Keywords:

Sustainable Public Procurement, COVID-19 pandemic, Legislation, Environmental Sustainability, Balance of Economic and Non-Economic Goals, Sustainable Development Purposes.

Introduction

The development of the world economy demonstrates that public procurement has the potential for buying capacity, which should be used while purchasing more sustainable goods and services that can assist to create positive benefits for the environment and society. It is confirmed by data from the European Commission, which demonstrates that more than 250,000 public authorities in the EU spend annually about 14% of GDP (about 2 trillion euros per year) on buying services, works and supply of goods. Public authorities are the main buyers in many sectors, such as energy, transport, waste management, social protection and health care or education services. Improvement of public procurement can bring significant savings: even 1% increase in efficiency can save 20 billion euros per year (The European Commission, 2020).

World leaders have adopted the 2030 Development Agenda in September 2015 that was based on 17 Sustainable Development Goals (SDGs), which take into account three aspects of sustainable development: economic, social and environmental. One of the goals within the goal 12 is to focus on promoting “public procurement practices that are sustainable in line with national policies and priorities” (United Nations Environment Programme, 2017). It is the demonstration of the fact that sustainable public procurement is recognized as the key strategic component of global efforts to achieve more sustainable consumption patterns and production.

The Marrakesh Working Group on Sustainable Procurement was one of the first international programs for sustainable public procurement, which was established under the leadership of the Swiss Government. The purpose of the Marrakesh Group was to promote the use of sustainable public procurement in the developed and developing countries. This program has created tools for sustainable production, consumption and procurement for 10 years. The United Kingdom, China, Brazil, Argentina and Norway were the members of this working group. The Marrakesh Working Group understands sustainable procurement as “the process when organizations meet their needs for goods, works and services in a way that assesses the benefits not only to the organization, but also to society and the economy while minimizing environmental damage, when assessing the value takes into account the cost of the product life cycle”(The International Council for Local Environmental Initiatives, 2021).

The main purpose of sustainable public procurement is to find the correlation between environmental, social and economic aspects of production and consumption, as well as balancing interests between market participants, such as producers, suppliers, consumers, and the environment protection while purchasing goods and services (Nikitchenko et al., 2016). Sustainable procurement must combine environmental, social and economic criteria, which ensures the solution of existing economic problems taking into account the priority of social and environmental aspects.

Results and Discussion

Public procurement legislation within the EU has started to be formed since 1971. There were four different Directives in early 1990s aimed at creating a complete internal market. Theregulatory legal base of themand later Directives of 2004 reflected fundamental commitment to free trade. The Directives enshrine five principles of trade, namely: the principle of non-discrimination, which means that discrimination against suppliers is prohibited directly or indirectly, on the grounds of nationality; the principle of equal treatment, which means that all suppliers should be treated equally; the principle of transparency, which means the obligation of the procuring entity to provide information on the procurement procedure; the principle of proportionality, which means that the requirements for the supplier and the requirements in the specification must have an obvious relationship and be proportional to the subject matter of the contract; the principle of mutual recognition, which means that diplomas and certificates issued by the agencies authorized by any Member State must also be used in other EU/EEA countries. The stated principles are aimed at ensuring effective, predictable and consistent actions, and underlie the Public Procurement Directives, which were last revised in 2014 (Sjafjell & Wiesbrock, 2015).

Directives 2014/24/EU and 2014/25/EU in modern conditions are the legal basis for sustainable public procurement in the European Union. Besides these Directives there is a number of other Acts in the EU that regulate procurement and affect how sustainable public procurement should be applied (for example, EU treaties, methodological materials on the use of sustainable public procurement by customers). Let’s study the documents regulating sustainable public procurement in details.

Directive 2014/24/EU and Directive 2014/25/EU contain specific guidelines on the possibility of including environmental requirements and criteria into the procurement process. Directive 2014/24/EU states that public procurement is one of the market instruments for achieving sound, sustainable development that ensures the most efficient use of public funds. This Directive also directly states that procurement rules should not prevent the introduction and application of measures necessary to protect life, public ethics, public safety, human and animal health, plant conservation and other environmental measures for sustainable development.

Directives 2014/24/EU and 2014/25/EU provide the inclusion of environmental, social and labor protection requirements into procurement procedures. These requirements can also be used as criteria in determining the winner of the application. Directives oblige customers to apply the requirements and conditions of sustainable procurement. Besides enhancing the simplicity and flexibility of EU public procurement legislation, the main objective of the 2014 EU Procurement Directive is to increase the possibilities to use public procurement in order to support wider social and environmental goals. The EU Commission has defined public procurement as the strategic policy tool for achieving sustainability and as a significant contribution to the EU’s goals in the field of smart technology, sustainable and inclusive growth (Sjafjell & Wiesbrock, 2015).

