories,
which serve as on-site inspections.259 Besides self-assessment
254 Norwegian Agency for Public Management and eGovernment (Difi), Walk the Talk: Ensuring Socially Responsible Public Procurement, 2014. Page 13.255 Ibid.256 Self-assessment tool is available at: http://www.anskaffelser.no/samfunnsansvar/sosialt-ansvar/information-english, (12.8.2015).257 Norwegian Agency for Public Management and eGovernment (Difi), Walk the Talk: Ensuring Socially Responsible Public Procurement, 2014. Page 19.258 Ibid.259 Ibid. Page 20.
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questionnaires, on-site visits are an additional tool for verification of social
performance clauses. Visits can be carried out randomly or if deemed
necessary when results from the self-assessment questionnaire are
unsatisfactory.260 Such visit would include all typical activities of a social
audit that many private companies execute (or a third person is hired to
carry it out), i.e. tour of the workplace, interviews with workers and
workers’ representatives, disclosure of wage slips, contracts and working
hours records, etc. On-site inspection is surely one of the strongest tools in
securing socially responsible PP. Firstly, it has a psychological effect on
both public authority/officer and the supplier. The public officer diminishes
willful ignorance that is typical for consumers who are detached from the
reality of how the product is made because of the global market that blurs
the reality of how a product was made.261 It is also reasonable to expect to
certain degree that suppliers that are aware of the possibility of inspection
perform better. On-site inspection might also reveal great differences
amongst suppliers of the same product, situated in the same country. On
paper, these suppliers most likely seem to have similar social standards, but
as Grete Solli, senior adviser on socially responsible procurement explains
in the promotional video, her experiences are different.262 She summons the
example of three Malaysian factories that all supply Norwegian health
institutions with disposable gloves. After conducting on-site visits it turned
out that rights of workers and working conditions in the first factory were
exemplary, satisfying in the second, and below any minimum standard in
the third (confiscation of workers’ documents, extremely low wages, etc.).263
Finding this out has enabled Norwegian authorities to act on these findings,
apply corrective actions, and as a result ensured that the Norwegian citizens’
tax money was not used to finance bad working conditions.
260 Ibid.261 See, for example: Irwin, J., Ethical Consumerism Isn’t Dead, It Just Needs Better Marketing, online article, Harvard Business Review, January 12th, 2015. Available at: https://hbr.org/2015/01/ethical-consumerism-isnt-dead-it-just-needs-better-marketing, (15.8.2015); or Schwartz, D., Consuming Choices: Ethics in a Global Consumer Age, 1st edition, Rowman & Littlefield Publishers, 2010.262 Grete Solli – experiences from socially responsible public procurement, video, January 2015. Video available at: https://vimeo.com/112149202, (15.8.2015).263 Ibid.
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All in all, the tools and actions taken by Norwegian authorities can have a
good impact on a market in general; especially if we consider the fact that
suppliers of public authorities are usually some of the largest players on the
market. However, we should not overlook certain characteristics that make
such conduct by the public actors possible. One condition is certainly
financial resources. Public authorities with funds that can hardly cover
operating their primary function are unlikely to be able to spend resources
on securing respect for rights at work of their suppliers.264
Furthermore, it seems that securing socially responsible PP demands a
centralized system of PP (to certain extent). In certain countries, e.g.
Slovenia, almost every public institution (ministries, schools, hospitals, etc.)
has a delegated officer who is responsible for PP of that particular
institution. In such a set-up, it is highly unlikely that every officer will have
the relevant knowledge and resources to provide the same level of social
responsibility in PP as persons who are employed exactly for this reason in
other countries with centralized systems.
5.1.2 Surgical instruments in Swedish hospitalsThe previous section implied that centralized organization of PP is
preferential for achieving socially responsible PP. However, there is a way
for a decentralized PP system to secure social responsibility and we will
demonstrate it with the example of advancement of PP in Sweden.
In 2007 the Swedish NGO Swedwatch published a report on production of
surgical tools that were being bought by Swedish hospitals through Swedish
importers from Pakistan. Swedwatch discovered that factories (and
workshops providing these factories), which were supplying Swedish
hospitals, produced tools under hazardous working conditions, with wages
below the prescribed minimum, in an anti-union environment and through
264 Howe notes that monitoring and enforcement are necessary for the legitimacy and effectiveness of promoting better labour standards through PP. Further, he adds that these processes should be supplemented and complemented by private monitoring by trade unions, NGOs, ILO, local labour inspection etc.Howe, J., The Regulatory Impact of Using Public Procurement to Promote Better Labour Standards in Corporate Supply Chain; published in Macdonald, K. and Marshall, S. (eds), Fair Trade, Corporate Accountability and Beyond: Experiments in Globalising Justice, 1st edition, Ashgate, 2010.
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the use of child labour.265 Pakistani manufacturers emphasized the issue of
pricing in PP, since bettering working conditions creates costs and
consequently raises the price of the product. This would result in less
chances of remaining competitive because awarding public contracts is
heavily based on price.266 A lot has happened since the report was published
as Swedish county councils, which are responsible for health care in each
region, took several measures in order to improve the situation presented in
the report. The interesting aspect for our purposes is the cooperation that
arose amongst country councils. The National Coordinator of county
councils started the process and in 2010 adopted a joint code of conduct.267
County councils now cooperate much better and are able to secure more
sustainable procurement through for example, introducing social criteria in
public contracts, co-financed audits at the suppliers and results sharing.268
Swedwatch went back to Pakistan in 2014 and discovered that, in factories
(and connected workshops) supplying Swedish buyers child labour was not
present anymore; wages were paid in accordance with the minimum wage;
and that employees were no longer forced to work overtime.269 Working
conditions and safety remained problematic despite certain improvements.270
Some other factories which supply surgical equipment to other buyers at
present in the European market were also visited in the same region and it
was found that child labour was still present in those factories. This clearly
demonstrates that the actions of the Swedish authorities which strengthened
social demands in PP did make a significant difference in factories and
workshops linked to them through the supply chain. However, Swedwatch
still emphasizes that price is still too big of a factor in PP and that the
authorities have to allocate more money into securing sustainable
265 Swedwatch, Vita rockar och vassa saxar. En rapport om landstingens brist på etiska inköp, report n. 16, 2007. The report is available only in Swedish language at: http://www.swedwatch.org/sv/rapporter/daliga-forhallanden-bakom-tillverkning-av-klader-och-kirurgiska-instrument, (22.8.2015).266 Swedwatch, Healthier procurement, Improvements to working conditions for surgical instrument manufacture in Pakistan, report n. 73, 2015. The report available at: http://www.swedwatch.org/en/reports/healthier-procurement, (22.8.2015).267 Ibid.268 Healthier procurement, video, Swedwatch, 2015. Available at: https://vimeo.com/122554492, (22.8.2015).269 Supra n. 266.270 Ibid.
