Issue 44 February 2009 - Public Procurement and Human Rights, Part II

Part I of this article appeared in the previous edition of the Scottish Human Rights Journal - link. In that article, the present state of public procurement law was mapped out and the methods by which human rights considerations can be incorporated into procurement processes were summarised. This article will demonstrate how better use of human rights considerations can be made and what changes need to be introduced to allow a more effective integration of human rights and public procurement.  

But first, a reminder of why it is important for human rights to play an active role in public procurement. In December 2008 the NHS admitted that British hospitals were buying surgical instruments produced in dangerous working conditions in Pakistan using child workers as young as eight. In some workshops, products such as scalpels, clamps and scissors to be used in NHS operations are made by workers paid as little as 170 rupees (£1.40) a day.¹ The NHS has now realised that there are problems inherent in its supply chain and we will look at its proposed solutions later in this article. This highlights the fact that public money can be used to purchase supplies and/or services in a way which may be directly or indirectly subsidising suppliers which operate in contravention of international law or human rights standards. Consider the implications that this has for the £150 billion annual expenditure on public procurement within the UK² and the €1000 billion spent within Europe and it becomes apparent that unethical public purchasing can have an enormous impact.  

It is my submission first that the present state of the law could be better exploited by the public sector to incorporate human rights and/ or other social criteria into the procurement process. Secondly, by making changes to procurement law, human rights considerations could be better implemented by public purchasers.

Incorporating Human Rights Standards under the Current Legal Framework

The present writer's previous article on this subject focused on the ways in which human rights considerations may be incorporated into the procurement process under the present legal framework. It was demonstrated that human rights considerations could be factored into each of the procedural steps taken when purchasing in accordance with the Public Contract (Scotland) Regulations 2006 ("the Regulations'') and EU Directives. By way of summary:

• Detailing technical specification: purchasers may indicate the level of technical specification they require from tenderers. Where the contract to be awarded may have a human rights impact the identifiable human rights standards which the contract must meet may be specified.

• Selection/ exclusion of bidders: those bidding for public contracts may be excluded from the tender process if it is possible to demonstrate they have committed "grave professional misconduct". Alternatively, bidders may be excluded if they fail to demonstrate that they are capable of meeting "technical or professional" standards that may be linked to human rights considerations.

• Award of the contract: human rights considerations may be used to assess who to award a public contract to, provided that such criteria comply with the principles established in the Concordia Bus Finland case³ of the European Court of Justice.

• Contractual terms: the public contract itself may contain terms which stipulate human rights standards which are to be complied with when providing goods and/ or services.  

European and UK law permits the inclusion of social criteria, including human rights considerations, and in the UK it is a matter of discretion as to how these are incorporated by public purchasers. However, uncertainty over how to put these propositions into practice leads to hesitancy on the part of purchasing authorities. Public procurement can seem a complicated and even dangerous undertaking; the Regulations are relatively new, and ever strengthening remedies for a breach of their provision are accessed with increasing frequency through the courts. The UK's Sustainable Procurement Task Force also identified a number of barriers to sustainable procurement⁴, including a lack of clarity and a proliferation of policies, a failure to manage supply chain risk, an overload of guidance and the fact that sustainable procurement is met with suspicion, confusion and ignorance. The Plan identified a focus on short-term efficiency in procurement at the expense of long term benefits.  

The Task Force recommended that the public sector is to lead by example and that the sustainable procurement agenda needs to be driven by a party which takes ownership for it. At the moment the sustainable procurement agenda is spread throughout the public sector-no one party leads, makes recommendations or advocates change. The Task Force recommended the creation of a sustainable procurement delivery team to support policy development, research and practical advice, but there appears to be no such team forthcoming. In the absence of such a team the lacuna could be occupied by a different public body willing to take ownership over the issue such as the new Scottish Human Rights Commission ("SHRC'') which has the general duty to promote human rights and, in particular, to encourage best practice in relation to human rights. But what could a body do that was willing to take this issue on?  

The Commission Communication

The Guidelines on sustainable public procurement that are promulgated within the UK⁵ take their lead from the European Commission's Communication commented on in the previous article on this topic.⁶ UK guidance documentation follows the Communication and its influence trickles down into the practice of purchasing authorities. The Communication is famously conservative in its approach; it ensures only that those following it operate within the minimum requirements of the European Directives. Nevertheless, there is evidence to suggest that the Communication's guidance is beginning to be internalised by purchasing authorities. Scotland's Housing Associations, for example, are beginning to see the benefit of including social criteria in their procurement processes⁷ and a number of local authorities have developed their own ethical or fair trade procurement policies. The European Commission is currently drafting a forthcoming guide on socially responsible public procurement which is due out in 2009. It is clear that national and local authorities implement EU guidance and therefore need clear guidance on socially responsible procurement from the European Commission. However, the current consultation process for the development of a guide on socially-responsible procurement has been criticised for being not transparent and does not allow for input from civil society groups, national and local governments, trade unions and business associations.⁸ The Commission's guidelines hold the greatest normative sway over the member states and must be the first port of call for those wishing to advocate a more human rights compliant approach. Pressure needs to be put on the European Commission to open up its current exercise in drafting guidance for consultation and so that it will listen to appropriate human rights based submissions.  

