Memorandum submitted by the Scottish Catholic
International Aid Fund
Do existing government guidelines on procurement
of ethical and fair trade products provide an enabling environment
for the development of this market and the opportunities for producers?
The UK Government's Sustainable Development
Strategy, published in 2005, sets out HMG's desire to be amongst
the leaders in the EU on sustainable procurement by 2009. As many
contracting authorities within Europe—including the European
Commission itself—have already procured fair trade goods,
it is surprising that the existing Office of Government Commerce
(OGC) guidance on procurement[74]
does not do nearly enough to promote the development of the fair
trade market in the UK, due to its unnecessarily restrictive interpretation
of EU legislation.[75]
It is true that, for the purposes of EU procurement
law, fair trade needs to be defined not just as products which
have received FLO/Fairtrade Foundation certification but, more
broadly, as products which are made according to specified fair
trade principles (for eg a fair producer price, a long-term contract
etc). These can include, but cannot be restricted to, products
with the FLO/Fairtrade Foundation label. Companies do not have
to have official fair trade certification but must prove, by "any
form of evidence", that they are abiding by fair trade principles.
However, procurement of fair trade goods as
thus defined is perfectly compatible with EU legislation and if
the government was to wholeheartedly support fair trade procurement,
this would have considerable implications for the growth of the
fair trade market in the UK.
However, in order for this to happen, the Office
of Government Commerce critically needs to reassess its current
guidance on this issue. In its current form, it does not so much
enable fair trade procurement as constrain it, as illustrated
by the following examples:
— No-where does the guidance mention
that several authorities—ranging from local authorities
in Scotland (eg Aberdeen) and local authorities in Italy, France
and Spain to the Austrian government in its Presidency of the
European Union and the European Commission itself—have successfully
procured fair trade products.
— Neither does it emphasise that the
whole purpose of EU procurement legislation is to ensure that
"contracting authorities shall treat economic operators equally
and non-discriminatorily and shall act in a transparent way".
In other words, EU legislation is not concerned with what is being
procured (be it fair trade or otherwise) but rather how it is
being procured. As such, although it would be possible to procure
fair trade goods in a manner incompatible with EU procurement
legislation, there is no inherent reason why the two should come
into conflict.[76]
This has a significant knock-on effect as it
means that contracting authorities who might wish to procure fair
trade are not receiving the information that they need to enable
them to do so as effectively as possible.
— For example, if authorities wish
to buy fair trade, they need to mainstream fair trade procurement
from the very beginning of this process. This can be quite easily
done by ensuring that there is an explicit reference to fair trade
in the title (subject matter) of the contract, and this then makes
provision of fair trade products (which need to be defined later
on in the contract) mandatory.
— However, the OGC Guidance implies
that provision of fair trade goods cannot be made mandatory and
that "a bid cannot be rejected or considered non-compliant
simply because it does not include any desired fair trade options".
In fact, as long as fair trade is mentioned in the subject matter
and is defined later on, it is necessary by definition to reject
a bid not offering fair trade products!
These are just a few of several examples illustrating
how current guidance does little to enable fair trade procurement.
(For other examples, and more details on the examples given, please
consult the accompanying full-length document on public procurement.)[77]
It is crucial that the government provides a
strong sense of direction on this issue, indeed, the government's
"Sustainable Development Taskforce" has recommended
that the OGC needs to "lead by example," by providing
a "clear commitment from the very top of government"
downwards.
SCIAF thus recommends that the OGC:
— Re-issue guidance clarifying that
the scope for fair trade procurement under EU law is wider than
previously advised.
— Make clear the different options
that are available to authorities, including advice on how to
mainstream fair trade goods as effectively as possible.
— Encourage and support authorities
in their efforts to apply fair trade principles, including holding
workshops/training if appropriate.
These actions, if undertaken, will bring several
direct and indirect benefits to communities in the UK and in developing
countries. SCIAF has calculated that if the Scottish Executive
was to spend just 0.5% of its procurement budget according to
fair trade principles, this would double the fair trade market
in Scotland. And if converting just a small part of Scotland's
consolidated procurement spend of £8 billion could produce
such a large impact, imagine the effect if the UK committed to
spend a significant proportion of its £150 billion budget[78]
according to fair trade principles.
The direct benefits that such large scale, guaranteed
procurement could have on poor communities overseas would be considerable
and it could also have enormous "spin-off" effects when
it comes to persuading other contracting authorities both within
in the UK and in Europe more broadly to procure fair trade goods.
The OGC should thus implement these recommendations
at the earliest available opportunity in order to ensure that
the government is able to meet its target of becoming a European
leader in sustainable procurement.
February 2007
74 Office of Government Commerce Guidance on Fair
and Ethical Trading. Back
75
The relevant document being 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. Back
76
In fact, the Directive is quite clear about this and states
that there are indeed "possibilities for the contracting
authorities to meet the needs of the public concerned, including
in the environmental and/or social area" and that "nothing
in this Directive should prevent the imposition of enforcement
measures necessary to protect public morality... human or animal
life... in particular with a view to sustainable development provided
that these measures are in conformity with the Treaty"(emphasis
added). Back
77
McClelland, J F (2006) Review of Public Procurement in Scotland:
Report & Recommendations. Back
78
http://www.sustainable-development.gov.uk/government/task-forces/procurement/index.htm Back
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