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procurement.271 The issue of pricing is certainly one of the main challenges
for achieving sustainable procurement – as long as public contracts are
awarded predominantly based on price the suppliers will be challenged.
Rigorous enforcement of and control on social criteria set in contract
performance clauses can definitely create a level-playing field among the
suppliers, but the challenge of offering the lowest price still remains. As a
consequence, suppliers might for example exercise pressure further down
the supply chain, which could affect labour standards there.
5.1.3 Sweatfree Purchasing ConsortiumIn the previous chapter we analysed US federal legislation, which is rather
restricted in options for socially responsible PP, but state and local
governments have greater independence in that aspect. This can of course
result in some state and local governments doing a lot to foster socially
sustainable PP, and some doing nothing. One of the most prominent
attempts for socially sustainable PP is the Sweatfree Purchasing Consortium
(hereinafter: the Consortium).272
The Consortium is a membership organisation for public entities in the US
which tries to, “end public purchasing from sweatshops and help its
members make sweatfree purchases more effectively and less expensively
than any single one could accomplish on its own.”273 It functions on the
basis of sharing of supply chain data – member public authorities require
apparel bidders or economic operators to disclose the factories where the
uniforms for public officers (e.g. military, police, etc.) are made and then
they share the information that they receive with the Consortium.274 The
Consortium independently verifies the names and locations of the entities
and adds them to the database which is available to the members of the
Consortium. The contractors are responsible for providing accurate
information to the public authorities or directly to the Consortium.275 Public 271 Ibid.272 Similar initiative in Europe is Electronics Watch, which is a combines efforts of public buyers monitoring and remediating electronics supply chains. See more at: http://electronicswatch.org/en/, (22.8.2015).273 See Sweatfree Purchasing Consortium website: http://buysweatfree.org/about, (21.8.2015).274 International Labour Rights Forum, Dignity and Justice for Workers Worldwide, 2015.275 Ibid.
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authorities therefore have a reliable database that can help them assess their
supply chain situation. The Consortium has a vision and an ultimate goal
that a market of decent working conditions will grow and eventually that
rules of competition will no longer favour businesses engaged with
sweatshop conditions but instead those that provide good value while
respecting rights at work.276
Sweatfree Purchasing Consortium has currently 3 state members (Maine,
New York and Pennsylvania) and 13 cities,277 which is not a great number
given the size of the US. The further downside of this Consortium is
certainly its scope as it only caters to the apparel industry, though there are
other industries with similar working conditions (e.g. electronics,
agriculture, etc.).
However, the idea and movement itself are a positive step, especially taking
into consideration that they are also proposing a Model Sweatfree
Procurement Policy, which would be a recommendation to cities and states
on how to craft procurement legislation in order to secure respect for rights
at work in the apparel industry. This would mean that any other state or city
could implement it. Such cooperation amongst public authorities is also one
of the solutions for decentralized systems to gain expertise and best
practices in sustainable PP at a lesser cost. This is particularly important in
countries like the US that do not place much emphasis on this topic in its
(current) legislation.278
All three subparts with practical examples of attempts for attaining socially
responsible PP offer us some much needed perspective in relation to the
preceding sections of this thesis, which were focused on possibilities and
limitations within the legislation. These examples demonstrate that much
can indeed be done in this area already within the framework of current
276 See: http://buysweatfree.org/about, (21.8.2015).277 See the current list at: http://buysweatfree.org/members, (21.8.2015).278 The International Labor Rights Forum in its recommendation emphasises the interagency collaboration and collaboration with state and local authorities as necessary for maximisation of the effects of socially responsible PP. The International Labor Rights Forum, Protecting Human Rights through Government Procurement, Recommendations for Responsible Supply Chain Management, Corporate Accountability, and Worker Access to Remedy in US Government Procurement, May 2015.
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legislation and the principles and yet in most of the countries, not much or
nothing is being done. Another feature that is common to these three
examples is that attempts to procure responsibly occur in the wealthiest
countries, implying that buying responsibly is expensive, therefore not
economical and in contrary to other principles of PP. This somehow leads us
to an underlying question that has been present throughout this thesis – are
the very foundations of our economic system and liberal market in conflict
with a respect for labour rights?
It seems reasonable to test this idea on a company case. If a company which
operates on purely economic principles (profit making) has a business case
for operating in a socially responsible way, why would public authorities
not do the same?
5.2 Learning from private procurement and responsible supply chain management – the IKEA case279
In times when public procurement legislation is taking baby steps by
including some social considerations in their purchasing, many socially and
environmentally conscious companies have some mechanisms in place for
preventing adverse impacts on the society and environment. We will take
IKEA280 as an example.
IKEA is the world’s largest furniture retailer with operations stretching all
around the world. IKEA does not only sell furniture, appliances and home
accessories, but also designs and produces or purchases them - it owns and
operates 325 stores on all continents except Africa and South America and
directly employs 147,000 people and indirectly, millions more (through
supply chains). It is also one of the few retail companies in the world that
runs its own factories producing certain products from its range.
279 Unless stated otherwise, all information from this section derive from the interview with Henrik Wilson, IMS Sustainability Manager at IKEA Services AB, which was conducted on May 4th 2015 in Helsingborg, Sweden. 280 http://www.ikea.com/, (14.9.2015).
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IKEA has a long standing tradition with working on achieving a more
sustainable life at home, improving energy and resource efficiency and
creating a better life for communities and people.281 One of the corner-stones
of these processes has been IWAY – IKEA’s code of conduct that is applied
to all IKEA’s business partners.282 The IWAY standard lays out
requirements related to working, social, safety and environmental conditions
that must be respected in order to do business with IKEA. It is implemented
and monitored by global and local compliance and monitoring teams, which
include over 80 auditors that are specially trained to continuously check and
advise on IWAY compliance. In the case of non-compliance, various
business consequences are applied.283 Unlike many other companies, IKEA
applies the same standard to every external business partner, no matter at
what stage or for what purpose a business contact is linked to IKEA. This
means that not only the suppliers that produce products that IKEA retails
have to meet the standard requirements, but also everyone else that IKEA is
doing business with in any capacity.284
This leads us to the internal organisation named Indirect Materials and
Services (IMS) which has a similar function in IKEA as PP
officers/departments within public authorities. IMS takes care of
procurement of all services and products that are not being part of IKEA’s
core business – furnishing products. IMS therefore covers all the products
and outsourced services that are not being sold, but are needed for the
functioning of the company (e.g. cleaning services, security services,
281 IKEA, IKEA's Planet & People Positive Sustainability Strategy, 2013. Available at: http://www.ikea.com/ms/en_GB/this-is-ikea/people-and-planet/index.html, (10.8.2015).282 IKEA, IWAY Standard requirement 5.1, 2012. Available at: http://supplierportal.ikea.com/doingbusinesswithIKEA/sustainability/betterlifeforpeopleandcommunities/Documents/Forms/DispForm.aspx?ID=2, (10.8.2015).283 See IWAY standard for details. Business consequences vary depending on severity and repetition of the non-compliance. E.g. second violation of IWAY Must requirements (the most basic social, safety and environmental requirements) in less than 2 years from the first IWAY Must violation results in termination of the contract with IKEA. Other such measure is temporary stop of delivery until the supplier eliminates discovered non-compliances.284 There are some exceptions to this rule: IMS does not impose IWAY standard requirements on global brands that have similar social and environmental standards, because it cannot be expected that global-sized companies would adapt its code of conduct to match demands of a single client. With such companies only frame agreements are signed. Further exceptions from applying IWAY standard requirements are government bodies and financial institutions and banks.