Domestic Guidelines

There are examples of purchasing guidelines which go further than the recommendations of the Communication. On the discovery that many of its surgical supplies may have been procured in contravention of international labour standards, the NHS published its own draft guidelines for consultation on ethical purchasing in December 2008. The guidance draws on self-assessment indicators developed by the Ethical Trading Initiative ("ETI") and the ETI's Base Code which is based on the International Labour Conventions discussed later in this article. The guidance contains a toolkit to assist NHS purchasers identify issues, to assess risk, deal with sensitive issues, how to ensure accountability and take remedial action on identified labour standards issues. It remains to be seen how effective the guidelines will be but they do at least seek to take sustainable procurement outside the minimum standards of compliance with the Regulations and seek to do more to ensure adherence to human rights. These guidelines were drafted after the fact, as a remedial measure designed to eradicate human rights abuse from the NHS's supply chain but could be worked into a format that has more general application so that they may be adopted throughout the UK's procuring authorities. Doing so might mean that other purchasing authorities do not end up repeating the mistakes made by the NHS.  

"Next Step" Guidance

Guidance on sustainable procurement at both the European and domestic level gives no instruction as to how to identify whether a particular contract is likely to engage human rights considerations and how to accommodate these in procurement procedures. If purchasing authorities are to take the human rights implications of their procured contracts seriously then they need to be instructed successfully on how to do so in order that they may internalise the procedures and culture necessary. In the absence of good guidance, purchasers seek to make their procurement processes merely compliant with the Regulation's minimum standards. This means that the full potential of procurement which could be used as a means for procuring human rights compliant contracts is missed. There is a lack of leadership, a lack of ownership, over the production of guidelines which indicate the next steps in the procedure. This results in a disparate supply of guidance documents which can overload and confuse purchasing authorities. A body willing to take ownership of this issue could work with a wide variety of NGOs, interest groups, statutory bodies, the academic community and other bodies[ix] on how to attribute value to the human rights aspects of sustainable procurement and to stimulate debate around the issues. The Task Force acknowledged that the Government must engage internationally with key markets to establish new sustainability standards and set mandatory minimum product and service standards. A public body which has its own powers to conduct research, publish information and provide advice or guidance¹⁰ needs to provide clear and easy to follow guidance on human rights standards and why and how to incorporate these standards into public procurement. Such guidance needs to be supplemented with model toolkits or incorporation and a model procurement policy that may be adopted by other public authorities.  

Legal changes?

Guidelines are, however, a voluntary code. Even if the NHS adopts its new guidelines, which are currently in consultation, NHS trusts will not be obliged to follow them. Human rights standards in other member states have been incorporated into law. Austria explicitly mentions adherence to a number of international labour norms in its procurement laws. In transposing the requirements of the EU Directives, Austrian national law states that:

"For all procurement procedures executed in Austria, the obligation following the (ILO] Conventions 29, 87, 94, 95, 100, 105, 111, 138, 182 and 183 have to be met."  This means that Austria's procurement procedures must adhere to the requirements of international norms which ensure public contracts do not use forced and child labour, that such contracts offer wage protection, equal remuneration, a minimum wage and maternity rights. For example, ILO Convention No.182¹¹ provides that:

 "Each Member which ratifies this Convention shall take immediate and effective measures to secure the prohibition and elimination of the worst forms of child labour as a matter of urgency." Incorporating protections against child labour into the procurement process is one method by which the UK can fulfil its legal duty to ensure the effective implementation and enforcement of the Convention.¹²  

Austrian procurement law also makes reference to ILO Convention No.94 on "Labour Clauses in Public Contracts". ILO Convention No.94 provides that public contracts will include clauses ensuring workers wages, hours of work and other conditions of labour are not less favourable than those standards established in the district where the work is to be carried out. Where appropriate provisions relating to the health, safety and welfare of workers are not applicable by virtue of national laws, public authorities must take adequate measures to ensure that fair and reasonable conditions of health, safety and welfare exist for the workers concerned. The UK ratified ILO Convention No.94 in 1950 but denounced it during the Thatcherite years.¹³ Of the 59 countries to have ratified the convention only the UK has denouriced it. It is submitted that by ratifying this Convention and incorporating it into our procurement law, better protections can be offered to the international workers fulfilling our public contracts.  

