But more needs to be done.
The European Federation of Building and Woodworkers (EFBWW) welcomes the European Commission’s intention to take a more strategic approach to public procurement. For many years, EFBWW has insisted on the important role of responsible public procurement in creating a sustainable construction industry. In the construction industry, public contracts make up an important share of all economic activity and turnover.
With major public investment needed for renovation, affordable housing, climate resilience and the infrastructure for the energy transition, the rules governing how this money is spent will play an increasingly important role in shaping the construction sector.
Strategic public procurement that promotes quality, direct jobs and fair competition can be a gamechanger for the construction sector.
The proposal explicitly recognises that social justice and fair working conditions are important strategic policy objectives and intends to strengthen these objectives by introducing the best price-quality ratio as the general basis for awarding public contracts.
In the past, EFBWW has insisted many times that the lowest price often comes with a high social cost for workers and responsible businesses. Introducing mandatory quality weighting criteria of 50% in labour-intensive and fraud-sensitive sectors, such as the construction sector, could potentially represent an important next step away from awarding contracts based on the lowest-price criterion and towards more socially responsible public procurement.
The proposal also requires public buyers to reject abnormally low tenders where the low price cannot be properly explained. EFBWW welcomes this step. It is particularly important in construction, where unrealistically low prices are likely to come at the expense of fair wages and compliance with labour standards.
On subcontracting, EFBWW welcomes the Commission’s recognition that it may have a negative impact on the execution of public works. The proposed measures to make it clear from the start which parts of a contract will be subcontracted are a positive step. More importantly, the recognition that contracting authorities can require contractors to perform certain critical tasks directly, and the prohibition of subcontracting the entirety of the public contract, are important steps towards a full and unconditional ban on financial subcontracting.
At the same time, EFBWW regrets that the Commission proposal does not contain a clear call to limit subcontracting, despite overwhelming evidence that long and complex subcontracting chains lead to unfair competition, fraud and exploitation. Academics, researchers, the European Labour Authority, trade unions and responsible businesses have all called for limits on subcontracting in public procurement in construction.
EFBWW therefore reiterates its call to limit subcontracting chains to a maximum of one subcontracting level, or two levels where this is technically necessary. Clear limits are essential to ensure transparency, accountability and effective enforcement throughout the subcontracting chain. Many examples in construction already show that this is possible and can be done. In several Member States, at national or regional level, individual public clients have imposed such limitations without creating problems for the execution of the works. On the contrary, they show that such limits result in more efficient enforcement, better quality, higher standards of health and safety, and fewer problems related to social dumping and labour crime.
No public money for exploitation
EFBWW welcomes the strengthening of mandatory exclusion grounds, including for fraud, human trafficking and criminal offences concerning the employment of illegally staying third-country nationals. However, social dumping itself is not a mandatory ground for exclusion. Public authorities must have effective possibilities to exclude companies that violate applicable social and labour obligations.
In a fair Internal Market, it is crucial that public money does not reward companies that gain a competitive advantage through exploitation. In that context, clear and transparent liability schemes are essential. EFBWW expects the operationalisation of these principles in the proposal to be further accompanied by full and unconditional joint and several liability, with the main contractor retaining overall responsibility. We call on the co-legislators to further develop these principles.
Finally, EFBWW is worried about the potential impact of changing the current legislative format and replacing the existing Directives with a Regulation. This change must under no circumstances weaken or reverse existing national prerogatives towards more socially ambitious public procurement. In particular, the right of Member States, public clients and sectoral social partners to put in place more ambitious measures to limit subcontracting, prohibit or restrict the use of labour intermediaries, and establish full joint and several liability in public procurement in construction must be preserved. We call on the co-legislators to carefully assess whether these concerns can be addressed within the framework of a Regulation.
Public procurement should be a driver for quality jobs, direct employment, fair competition and social progress, not a race to the bottom.
Our overall assessment is that the Commission proposal is a positive first step in the right direction, but much more needs to be done, including addressing the potential impact of replacing the Directives with a Regulation. EFBWW stands ready to work with policymakers to achieve the best possible outcome on one of the most important tools for promoting fair competition and quality jobs.
“We welcome the proposal’s recognition that public procurement has a role in fighting social dumping and labour crime, but the real test is whether the new rules make it harder to build business models on exploitation and blurred responsibility. Also, if the Commission wants to replace the Directives with a Regulation, it must guarantee that Member States, public clients and social partners remain free to go further. We cannot accept European rules becoming an excuse to lower standards where countries have chosen to do better. Now or in the future.”
Claus von Elling, President of EFBWW
“Public procurement shapes the construction market. The European Commission proposal to revise public procurement rules is a first step towards more quality jobs in construction. But a lot more needs to be done! The problems caused by long subcontracting chains have been recognised, but the only viable prevention has not. In construction, only clear limits on subcontracting chains and strict accountability and liability rules can ensure that responsibility is placed when things go wrong, prevent labour crime from hiding in the chain and create more quality, direct jobs.”
Tom Deleu, General Secretary of EFBWW