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electronic equipment, buildings, vehicles, equipment in stores like shopping
carts, employees’ uniforms, etc.).
This is the first similarity to public authorities, as those also have their
primary function (e.g. police maintains public safety and respect for laws).
At the same time, public authorities also need indirect services and products
that facilitate their primary function (e.g. policemen need cars, uniforms and
equipment). The difference between IKEA and a public authority is obvious
– IKEA decided that it will adhere to certain social and environmental
standard in its primary role/function and also apply the same standard to its
indirect, secondary business associations. Whereas public authorities have
not; their primary function/product is set and bound by legislation, which
has to enshrine the respect for, protection and fulfillment of human rights.
But secondary activities of public authorities (PP of products and services)
are not bound by the same human rights standards as their primary function.
Depending on applicable PP regulation, it might even be that public
authorities have no human rights requirements on procured goods and
services.
This situation creates a kind of paradox – public authorities, who are an
operative hand of a state, which is primarily responsible for respect for,
protection and fulfillment of human rights, cannot secure the same human
rights standard in its secondary activities as it has to uphold within its
primary function. To draw an extreme case – the police have to for example,
pursue people who employ children as this is against the law, but at the
same time, the police could be buying their uniforms from a supplier who
uses child labour for their production. It might even be that under current
legislation there are some prohibitions against procuring such products, but
if there are no executive and operative options to secure this (due to the
transnational nature of commerce) there is hardly anything that can prevent
the competition for public contract with such products. This implies that
lack of respect for human rights in secondary activities of public authorities
(PP) derives from either lack of legislative authorization to do so, or where
the legislation authorizes it, the lack of effective practical mechanisms to
actually secure that rights have been respected.93
IKEA on the other hand, which as a private company under current
legislation has no obligation with respect to human rights performance of its
suppliers, is striving to uphold the very same human rights standard in its
primary and secondary functions.
This simplified example demonstrates that IMS organization is doing
something that public authorities are relatively restricted in within the scope
of their own activities – demand of every indirect service or product
supplier that it adheres to the same environmental, social and working
standards as IKEA maintains in its primary business.285 Of course, it is
understandable that public authorities cannot run PP processes in the same
way as private procurers (IKEA in this case), given the legislative
restrictions that mainly facilitate principles of fairness, accessibility,
transparency and equal treatment – which private procurers are not bound
by.286 In any case, these principles have to be balanced with other basic
legislation and principles (under which we can count in core labour laws)
and for the sake of legal coherence, PP should still be able to at least secure
that the basic minimum of labour rights are respected by public contractors.
This ambiguity amongst (often) clashing principles certainly exists and will
sooner or later have to be resolved and private procurement could offer up
some ideas.
For better understanding of socially responsible procuring it is worth
looking into how IKEA buys indirect services and products. The elements
of this method could potentially be highly useful for PP.
There are three main principles that guide IKEA’s procurement of indirect
materials and services:
Consolidation of suppliers. This process includes recognizing
strategic suppliers and developing stronger relationship with them.
Lower number of suppliers means less administrative costs, getting a
285 The International Labor Rights Forum, Protecting Human Rights through Government Procurement, Recommendations for Responsible Supply Chain Management, Corporate Accountability, and Worker Access to Remedy in US Government Procurement, May 2015.286 However, practical examples described above demonstrated that public authorities have certain tools or options to check/secure respect for labour rights, but in great majority of (EU) states are not being used – due to lack of knowledge, money, etc.
94
better value for products and services, and easier control over the
supply chain.
Standardisation of products and services . Reducing environmental
and social impacts and ensuring quality is less complicated by
offering a selected, streamlined selection of products and services.
Meeting the needs . In order to benefit the most from consolidation
and standardization, the needs of IKEA’s facilities and co-workers
have to be well understood.287
It is evident that these principles are economically efficient while securing
sustainability, which would make them useful for public authorities, and to
certain extent, standardization and compliance already are present in public
purchasing. But consolidation, on the other hand, is actually quite the
contrary to the effect that PP is usually trying to secure – supporting small
and medium sized companies.288
Regarding the purchasing procedure itself, we will not go into the tender
process, because private companies have clearly much more operational
space in this area than public authorities which have to strictly follow the
legislation regarding the publication/announcement of invitation to tender
and submission of bids by economic operators/tenderers in order to satisfy
transparency and equal access for all economic operators. It is sufficient to
mention that IMS uses different ways to discover the situation on a market
and receive the offers.289
The more relevant part for our purpose is the decision making by IKEA.
Each of the possible products is evaluated through the Sustainability
Scorecard system which adds on to the IWAY standard requirements.290
Such evaluation results in an actual score of the product, which tells how
sustainable the product is. Such evaluation is currently based on mostly
environmental criteria, because IWAY, which is a necessary prerequisite for
every business partner, is covering the social and working part. Through 287 See also: IKEA, IKEA Group Sustainability Report FY2014, 2015. Available at: www.ikea.com/ms/en.../ikea-group-yearly-summary-fy14.pdf, (18.8.2015).288 See the EU section.289 To mention some: market analysis, which can be country/segment oriented, tender process to simply scan to market, electronic auctions, etc.290 See more in IKEA Group Sustainability report FY2014, 2015. Page 37.
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this IMS makes sure that all aspects are taken into consideration while
deciding amongst different products or services. The higher the
Sustainability Scorecard result is, the bigger the chances the product/service
has.
If we bring this example into the terminology of PP, IWAY can be linked to
basic prerequisites or principles, such as Art. 18(2) of the new EU
Directive291 or even conditions of performance of the contract, as it
prescribes the minimum standards; and the Sustainability Scorecard
resembles the contract award criteria. However, these public and private
procurement tools cannot simply be designated as the same, because there
are significant differences. IWAY on the one hand, has a strong
enforcement mechanism with a global reach of auditors and a compliance
team, whereas securing principles or conditions of performance in PP
transnationally can on the other hand, clash with numerous legal and
administrative restraints, lack of financial means and knowledge, and
perhaps lack of will to tackle relevant issues.
The Sustainability Scorecard lays out a numeric result of how sustainable
the product is, which makes it much easier to determine the best ones.292 In
this way, the company that actually invests time and money into producing
the most sustainable product will achieve a higher score and improve its
chances of being chosen. If the price of the product would be the only
criteria for awarding the contract, such companies would not have great
chances, as their price might be higher. For this reason it does not come as a
surprise, according to Wilson, that most of the companies are content with
the Scorecard system as their efforts to be more sustainable are being
recognized which would not happen in price-only consideration.
