The European Parliament has updated EU rules on public procurement on Wednesday (15 January), introducing new provisions allowing for environmental, social considerations and innovation to be taken into account when public contracts are awarded. The move is not aimed at privatising public services, MEPs insisted however.

The European Parliament voted today (15 January) in favour of two directives - on public procurement and awarding of concessions -, which had already been agreed with the EU member states last June in the Council of Ministers.

The aim of the reform is to open up public tenders to smaller businesses and encourage public authorities to consider how they can better provide their services to taxpayers.

The new measures are supposed to cut red tape, promote value for money, transparency and accountability in how public authorities provide goods and services.

"Public procurement will no longer be a question of simply accepting the lowest price. Smart customers will work with smart suppliers to provide better solutions, better tailored to meeting customer needs in more innovative ways," said British MEP and rapporteur Malcolm Harbour from the European Conservatives and Reformist (ECR) group, who's also the chairman of the Internal Market and Consumer Protection Committee.

Common standards

According to official data, public authorities spend around 18% of GDP on works, goods and services. Until now the focus was placed on getting the lowest price, but the European Parliament says the revised EU laws will herald a new era where quality and sustainability criteria can also be taken into account.

The new legislation for the first time sets "common EU standards on concession contracts to boost fair competition and ensure best value for money by introducing new award criteria that place more emphasis on environmental considerations, social aspects and innovation," the EU parliament said in a statement.

Indeed, by introducing the Most Economically Advantageous Tender (MEAT) criterion, environmental and social aspects will also be taken into account more prominently.

Innovation partnership

Moreover, by introducing the “Innovation Partnership”, public authorities will be able to launch a call for tender without pre-empting the solution, leaving room to the tenderer to come up with innovative solutions together with the authority.

The new rules are also expected to cut administrative burdens and help smaller companies to bid by encouraging the division of contracts into lots.

“Abnormally low bids” will be closely monitored in order to avoid social dumping and make sure that workers’ rights are respected in all member states.

MEPs stressed the revised texts do not represent a push to privatise public service, saying the new procurement directive "does not require the privatisation of public enterprises providing services to the public".

Water services have been specifically excluded from the text as MEPs acknowledged the special nature of water as a public good.