The UK's attempts at addressing employment protection are given in reg.38 of the Regulations, which provides that public authorities may include information as to employment protection and working conditions in the contractual documents provided to tenderers. If such information is to be provided a public authority must then request of tenderers that they have taken account of the obligations relating to the employment protection provisions and working conditions in preparing their tender. This rather laissez faire approach relies on contracting authorities providing information about employment protection provisions. The reality is that public authorities are rarely aware that they can take neither this approach nor how to stipulate reference to the normative requirements of ILO Conventions. Purchasing authorities have the discretion to incorporate provisions to ensure the fulfillment of these ILO Convention obligations, but there is no instruction as to how to make this happen, no model contractual clauses, no example questionnaires, no guidance and no publicity. In the absence of any engagement between the UK's procurement process and the ILO Conventions the UK's purchasing authorities have, understandably, little idea what the ILO Convention requirements are, let alone how to ensure their protection. Clear guidelines would help public purchasers incorporate the requirements, but in order to ensure that it's public authorities duty to adhere to the Conventions and to ensure the UK's fulfilment of its legal duty, the ILO Conventions could be incorporated into the Regulations.  

This is just one proposal to change UK or Scotland's procurement law. It would in principle be possible to refer to other instruments of international human rights law as well, thus encouraging member states to take compliance with human rights standards into account in awarding public contracts.¹⁴ The last article on this topic also suggested defining the concept of "grave professional misconduct" to allow purchasing authorities to preclude certain suppliers from participating in public tenders. Again, a public body which has the power to review and recommend changes to the law needs to research and advocate the changes proposed if these suggestions are to carry any weight.  

Public expenditure can be harnessed to a procurement process which is designed to ensure the observation of minimum standards of human rights. This would mean that the risks of procuring from unethical supply chains were minimised and that the human rights considerations were used as a method of selecting the best suppliers of our public supplies and services. To do so, better use of the current legal framework needs to be made together with changes to the law.

References

[1] http:/ / www.guardian.co.uk/society/2008/ dec/08/ nhs-instruments-child-labour [Accessed February 10, 2009].

[2] "Buy and make a difference", Office of Government Commerce, p.3, available at http:/ www.ogc.gov.uk/documents/ Social_Issues_in_Public_Procurement.pdf [Accessed

February 10, 2009].

[3] Case C-513/99, September 17, .2002 Rep. 2002 p.I- 07213, Concordia Bus Finland Oy Ab, formerly Stagecoach Finland Oy Ab v Helsingin kaupunki and HKL- Bussillkenne 

[4] Sustainable Procurement Action Plan 2006, http:www.defra.gov.uk/sustainable/ government/gov/taskforces/ procurement/ index.htm [Accessed February 10, 2009] .

[5] e.g. Office of Government Commerce publication, "Buy and Make a Difference-How to Address Social Issues in Public Procurement" and the Scottish Procurement Directorate's "Community Benefits in Public Procurement Guidance Note".

[6] http:/ / eur-lex.europa.eu / LexUriS erv / LexUriServ.do?uri=CELEX:52001 DC05 66:EN:NOT [Accessed February 10, 2009].

[7] Housing Association's social history lends itself toward incorporating local employment or training opportunities within their regeneration projects. See, e.g:

"Buying for Good-Housing Associations, Social Firms and Community Benefits in procurement." http:// www.socialfirms.org.uk/ FileLibrary / Resources/ Procurement/080519%20Final%20PDF%20Guide.pd[[Accessed February 10, 2009].

[8] http://procureitfair.org/ news-en/ european-commission-needs-to-show-leadership-for-socially-responsible-public-procurement [Accessed February 10, 2009].

[9] e.g. The European Coalition for Corporate Justice, ProcureIT fair, SOMO Centre for Research on Multinational Corporations, other National Human Rights Associations.

[10] Such as belong to the SCHR. The Scottish Commission for Human Rights Act 2006 s.3, http://www.opsi.gov.uk/legislation/scotland/acts2006/ asp_2060016_en_l#pb2 [Accessed February 10,2009].

[11] Ratified by the UK on March 22, 2000.

[12] art.7.

[13] Denounced on September 20, 1982.

[14] HJan Wouters, Leen Chanet, "Corporate Human rights Responsibility: A European Perspective", 6 Nw.U.J. Int'l Hum.Rts 262.