Nevertheless, there is still room for improvement in the Sustainability
Scorecard system by including working conditions. IWAY does secure the
minimum of rights293 and this is a precondition for every service or product
291 See section 3.1.1.292 However, we need to keep in mind that Sustainability Scorecard so far only covers environmental criteria, which is much easier to put in numbers than social and working conditions and rights. This is certainly an area of a big possibility for improvement at IKEA.293 Based on the core ILO conventions.
96
provider to be considered, but including the level of respect for rights at
work and working conditions (and not just yes/no or respect/disrespect) into
Sustainability Scorecard would actually recognize those that are raising the
bar in labour standards.294
However, it needs to be kept in mind that we are still talking about a
business case. In a current economic system, a company introducing tools
which secure respect for environmental and labour standards has to be
considered to be at the top end of corporate social responsibility scale. And
current tools of public purchasing in this case, fall behind due to several
reasons – relative rigidness of public authorities, legislative restraints, lack
of funds and knowledge, etc. But nothing should hold back public
authorities from looking into and using methods from private companies
that have been proven to work well. Such cooperation and knowledge
sharing should become more common in the future, as we can already see
some individual examples – National Audit Office of the UK conducted a
study on open-book accounting and supply chain assurance for which it
visited nine institutions (private companies and public authorities) in order
to understand how they use supplier information to manage contracts so that
the government can draw on their experience when considering these
issues.295
By no means are we trying to argue that PP should follow the same
principles as the private procurement, but to adopt those that bring
sustainable results for the society and that can still be aligned with the
principles of PP as we know it today.
Overall, it is necessary to keep in mind that by comparing public and private
procurement we are dealing with two subjects in diametrical situation. One
of the basic principles of modern law stipulates that public authorities are
294 E.g. IWAY demands compliance with nationally/locally set minimum wage; scorecard system could award more points to the company which pays its employees a living wage.295 The National Audit Office, Open-book accounting and supply-chain assurance, Report by the Comptroller and Auditor General, 2015. The report is available at: http://www.nao.org.uk/wp-content/uploads/2015/07/Open-book-accounting.pdf, (18.8.2015). And The National Audit Office, Open-book accounting and supply-chain assurance: case studies, Report by the Comptroller and Auditor General, 2015. The report is available at: http://www.nao.org.uk/wp-content/uploads/2015/07/Open-book-accounting-case-studies.pdf, (18.8.2015).
97
only allowed to take those actions that legislation gives mandate for;
whereas private actors are allowed to do anything that is not forbidden by
the law.296 The rationale behind this principle is certainly righteous –
preventing public authorities to act arbitrarily and perhaps use its power for
purposes that are not in the interest of the people and go against human
rights. However, this principle is based on presumption that the legislation
that prescribes actions that are permissible to public authorities is based on
the best interest of the citizens. Applying this to the case of PP legislation,
which often limits public authorities to do what would be good for the
general society (buy in a socially responsible way), leaves us with only one
possible conclusion - current PP regulation which is predominantly based on
liberal market principles is not appropriate for ensuring the respect for
labour rights in the products concerned, because in the process of procuring,
labour standards are outweighed by economic considerations. It is not being
argued that liberal market principles should be abolished, but certainly to be
ranked in relation to other considerations in a way that would enable fairer
procurement.
296 Even though one might argue that with the emergence of soft law documents on business and human rights and especially UN Guiding Principles, companies have certain responsibilities that go beyond the legal requirements, i.e. respect for fundamental human rights.
98
6. ConclusionThis thesis firstly attempted to explain why public authorities should use PP
for transnational promotion and advancement of labour rights and, secondly,
what are the possibilities and limitations to do so under the current
legislative setup.
It emerged that slowly but steadily, more and more mechanisms and
safeguards for securing respect for basic rights at work in the supply chain
are being implemented in the PP procedure. Or at least the need for their
adoption is being recognized, which is an improvement compared to a
decade or two ago. The actual progress, though, is certainly not aligned with
the speed with which part of the private sector is developing mechanisms to
secure sustainable management of the supply chain.
Regarding the question of whether current international legislation on PP is
able to secure socially sustainable procurement of goods, a clear one sided
answer is not possible. If one had to choose one, “no” seems more accurate
than “yes” at the moment. As we have seen in the case of the new EU
Directive, which is by far the most social sustainability-oriented
international PP legislation, the majority of provisions, including some sort
of social consideration, are voluntary. Even the promising principle for
respect for internationally recognized labour rights enshrined in Art. 18(2)
overall lacks clear ideas of responsibilities of the parties and enforcement
mechanisms. Social considerations are thus mostly left to the discretion of
the Member States and public authorities. One could possibly claim that
legislation is therefore flexible enough but, since provisions cannot be used
as they should, we have an obvious lack of legislative tools and mechanisms
(and the political will to create them, which is already part of a new
discussion).
US federal legislation on PP offers even less than the EU regulation and is
characterized by a piecemeal approach – entailing measures to prevent
procurement of products or services, which have been tainted with particular
violations of labour rights. But, due to depending on labour legislation and
99
relevant authorities to ensure a general respect for labour rights, there is no
general provision demanding respect for labour rights in relation to procured
services and goods, nor one instructing public purchasers to check for
compliance. And even less so for procurement of goods with transnational
supply chains.
Practical examples and good practices in securing sustainable PP in certain
countries certainly demonstrated that there are ways within current
legislative frameworks to, for example, inquire about labour conditions,
demand information regarding the supply chain, and to eventually improve
certain labour standards (as with the case of child labour in the production
of Swedish surgical tools) but, overall, such examples are all too rare and
illustrate some fundamental difficulties of achieving socially sustainable
procurement in the current legal framework. Difficulties are certainly not
just legislative ones; nevertheless, legislation only mirrors basic societal
and, in this case, economic principles. But let us stay with legislation for a
bit longer.
Given the fact that we already encountered enormous legal obstacles that
would secure respect for at least core labour rights in transnational
procurement of products, it must not come as a surprise that the success in
PP tools that would actually promote the advancement of labour rights
(raising the bar above the minimum) is even significantly lower. The reason
behind it might simply be that the development in socially responsible PP is
not advanced enough for public authorities to award the contract to the
economic operator that secures better standards for their workers than other
bidders. Of course, this would be an opposite extreme of awarding the
contract to the bidder with the lowest price, in a sense that there might not
be an upper limit for labour standards (as there is theoretically no bottom
limit to price).297 For a proper solution, a balance between both should be
struck. As of now, current legislative framework still gives vastly greater
advantages to the price factor which, on the other hand, makes securing at
297 For this reason, abnormally low tenders can be rejected in EU procurement. See EU chapter.
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least minimal labour standards in PP a struggle and awarding better labour
standards only a distant wish.