The Treaty on the Functioning of the European Union, the Treaty on the European Union both directly and indirectly regulate issues related to sustainable procurement. In particular, the Treaty on European Union (The European Union, 2012) stipulates that the task of the community is to promote harmonious, balanced and sustainable economic development, high employment and social protection, sustainable and non-inflationary growth, high competitiveness level and convergence of economic indicators, high level of protection and improvement of the quality of the environment, improvement of the standard and quality of life, economic and social cohesion and solidarity of the Member States. On the basis of the norms of the Treaty on the Functioning of the European Union (The European Union, 2012) the principles of public procurement in the EU were formulated. The EU Treaties enshrine both the basic principles of free movement of goods, services, capital, people, the prohibition of discrimination on the basis of nationality, and specific principles applied in public procurement. These are the principles of transparency, equality, proportionality and mutual recognition. The EU Treaties are more widely applicable than the Directives because they are applied to procurement of any sum of money, while the provisions of the Directives are applied to procurement above threshold sums of money and public procurers are obliged to apply these principles in all areas of procurement (Naija & Warren, 2012).

In addition, the EU has developed methodological materials designed to help customers in applying sustainable public procurement. One of such tools is a developed list of environmental criteria that are recommended for public procurement. These are both product requirements and contract criteria. They are formulated for 21 product groups (Pereraand et al., 2007).

The conducted analysis allows us to note that there are problems in the process of applying EU norms on sustainable public procurement. In particular, the problems for the practical implementation of sustainable procurement are that EU norms on sustainable procurement are not mandatory, there is ambiguity in the legal validity of sustainable public procurement in EU norms; there is a huge difference in the application of public procurement norms by the Member States; there is also insufficient quantity of goods that meet the established environmental requirements. Therefore, there is a need to address issues that constitute the obstacle to the practical application of sustainable procurement.

During the COVID-19 pandemic, international trade acquired an important role in ensuring the availability of vital medicines and devices (Teremetskyi & Duliba, 2020). The pandemic has led to the flourishing of corruption in health care around the world, fraud, abuse in public procurement, etc. Examples of healthcare funds being embezzled, public contracts falsified, power misused as well as patronage and preference in administration or organization, medicine or medical care deceit are not rare (Teremetskyi et al., 2020) and numerous problems in the field of sustainable procurement have been highlighted by the pandemic. Some countries and business groups, due to deep economic and social crisis caused by the Covid-19 pandemic, call for temporary easing of environmental regulations. In fact, many stimulus measures that have been recently announced by leading economies, demonstrate a significant lack of attention to addressing environmental sustainability. However, there could be a temptation to abandon some environmental commitments in order to address short-term social and economic priorities, but it would be a mistake. On the contrary, the global crisis in the health care sector should be considered as an opportunity to build a more sustainable and inclusive economy and society, and one of the ways to achieve it – is through sustainable public procurement (Yaker & Ahn, 2020).

The experience of the COVID-19 pandemic changes our understanding in regard to systemic risks and their consequences, as well as our inability to prepare for and mitigate those risks. As the effects of the Covid-19 crisis begin to be manifested, governments are obliged to take decisive actions without compromising their commitment to sustainable development. In particular, the scale of the coronavirus pandemic and related measures have led to an acute shortage of protective equipment of the employees, including surgical masks, face shields, hand sanitizers and surgical gloves, as well as medicines that countries could purchase. Due to the urgency, where the countries have to respond, procuring entities may ignore aspects of sustainability in such procurement processes. Procurement organizations must ensure that the products and services they purchase are as sustainable as possible, with the least impact on the environment and the most positive social outcomes (Yaker & Ahn, 2020).

Investors and companies must contribute to the fight against Covid-19, but at the same time it is necessary to take into account the goals of sustainable development and implement an effective mechanism for sustainable procurement. The practice of introducing sustainable public procurement in the world countries is different, due to a number of socio-economic and legal factors. Thus, the application of sustainable public procurement policy in some countries is aimed at solving the problem of consumption of national resources. For example, legal acts in Brazil and Germany regulate the use of certified wood and the use of eco-labels. The governments of the United Kingdom, Austria, Mexico, Brazil and many EU Member States have adopted procurement strategies to achieve the high level of energy efficiency. As a result, the examples of these states are the standards for adopting similar rules in the procurement policies of other countries (The United Nations Environment Programme (UNEP), 2012).

