Anna Kucinska
21 January 2015

Changes regarding social clauses in public procurement in Poland

Social clauses in public procurement are instruments which help take into account important social objectives as selection criteria. The possibility to include social clauses in public procurement was introduced by the two EU directives in 2004[1]. The EU has introduced these solutions in belief that public spending can also bring added social value.
 
In a guidebook on social clauses in public procurement, published in 2011, the European Commission points to a dozen social aspects, including job creation, consistence with social legislation, social integration, equal chances, sustainable development criteria – including ethical trade, corporate social responsibility[2].
 
In order to be able to use social clauses in public procurement the EU member countries have to include them in their national legislation. In 2009 Poland introduced three solutions, colloquially called social clauses, in its public procurement law (PPL). The first of them is restrictive clause which makes it possible to restrict the public tender exclusively to companies where over 50% of employees are disabled (art. 22 PPL). The second solution, employment clause, allows the contracting authority to require the contractor to hire persons who have limited access to the labour market (art. 29, paragraph 4, PPL). The PPL specifies the categories of such people, they include the unemployed, young people who need vocational training, the disabled, the mentally disabled, the homeless or former prisoners. The contracting authority specifies which category they are interested in and how many people in each category the seek to employ. According to the third clause (art.29, paragraph 4 PPL), pro-worker clause, the contracting authority can require the contractor to set up a training fund for financing or co-financing continued training for employees and employers in their company; the contractor should allocate not less than 1% of the wage bill if such a fund exists or increase contributions to it up to 1% of the company’s wage bill.  
 
The bad news is that even though more social clauses are being used today compared to three years ago, they remain marginal in all public tenders – for example, in 2013 only 400 public tenders included restrictive clause, which represents slightly over 2 per mille of all tenders over 30,000 euros[3]. There are no detailed data regarding employment clause but its use can be estimated at 500-600 procedures over 30,000 euros, which is infinitesimal. The social clauses seem to be new and unfamiliar to the contracting authorities which are reluctant to complicate even further the delicate area of public procurement, they do not have sufficient knowledge of or experience in it.
 
Another bad news is that in 2014 the possibility to use pro-worker clause was lost due to the amendment to the legislation on promotion of employment and labour market institutions that repealed the possibility to set up training funds and replaced it with financing from the National Training Fund.
 
The third bad news is that the Polish Public Procurement Office has decided that the requirement to employ the unemployed should be interpreted literally, which means that people who are to be employed should be unemployed at that moment. This change impedes the possibility of employing those who are in the process of professional and social integration in social cooperatives because with in the light of literal interpretation they are not regarded as unemployed.
 
Fortunately, recent years have also brought about certain positive changes.

  • The first one is that awareness raising campaign promoting the use of social clauses was conducted in 2014 as part of the Integrated Support System of Social Economy project, co-funded by the EU (see http://www.klauzulespoleczne.pl/).
  • The foundation Co-operation Fund has run seminars on social clauses and reached out to nearly a thousand people, mainly local government officials responsible for public procurement.
  • The Institute of Public Affairs has published a practical guidebook on using social clauses, based on research and analyses of public tenders, which will be distributed free of charge to local governments and downloadable on the Institute’s website (http://www.isp.org.pl/).
  • The Public Procurement Office has also published its legal guide on social aspects of public procurement, including social clauses.

The good news is also that there have been several decisions of the National Appeal Chamber over the use of social clauses, which makes the interpretation of the related legislation less vague.
 
The National Strategy for Social Economy Development (KPRES), which was adopted in August 2014, also features the promotion and inclusion of social clauses in local and national public policies. The support for the use of social clauses has also been included in many multi-annual regional strategies for social economy development.
 
The excellent news is that there are local governments, for example in Czestochowa or Brzeziny, which have already included social clauses in several tens of public tenders. This provides evidence that social clauses have advantages – they help remedy unemployment, contribute to providing jobs for the disabled and help decrease spending on social welfare benefits.
 
Furthermore, two amendments that can have social impact have been made to public procurement law (PPL). Now in the description of subject-matter the contracting authority can require the potential contractor to employ workers on the basis of the contract of employment if it is justified by the nature of work required (art. 29, paragraph 4, point 4 PPL). The second potentially positive amendment is the obligation to use additional criteria, apart from the cost/price one, which can take into account social aspects. The contracting authority can use the cost/price criterion as the only one exclusively with regard to goods or services that are commonly available on the market and have agreed quality standards - unless it is a tender in the form of electronic bidding (art. 91 ust. 2 PPL).
 
At present it is difficult to assess the impact of the above mentioned amendments because they only came into force on 19 October 2014. They should however be treated with caution, particularly the change regarding the contract of employment as these regulations are quite general and vague. The amendment relating to additional criteria requires the contracting authority to formulate such criteria well and there are fears that the contracting authorities will be opting for other criteria such as the timely execution of the task or the guarantee that it will be completed because these criteria do not leave room for interpretation.
 
To sum up, although social clauses are not sufficiently widely used, many measures have been taken to promote them and there are chances we will see their results this year. The new EU directives, which were adopted in spring 2014[4], provide a great opportunity to further promote social clauses in public procurement as they have introduced new possibilities to include social aspects and have broadened the scope of the application for the existing ones. One of the examples is the restrictive clause which now can be used for contractors whose main goal is social and professional integration of workers disadvantaged on the labour market (e.g. in social cooperatives) on condition that over 30% of the staff have limited access to the labour market. This solution could really have social impact, the only condition being to include it in the Polish public procurement law. We have time for it until April 2016.
 
 
Adapted from: Klauzule społeczne w prawie zamówień publicznych w Polsce 2011–2014. Co się zmieniło, Tomasz Schimanek, Instytut Spraw Publicznych, www.ekonomiaspoleczna.pl
 

[1] Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 and Directive 2004/18/WE of the European Parliament and of the Council of 31 March 2004

[2] „Buying social - A Guide to Taking Account of Social Considerations in Public Procurement", EU Publication Office, Luxembourg 2010

[3] „Sprawozdanie Prezesa Urzędu Zamówień Publicznych o funkcjonowaniu systemu zamówień publicznych w 2013 roku”, Public Procurement Office, Warsaw 2014

[4] Directive 2014/24/UE of the European Parliament and of the Council of 26 February 2014 on public procurement repealing Directive 2004/18/EU, Directive  2014/25/UE of he European Parliament and of the Council of 26 February 2014 on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC Text with EEA relevance and Directive 2014/23/UE of the European Parliament and of the Council of 26 February 2014 on granting concessions. 
 

 

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