What is clear, overall, is that PP rules are still, in the greater part, committed
to securing a transparent and efficient procedure, whose purpose is to fairly
assess which tender is the best on predominantly economical and qualitative
criteria. It is rather self-evident that including labour clauses (especially for
products with extensive and transnational supply chains) might contradict
some current basic PP principles or objectives – for example, running an
efficient and economical procedure. Whether checking for compliance with
minimal labour standards in the supply chain or evaluating labour standards
as one of the criteria for awarding public contracts, such additions certainly
do not contribute to faster and more efficient procurement processes, but
create quite the opposite effect. Naturally, such processes can be
standardised and rationalized to a certain extent, but at some point, a balance
needs to be struck.
A balance will in fact have to be struck on a wider level, if we eventually
want to come closer to a more sustainable PP. Awarding the contract to the
bid with the lowest price has been close to a rule for years and it is
practically incompatible with socially sustainable PP.298 Low costs are
(amongst other factors) based on low labour standards and raising their level
inevitably leads to higher prices, at least to a certain extent. It is therefore up
to the governments and public authorities to decide whether they want to
procure sustainably or not. Having a legal basis to do so is just one part of
the quest; actual (financial) enablement is the other part.299
One further point regarding the compatibility of the modern PP principles
with sustainable procurement is PP’s role within the market. PP is one of the
foundations of the single market in the EU and is for similar reasons
regulated on the WTO level as well. It was beyond the scope of this thesis to
analyse all potential obstacles to sustainable PP, however, certain court
298 Unless a rigorous scanning of labour standards at the earlier stages of PP process that would exclude all bids that do not meet the standard threshold would exist. 299 Throughout the thesis other practical impediments to socially sustainable PP were mentioned, like time aspect and knowledge of public purchasers, but due to the research question being legally oriented, we did not examine practical obstacles in detail.
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cases demonstrated that single market/free trade provisions can have a
significant negative (or limiting) effect on labour standards. This is highly
important since most of the international legislation on PP comes from the
international organisations, whose purpose and tasks are market related, and
are thus prone to putting market principles in front of other pursuits. This is
another area where balance needs to be struck in order to enable a level
playing field where demand for a certain level of respect for labour
standards in PP will be discussed as a necessary prerequisite and not as a
limitation to the free market.
Overall, respect for labour (and human) rights in PP in general is far from
the standard that the international community is trying to impose on private
companies, and far from the standard of Principle 6 of the UN Guiding
Principles on Business and Human Rights. Some kind of legal avenues and
practical solutions for conducting due diligence in PP of goods will
eventually have to be introduced, otherwise provisions as we have them
now cannot have meaningful effects. What this thesis has been arguing for
is actually a step forward from Principle 6 that urges states to “promote
human rights by business enterprises with which they conduct commercial
transactions.” Sustainable PP should not just promote, but also ensure that
rights have been respected in regard to the object of the contract (and
potentially reward better practices and thus foster improvement). Respect
for labour rights should not be a good thing to do or one of the possible
strategic effects of PP, but a necessary prerequisite to compete for a public
contract. Also, in the case of goods with extensive transnational supply
chains – legal mechanisms to secure sustainable PP will be created only
when the long-term societal effect of respect for labour rights will be valued
higher than short-sighted quest for a low price.
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7. Bibliography
7.1 LiteratureAlvarez-Fernandez, A. and Brandstrup, P., The access of third countries to the European Union’s public procurement market, student working paper, Maastricht University, Maastricht Centre for European Law, 2013.
Arrowsmith, S., Linarelli, J. and Wallace, D.: Regulating Public Procurement: National and International Perspectives, 1st edition, Kluwer Law International, 2000.
Arrowsmith, S., The Law of Public and Utilities Procurement, 3rd edition, Sweet & Maxwell, 2014.
Augenstein, D., and Kinley, D., When human rights ‘responsibilities’ become ‘duties’: the extra-territorial obligations of states that bind corporations, in Bilchitz and Deva (eds.), Human Rights Obligations of Business: Beyond the Corporate Responsibility to Respect? Cambridge University Press, 2013; Sydney Law School Research Paper No. 12/71.
Barnard, C., A Proportionate Response to Proportionality in the Field of Collective Action, European Law Review, 2012. Vol. 37 no. 2, p. 117-135.
Benvenisti, E., and Downs, G. W., The Empire's new clothes: Political economy and the fragmentation of international law, Stanford Law Review, 2007. Vol. 60 Issue 2, p. 595-631.
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Brodie, D., A History of British Labour Law 1867-1945, Hart Publishing, 2003.
Bruun, N., Jacobs, A. and Schmidt, M.: ILO Convention No. 94 in the aftermath of the Ruffert case, European Review of Labour & Research, 2010. Vol. 16 Issue 4, p. 473-488.
Burkhauser, R. and Haveman, R., Disability & Work: The Economics of American Policy, The Johns Hopkins University Press, 1982.
Coomans, F., Application of the International Covenant on Economic, Social and Cultural Rights in the Framework of International Organisations, Max Planck Yearbook of United Nations Law, 2007. Vol. 11, p. 359-390.
Dølvik, J. E., and Visser, J., Free movement, equal treatment and workers’ rights: can the European Union solve its trilemma of fundamental principles?, Industrial Relations Journal, Blackwell Publishing Ltd., 2009. Vol. 40 No. 6, p.491–509.
Hallo de Wolf, A. G., Reconciling Privatization with Human Rights. Antwerpen: Intersentia, International Law Series, 2011.
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Hettne, J., Sustainable Public Procurement and the Single Market – Is There a Conflict of Interest? EPPPL 1, 2013.
Howe, J., The Regulatory Impact of Using Public Procurement to Promote Better Labour Standards in Corporate Supply Chain; published in Macdonald, K. and Marshall, S. (eds), Fair Trade, Corporate Accountability and Beyond: Experiments in Globalising Justice, 1st edition, Ashgate, 2010.
Jensen, H. B., From economic to sustainable development: Unfolding the concept of law, Systems Research and Behavioural Science, 2007. Vol. 24 Issue 5.
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Schlemmer-Schulte, S., Fragmentation of International Law: The Case of International Finance & Investment Law Versus Human Rights Law, Pacific McGeorge Global Business & Development Law Journal, 2012. Vol. 25 Issue 1, p. 409-424.
Schwartz, D., Consuming Choices: Ethics in a Global Consumer Age, 1st edition, Rowman & Littlefield Publishers, 2010.
Semple, A., The Link to the Subject-Matter: A Glass Ceiling for Sustainable Public Contracts?, European Law Conference at University of Oslo, 2014.
Simpson, F., Labour Rights Protections within International Trade: A study of Free Trade Agreements and Generalised Systems of Preferences, Master Thesis, Lund University, 2015.