There are different approaches in European countries on creating legislation that regulates sustainable public procurement. For example, the idea of sustainable public procurement in such countries as Norway and Denmark was supported by the legislator at the stage of developing appropriate programs, which was later reflected in the legislation regulating public procurement. At the same time, legislation on sustainable public procurement in Germany was not created separately, but the relevant norms were integrated into legal acts that regulate other areas: environmental, social protection, innovation support, etc. It should be noted that the implementation of sustainable public procurement is possible only if there is legal base that must meet the requirements set out in EU legal norms on sustainable procurement.

Norway was one of the first countries to embark on the path of green procurement, establishing the GRIP by the Norwegian Fund for Sustainable Consumption and Production of the Ministry of the Environment in 1993(The United Nations Environment Programme (UNEP), 2012). Green Public Procurement (GPP) is part of Norway’s national sustainable development strategy and has become the national policy due to the legislation and various government initiatives. Several other public initiatives, in addition to the adopted laws, were presented among other guidelines and action plans for the introduction of environmental and social responsibility in public procurement. The Government also presented a number of official documents related to sustainable public procurement. The documents focus on environmental and ethical issues in public procurement (Fet et al., 2011).

The Swiss Federal Constitution of 18 April 1999 enshrines sustainable development as a long-term goal of national policy. To achieve its constitutional goal of sustainable development, the Federal Government has adopted “Sustainable Development Strategy”, which determines sustainable public procurement as part of the national strategy for sustainable development. The strategy provides guidance on how to address environmental and social aspects in the procurement process without losing economic efficiency goals. The Article 11 of the Swiss Public Procurement Act (PPA) provides an exhaustive list of the main grounds that allow a customer to withdraw a contract or to remove a tenderer from the process. Violations of national environmental legislation are not included in this list. However, the customer may establish environmental requirements on a contractual basis for the duration of the contract and to protect them with a penalty. Award Criteria (AC) can be specified in monetary terms, but can also be non-monetary in nature. The Article 21 of the Public Procurement Act directly mentions the impact on the environment as an example of AC. In addition, the procuring company may use sustainability as AC (the Art. 27 (2) PPA). However, sustainability as AC must be directly related to the object of procurement, must be defined with sufficient clarity and cannot be discriminatory (Swiss Federal Procurement Conference FPC, 2014).

The relationship between social goals and public procurement in Sweden began with domestic policy issues such as racial discrimination. The City of Malmö was the first to adopt an anti-discrimination clause in its procurement (McCrudden, 2007). The Swedish Environmental Management Council has developed an environmentally sustainable procurement instrument in order to help state and private organizations to make procurement processes more environmentally friendly by supporting responsible procurement. The EKU instrument ensures environmental criteria for different product groups, which facilitates the definition of environmental requirements. The EKU provides guidelines in regard to 20 product categories. The criteria are constantly monitored and revised if necessary, for example, to adapt to changes in legislation or technology (Innovation for Sustainable Development Network, 2019).

The Public Procurement Code of France was supplemented in 2006 by a number of Articles on sustainable public procurement (The United Nations Environment Programme (UNEP), 2012), which address the following issues: needs assessments depending on the availability of innovative solutions; inclusion of stability parameters into technical specifications; identification of small business entities as major contractors; opportunities to enter into contracts with companies that employ only people with disabilities.

The Dutch Government annually purchases works, services and supplies worth about 73 billion euros. Much of this concerns infrastructure: roads, bridges, home care, school books, school transport, etc. The amended Dutch Public Procurement Law came into force on July 1, 2016, which implements the latest EU procurement directives (2014/23/EU, 2014/24/EU and 2014/25/EU). The Dutch legislation recognizes the general principles of public procurement law (equal treatment, non-discrimination, mutual recognition, proportionality and transparency) and the general principles of the Dutch civil law (including pre-contractual issues). The Public Procurement Law is applied both to national and European procurement procedures (Dutch Public Procurement Expertise Centre, 2020).

The Austrian Procurement Law stipulates that environmental objectives and standards must be included into tender specifications and participation criteria. The Law also defines the conditions, when the elements of social responsibility may be included (Pereraand et al., 2007).

Germany amended its Anti-Restrictition Act (ARC) in 2017 on the basis of the EU procurement reform, thus including the possibility to consider innovative, social and environmental aspects in public procurement (Laws, 2020).

It is worth noting that the leaders in the field of sustainable public procurement are Sweden, Great Britain, Germany, Denmark, Switzerland, Japan, the Netherlands, the United States, Norway and Canada (Murray, 2009).