Syrpis, P., Reconciling Economic Freedoms and Social Rights - The Potential of Commission v Germany (Case C-271/08 Judgment of 15 July 2010). Industrial Law Journal, 2011. Vol. 40, p. 222-229.
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Thrasher, R., On Fairness and Freedom: The WTO and Ethical Sourcing Initiative. GEGI Working Paper Series, Global Economic Governance Initiative, 2014.
Tosoni, L., The Impact of the Revised WTO Government Procurement Agreement on the EU Procurement Rules from a Sustainability Perspective, European Public Private Partnership Law Review, 2013. Issue 1, pp. 41-48.
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Van Der Abeele, E., Integrating Social and Environmental Dimensions in Public Procurement: One Small Step for the Internal Market, One Giant Leap for the EU?, European Trade Union Institute (ETUI), 2014.
Vinterskoug, J., The Scope of Labour Law Requirements in Public Procurement - at the ILO, EU and Swedish Level. Master Thesis, Lund University, 2011.
7.2 Legislation and Treaties
7.2.1 UN1 UNTS XVI. United Nations, Charter of the United Nations, 24.10.1945.
UN General Assembly, International Covenant on Civil and Political Rights, United Nations, Treaty Series, vol. 999, 16.12.1966.
UN General Assembly, International Covenant on Economic, Social and Cultural Rights, United Nations, Treaty Series, vol. 993, 16.12.1966.
7.2.2 EUConsolidated version of the Treaty on the Functioning of the European Union. OJ 2008 C 115/47, 9.5.2008.
Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors.
Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts.
Directive 2014/23/EU of the European Parliament and of the Council on the award of concession contracts.
Directive 2014/24/EU of the European Parliament and of the Council on public procurement and repealing Directive 2004/18/EC.
Directive 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sector and repealing Directive 2004/17/EC.
Directive 2014/67/EU of the European Parliament and of the Council of 15 May 2014 on the enforcement of Directive 96/71/EC concerning the posting of
105
workers in the framework of the provision of services and amending Regulation (EU) No 1024/2012 on administrative cooperation through the Internal Market Information System.
Rules on public works contracts, public supply contracts and public service contracts, applicable until 2016. Summaries of EU legislation. Available at: http://europa.eu/legislation_summaries/internal_market/businesses/public_procurement/l22009_en.htm, (25.2.2015).
7.2.3 ILOILO Convention no. 100, on Equal remuneration, 1951.
ILO Convention no. 105 on Abolition of Forced Labour, 1957.
ILO Convention no. 111 Discrimination (Employment and Occupation), 1958.
ILO Convention no. 138 on Minimum Age Convention, 1973.
ILO Convention no. 182 on Elimination of the Worst Forms of Child Labour, 1999.
ILO Convention no. 29 on Forced Labour, 1930.
ILO Convention no. 87 on Freedom of Association and Protection of the Right to Organize, 1948.
ILO Convention no. 94 on Labour Clauses in the Public Contracts, 1949.
ILO Convention no. 98 on Right to Organize and Collective Bargaining, 1949.
ILO Declaration on Fundamental Principles and Rights at Work, 1998.
ILO Recommendation no. 111 Discrimination (Employment and Occupation), 1958.
7.2.4 WTOWTO, Agreement on Government Procurement, GPA/W/313, 16.10.2010.
WTO, (Marrakesh) Agreement Establishing the World Trade Organization, 1867 UNTS 154, Apr. 15, 1994.
7.2.5 USCalifornia Transparency in Supply Chains Act, S.B. 657.
Fair Pay and Safe Workplaces, Executive Order 13673.
Federal Acquisition Regulation, 48 C.F.R.
Federal Property and Administrative Services Act, 40 U.S.C.
Omnibus Appropriations Act for Fiscal Year 1999, 105th Congress Public Law 277.
Prohibiting Discrimination Based on Sexual Orientation and Gender Identity, Executive Order 11246.
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Prohibition of Acquisition of Products Produced by Forced or Indentured Child Labor, Executive Order 13126.
San Francisco Food Policy, Executive Directive No. 09-03.
Strengthening Protections against Trafficking in Persons in Federal Contracts, Executive Order 13627.
Trade Act, 1974.
Trafficking Victims Protection Act of 2000, 22 U.S.C. 7102.
U.S. Foreign Corrupt Practices Act, 15 U.S.C., 1998.
US Constitution.
Wagner-O'Day Act, PL 739.
7.2.6 OtherCouncil of Europe, European Social Charter (Revised), 3.5.1996, ETS 163.
Council of Europe, European Social Charter, 18.10.1961, ETS 35.
Malaysia: Federal Constitution, 31 August 1957.
UK, Committee on Government Contracts, Fair Wages Resolutions, 1897.
UK, The Public Contracts Regulations 2015.
7.3 Caselaw
7.3.1 EUECJ, Case C-158/91, Ministère public et Direction du travail et de l’emploi v. Jean-Claude Levy.
ECJ, Case C-341/05, Laval Un Partneri Ltd v Svenska Byggnadsarbetareförbundet.
ECJ, Case C-346/06, Dirk Rüffert v Land Niedersachsen.
ECJ, Case C-368/10, European Commission v. Kingdom of the Netherlands.
ECJ, Case C-438/05, International Transport Workers Federation v Viking Line ABP.
7.3.2 OtherCrosby v. National Foreign Trade Council, 530 U.S. 363 (2000).
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7.4 Secondary Legislation, Reports and Preparatory Work
7.4.1 UNA/HRC/11/13. Report of the Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises. Human Rights Council, Business and Human Rights: Towards Operationalizing the “Protect, Respect and Remedy” Framework. 11th Session, 22.4.2009.
A/HRC/17/31. Report of the Special Representative of the Secretary- General on the issue of human rights and transnational corporations and other business enterprises. Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework. 17th Session, 21.3.2011.
CRC/C/GC/16. UN Committee on the Rights of the Child, General comment No. 16 (2013) on State obligations regarding the impact of the business sector on children’s rights. Adopted by the Committee at its 62nd session, 2013.
ILO, Labour Clauses in Public Contracts, International Labour Conference 97th Session, 2008.
ILO, Summary Report, 2014 Interagency Roundtable on CSR, Sustainable public procurement as a tool for promoting responsible business, 19 November 2014, Geneva.
Open Working Group proposal for Sustainable Development Goals. Available at: https://sustainabledevelopment.un.org/sdgsproposal, (15.3.2015).
U.N. Doc. E/1991/23. UN Committee on Economic, Social and Cultural Rights, General Comment 3, The nature of States parties' obligations. 5th Session, 1990.
UN Doc. E/1999/22. The Committee on Economic, Social and Cultural Rights, Report on the 18th and the 19th session.
United Nations Commission on International Trade Law, UNCITRAL Model Law on Public Procurement, 1.7.2011.
7.4.2 EUEU, Opinion of Advocate General Kokott delivered on 15 December 2011. Case Case C-368/10 of European Commission v Kingdom of the Netherlands.