At the same time, there are problems of implementing the provisions on sustainable public procurement in practice. The EU countries, which are actively implementing sustainable public procurement, are no exception. In particular, the research of public and private procurement in Sweden found four blocks of obstacles to achieving sustainable procurement: first of all, there is a significant lack of knowledge on environmental issues, not least in terms of the legal framework for setting environmental criteria of public procurement; secondly, communication barriers, unlike private companies that can buy what they want, the law does not allow procurement authorities to establish long-term contacts with suppliers, which complicates the development of sustainable value chains; thirdly, the lack of clarity in legislation and practice, which forces a number of contracting organizations to evade the establishment of strict criteria that relate to environmental protection and social sustainability; fourth, the ability to set criteria is limited (TCO Development, 2016).

Thus, most European countries have legal basis for the introduction of sustainable public procurement (Table 1) and have made efforts to ensure transparency in sustainable public procurement. There are many approaches to ensure a sustainable procurement system within countries. Some countries use procurement policies for further social and other development policies. However, some strategies are inconsistent and demonstrate a lack of sectoral relationships and are therefore unable to use their full potential. It also means that sustainable procurement must be adapted to local conditions to some extent and determine their priorities according to social criteria.

Table 1 Legal Grounds For Introducing Sustainable Procurement In European Countries
Country	Legal Grounds for Introducing Sustainable Procurement
Germany	German Federal Law against restrictions on competition, which provides the possibility to consider innovative, social and environmental aspects within public procurement.
Sweden	EKU, which contains instructions on 20 categories of goods.
France	Public Procurement Code, which is supplemented with regulations on sustainable public procurement.
Austria	The Procurement Law stipulates that environmental objectives and standards must be included into tender specifications and participation criteria.
The Netherlands	The Law on Public Procurement, which was amended in 2016 in order to implement the latest EU procurement directives.
Norway	Legislative acts and decisions of the Government on public procurement.
Switzerland	Swiss Federal Constitution dated from April 18, 1999, the Public Procurement Act (PPA).

Ukraine also has legal basis for the implementation of sustainable public procurement, but the legislation does not directly define the need for sustainable public procurement, and therefore public procurement is used without the priority of social and environmental issues. Only 1% of public procurement is carried out in Ukraine by using non-price criteria taking into account the requirements of environmental and (or) social standards. This is mainly due to the fact that customers have no idea about the content, meaning and advantages of certain standards. The lack of necessary knowledge and practical experience among customer staff on issues related to the justification of the need to apply non-price criteria and the method of documenting the compliance also limits the implementation (Prozorro, 2018). It should be also noted that one of the reasons for the non-application of sustainable public procurement in Ukraine is the non-compliance of national enterprises with environmental standards provided by EU directives. Most suppliers and manufacturers tend to express concerns that sustainable public procurement may hinder domestic enterprises because they will not be able to meet the environmental and social criteria included into “sustainable tenders” (Nikitchenko et al., 2016, p. 25).

Studying the legislation of Ukraine on public procurement and the practice of its implementation, it is important to emphasize that there is no priority of social and environmental issues in the process of public procurement. It does not allow the introduction of sustainable public procurement.

Conclusion

The experience of countries that widely use sustainable public procurement demonstrates that the projected positive social, environmental and economic consequences are also necessary in addition to the main function of procurement, namely: the purchase of goods, works, services. We mean the balance of economic and non-economic goals. It does not always make sense to give priority to the best economic conditions. It is often advisable to take into account not only economic goals, but environmental, social, which can allow solving the problem in a given case. Sustainable public procurement allows the implementation of economic, environmental and social principles.

The positive experience of European countries in the implementation of sustainable public procurement is not reflected in the legislation of Ukraine. Thus, there is the need of real rather than declarative implementation of international standards and those European norms of law on sustainable procurement that have demonstrated their effectiveness into the legislation of Ukraine.

Despite the proclamation of the priority of sustainable public procurement, this process has not been intensified in Ukraine, and therefore it is necessary to distinguish the problems that are the obstacle to the introduction of sustainable public procurement in Ukraine, namely: the lack of the definition of the term of “sustainable procurement” in Ukrainian legislation; the legislation of Ukraine on public procurement mentions the possibility of applying environmental criteria, but the social criteria of sustainable procurement remained out of the attention of the legislator; there is no effective mechanism for introducing sustainable procurement in Ukraine.

The legislation of Ukraine on public procurement needs to be improved, namely it is necessary to reveal and enshrine the term of “sustainable procurement” in legislation, to provide not only environmental, but also social aspects of sustainable procurement, to establish the priority of sustainable public procurement. It is necessary to develop and regulate an effective mechanism for the introduction of sustainable public procurement in Ukraine, taking into account the peculiarities of Ukrainian legislation and the practice of public procurement.

The economic and social crisis resulting from the COVID-19 pandemic has not bypassed Ukraine. It makes sense to consider the global health crisis in this situation as an opportunity to build a more sustainable and inclusive economy; and the introduction of sustainable public procurement is one of the ways to achieve it.

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