European Commission, Buying Social, A guide on taking account of social considerations in public procurement, 2011.
European Commission, Europe 2020 Strategy for Smart, Sustainable and Inclusive Growth. Available at: http://ec.europa.eu/europe2020/index_en.htm, (10.6.2015).
European Commission, Green Paper on the modernisation of EU procurement policy; Towards a More Efficient European Procurement Market. COM(2011) 15 final, 27.01.2011.
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European Commission, Interpretative Communication 2001/C 333/08 of the Commission on the Community law applicable to public procurement and the possibilities for integrating social considerations into public procurement, 2011.
European Commission, Public Procurement Indicators 2010. Available at: http://ec.europa.eu/internal_market/publicprocurement/docs/indicators2010_en.pdf, (7.3.2015).
Kahlenborn, W., Moser, C., Frijdal, J. and Essig, M., Strategic Use of Public Procurement in Europe, Final Report to the European Commission MARKT/2010/02/C. Adelphi, 2011.
Steurer, R., Berger, G., Konrad, A. and Martinuzzi, A., Sustainable Public Procurement in EU Member States: Overview of government initiatives and selected cases. Final Report to the EU High-Level Group on CSR, Vienna, October 2007.
Study on Precarious work and social rights Carried out for the European Commission, (VT/2010/084), Working Lives Research Institute, London Metropolitan University.
7.4.3 USBurrows, V. and Manuel, K., Presidential Authority to Impose Requirements on Federal Contractors, Congressional Research Service Report for Congress, 14.6.2011.
United States Department of Labor, Office of the Secretary of Labor, Notice of Final Determination Updating the List of Products Requiring Federal Contractor Certification as to Forced or Indentured Child Labor Pursuant to Executive Order 13126, 75 FR 42164.
United States Department of State, Bureau of Democracy, Human Rights, and Labor, U.S. Government Approach on Business and Human Rights, 2013.
United States Health, Education, Labor, and Pensions Senate Committee: Acting Responsibly? Federal Contractors Frequently Put Workers’ Lives and Livelihoods at Risk, Majority Committee Staff Report, 11.12.2013.
7.4.4 OtherCrown Commercial Service, A Brief Guide To The EU Public Contracts Directive, publication, February 2015.
Norwegian Agency for Public Management and eGovernment (Difi), Walk the Talk: Ensuring Socially Responsible Public Procurement, 2014.
OECD, OECD Principles for Integrity in Public Procurement, 2009.
The Macbride Principles, by Father Sean McManus, President, Irish National Causus, December 1997. Available at: http://www1.umn.edu/humanrts/links/macbride.html, (18.3.2015).
The National Audit Office, Open-book accounting and supply-chain assurance, Report by the Comptroller and Auditor General, 2015. The report is
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available at: http://www.nao.org.uk/wp-content/uploads/2015/07/Open-book-accounting.pdf, (18.8.2015).
The National Audit Office, Open-book accounting and supply-chain assurance: case studies, Report by the Comptroller and Auditor General, 2015. The report is available at: http://www.nao.org.uk/wp-content/uploads/2015/07/Open-book-accounting-case-studies.pdf, (18.8.2015).
7.5 WebpagesBureau of International Labor Affairs, section DOL Home, sub-section ILAB, sub-section Reports, sub-section Child Labor & Forced Labor, sub-section List of Products Produced by Forced or Indentured Child Labor, 1.12.2014. Available at: http://www.dol.gov/ilab/reports/child-labor/list-of-products/index-country.htm, (25.5.2015).
Business & Human Rights Resource Centre, section Binding Treaty. http://business-humanrights.org/en/binding-treaty, (3.3.2015).
CSR Roundtable, Inter-agency roundtable on Corporate Social Responsibility. http://www.csrroundtable.org/, (7.5.2015).
Electronics Watch. http://electronicswatch.org/en/, (22.8.2015).
IKEA. http://www.ikea.com/, (14.9.2015).
Norwegian Agency for Public Management and eGovernment (Difi), section English, sub-section Socially Responsible Public Procurement, sub-section Information about High-Risk Products. http://www.anskaffelser.no/sosialt-ansvar/information-english/high-risk-products, (12.8.2015).
OECD, section Investment, sub-section Guidelines for Multinational Enterprises, sub-section National Contact Points for the OECD Guidelines for Multinational Enterprises. http://www.oecd.org/investment/mne/ncps.htm, (12.9.2015).
Sustainable Purchasing of the International Organization for Standardization, ISO/CD 20400. http://www.iso.org/iso/home/news_index/news_archive/news.htm?refid=Ref1873, (5.7.2015).
Sweatfree Purchasing Consortium, http://buysweatfree.org/, (21.8.2015).
UN Millennium Goals. http://www.un.org/millenniumgoals/, (7.3.2015).
UN Sustainable Development Goals. https://sustainabledevelopment.un.org/topics/sustainabledevelopmentgoals, (7.3.2015).
UN, section Global Issues, sub-section Briefing Papers, sub-section Child Labour. Available at: http://www.un.org/en/globalissues/briefingpapers/childlabour/intlconvs.shtml, (25.6.2015).
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United Nations Human Rights, Office 0f the High Commissioner for Human Rights, section Business, subsection National action plans. http://www.ohchr.org/EN/Issues/Business/Pages/NationalActionPlans.aspx, (10.3.2015).
United States Environmental Protection Agency, section Sustainable Marketplace: Greener Products and Services, sub-section Environmentally Preferrable Purchasing Programme. http://www.epa.gov/greenerproducts/about-environmentally-preferable-purchasing-program, (12.9.2015).
7.6 InterviewsHenrik Wilson, IMS Sustainability Manager at IKEA Services AB, which was conducted on May 4th 2015 in Helsingborg, Sweden.
Jörgen Hettne, Institutionen för handelsrätt, Lund University, 11.8.2015, Lund, Sweden.
7.7 News mediaAltschuller, S., H.R. 3226: New Bill Calls for Transparency on Trafficking and Slavery in Corporate Supply Chains, newsletter, 4.8.2015, Foley Hoag LLP. Available at: http://www.csrandthelaw.com/2015/08/04/h-r-3226-new-bill-calls-for-transparency-on-trafficking-and-slavery-in-corporate-supply-chains/, (6.8.2015).
Borenstein, S., Congress Debates Whether Lawbreakers Should Receive Contracts Many Still Get Government Money Despite Guilty Pleas Or Settlements. Strict Interpretation Of The Rules Could Disqualify 23 Of The Top 25. Article, Inquirer Washington Bureau, 22.7.2000. Available at: http://articles.philly.com/2000-07-22/business/25610736_1_contractors-joshua-gotbaum-violations-of-federal-tax, (23.6.2015).
Duvall, R., Elling, T. and Taylor, T., Public procurement in the United States: overview, Holland & Knight LLP, 2013. Available at: http://us.practicallaw.com/3-521-7446?q=&qp=&qo=&qe, (19.8.2015).
Farhat, V., Shepherd, W. and Canale, J., United States: Proposed Anti-Human Trafficking Rule Could Significantly Affect Contractor Compliance Programs, newsletter, January 8, 2014, Holland & Knight LLP. Available at: http://www.hklaw.com/publications/proposed-anti-human-trafficking-rule-could-significantly-affect-contractor-compliance-programs-01-08-2014/, (1.8.2015).
Gillis, N., Guidelines on Sustainable Public Procurement by U.S. Government, speech from 26.4.2012, Youtube. Available at: https://www.youtube.com/watch?v=zMCvWUYoDJQ, (12.6.2015).
Grete Solli – experiences from socially responsible public procurement, video, Difi, January 2015. Video available at: https://vimeo.com/112149202, (15.8.2015).
Healthier procurement, video, Swedwatch, 2015. Available at: https://vimeo.com/122554492, (22.8.2015).
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International Corporate Accountability Roundtable, Executive Order on Trafficking in Persons. Available at: http://hrdd.icar.ngo/content/executive-order-trafficking-persons, (28.7.2015).
International Labor Rights Forum, Dignity and Justice for Workers Worldwide, PowerPoint presentation, 2015. Available at: http://www.laborrights.org/publications/government-procurement-and-rights-workers-contractors%E2%80%99-supply-chains, (26.6.2015).
Irwin, J., Ethical Consumerism Isn’t Dead, It Just Needs Better Marketing, online article, Harvard Business Review, January 12th, 2015. Available at: https://hbr.org/2015/01/ethical-consumerism-isnt-dead-it-just-needs-better-marketing, (15.8.2015).
Ittig, K. and Witten, S., Preparing for New Anti-Human Trafficking Rules for Federal Contractors and Subcontractors: What Companies Need to Know about Obligations, Implementation, and Enforcement, PowerPoint presentation, March 12, 2014, Arnold & Porter LLP. Available at: http://www.arnoldporter.com/events.cfm?action=view&id=924, (1.8.2015).
Künnemann, R. The Extraterritorial Scope of the International Covenant on Economic, Social and Cultural Rights. Forum for a New World Governance, 2001. Available at: http://www.world-governance.org/article48.html, (13.3.2015).
Lynch, G., Public Procurement: Principles, Categories and Methods, available at: https://leanpub.com/procurement-principles-categories-and-methods, (20.3.2015).
Lynch, G., Public Procurement: Principles, Categories and Methods, e-read, 26.7.2013. Available at: https://leanpub.com/procurementintroduction/read, (25.3.2015).
Massachusetts Burma Procurement Law Challenged at WTO, available at: http://www.citizen.org/trade/article_redirect.cfm?ID=11103, (19.3.2015).
Nakashima, E., Clinton Contractor Rule Is Suspended, article, The Washington Post, 31.3.2001. Available at: http://www.washingtonpost.com/archive/politics/2001/03/31/clinton-contractor-rule-is-suspended/98aeef4a-99d8-4d3b-901a-c1665db6585c/, (23.6.2015).
Public Contracts Regulations: Government getting it badly wrong on public procurement, Matt Dykes, blog. http://touchstoneblog.org.uk/2015/03/public-contracts-regulations-government-getting-it-badly-wrong-on-public-procurement/, (14.7.2015).
Roth, M., Sullivan Principles, news article, The Encyclopedia of Greater Philadelphia, Rutgers University, 2013. Available at: http://philadelphiaencyclopedia.org/archive/sullivan-principles/, (24.3.2015).
Schulten, T., Renaissance of Pay Clauses in German Public Procurement and the Future of the ILO Convention 94 in Europe. Global Labour Column, Number 91, 2012. Available at: http://column.global-labour-university.org/2012/01/renaissance-of-pay-clauses-in-german.html, (18.5.2015).
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Use of Fair Trade labels in procurement decisions – Court of Justice of the EU in Max Havelaar, Geert van Calster, blog. http://gavclaw.com/2012/06/27/use-of-fair-trade-labels-in-procurement-decisions-court-of-justice-of-the-eu-in-max-havelaar/, (2.5.2015).
Wheeler, L., House bill would force businesses to detail anti-trafficking efforts, article, 27.7.2015, The Hill. At: http://thehill.com/regulation/249328-house-bill-would-force-businesses-to-report-anti-trafficking-policies, (2.8.2015).
White, S., The Top 175 Global Economic Entities, 2011. Available at: http://dstevenwhite.com/2012/08/11/the-top-175-global-economic-entities-2011/, (7.3.2015).
Why we must put the new Public Procurement Regulations on hold, Allison Roche. http://leftfootforward.org/2015/02/why-we-must-put-the-new-public-procurement-regulations-on-hold/, (14.7.2015).
7.8 OtherEuropean Trade Union Confederation, ETUC Key Points for the Transposition of the Directive 2014/24/EU, ETUC Publication, 2014.
IKEA, IKEA Group Sustainability Report FY2014, 2015. Available at: www.ikea.com/ms/en.../ikea-group-yearly-summary-fy14.pdf, (18.8.2015).
IKEA, IKEA's Planet & People Positive Sustainability Strategy, 2013. Available at: http://www.ikea.com/ms/en_GB/this-is-ikea/people-and-planet/index.html, (10.8.2015).
IKEA, IWAY Standard requirement 5.1, 2012. Available at: http://supplierportal.ikea.com/doingbusinesswithIKEA/sustainability/betterlifeforpeopleandcommunities/Documents/Forms/DispForm.aspx?ID=2, (10.8.2015).
Morton, A., EU Reform of Transnational Posted Workers Law and the Place of Working Eights and Collective Agreements within the Single European Market, European Public Services Briefings 5. European Services Strategy Unit, 2013.
Ruggie, J., A UN Business and Human Rights Treaty? An Issues Brief, Harvard Kennedy School, 28.1.2014.
Stumberg, R., Ramasastry, A. and Riggensack, M., Turning a Blind Eye? Respecting Human Rights in Government Purchasing, International Corporate Accountability Roundtable, September 2014.
Swedwatch, Healthier procurement, Improvements to working conditions for surgical instrument manufacture in Pakistan, report n. 73, 2015. The report available at: http://www.swedwatch.org/en/reports/healthier-procurement, (22.8.2015).
Swedwatch, Vita rockar och vassa saxar. En rapport om landstingens brist på etiska inköp, report n. 16, 2007. The report is available only in Swedish language at: http://www.swedwatch.org/sv/rapporter/daliga-forhallanden-bakom-tillverkning-av-klader-och-kirurgiska-instrument, (22.8.2015).
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The International Labor Rights Forum, Protecting Human Rights through Government Procurement, Recommendations for Responsible Supply Chain Management, Corporate Accountability, and Worker Access to Remedy in US Government Procurement, May 2015.
World Vision, Creating Markets for Child-Friendly Growth, Addressing child labour through G20 public procurement, policy report, April 2014.
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