When issuing a public tender in the EU, you must comply with the requirements of European procurement law. Using the CO2 Performance Ladder as an award criterion to determine the most economically advantageous tender (MEAT) on the basis of the best price-quality is in line with this legislation, provided you do so in the way SKAO prescribes. In this blog, we explain what the EU Procurement Directive says and how you can comply with it when using the CO2 Performance Ladder in a tender.
As a public organisation in the EU, when you put a contract on the market, you are bound by rules for tenders and public contracts. These rules are laid down in the EU Procurement Directive.
The European Procurement Directive sets out the requirements you must meet when selecting a party to perform a contract. The aim of the law is to create a free, open and fair market, also between the different EU member states. This means that all companies that tender should have an equal chance of being awarded a contract.
To achieve this goal, a tender must comply with four principles:
Objectivity means that a contracting authority must assess a bid on the basis of objective and verifiable criteria. These criteria must be the same for all parties. A tendering process should not contain any discriminatory factors that would give one party more opportunities than another. Everyone should be treated objectively and in the same way, and everyone should receive the same information.
Transparency means that everyone should be able to see what is in a tender and the basis of the award. Decisions must be clearly justified.
Non-discrimination means that no parties may be excluded for example on the basis of their country of establishment.
Proportionality means that the requirements in a tender should be in proportion to the effort it takes to carry out the contract. Technical specifications, grounds for exclusion, suitability requirements, selection and award criteria must be relevant and proportional to the nature and scope of the contract.
The EU Procurement Directive describes several methods for awarding a contract collectively referred to as ‘most economically advantageous tender’ (MEAT). One of these is MEAT on the basis of the ‘best price-quality ratio’ (BPQR). This means that in addition to the price you can include qualitative criteria in awarding a contract, such as delivery time, a company’s experience and sustainability. The requirement, however, is that these criteria are clearly defined and described in the contract or tender document.
Yes, using the CO2 Performance Ladder in a tender is in line with European procurement law. When using the CO2 Performance Ladder BPQR-award criterion you can, for example, choose to reward parties with a notional discount or points based on their CO2 ambition level. You then lay down this criterion and the advantage levels in the tender document. When using the Ladder in a tender, you do not award the contract to the lowest bidder, but to the one with the best price-quality ratio.
Organisations that want to be rewarded with a notional discount or points via the ‘CO2 Performance Ladder’ BPQR-award criterion crucially do not already have to possess a certificate at the time of submission. A company indicates that, for the implementation of the project, it wants to meet a certain CO2 ambition level of the ‘CO2 Performance Ladder’ BPQR-award criterion corresponding to one of the levels (version 3.1) or steps (version 4.0) of the Ladder. When one bidder wins and the contract is signed, this ambition level becomes a contractual performance requirement.
To give all parties an equal chance in a tender, suppliers can prove they meet the Ladder’s BPQR-award criterion in two ways. As a contracting authority, you should mention both options in the tender document.
With a project statement, a tendering party demonstrates that it has met the promised CO2-ambition level at project level. The tendering party receives this statement after an auditor has checked that the company has implemented the project according to the specified requirements.
This option can be chosen by companies that want to use the Ladder only once in a tender and have no ambition to have their entire organisation certified.
With a CO2 Performance Ladder certificate, a bidder demonstrates that both its organisation and the projects it carries out using the Ladder as an award criterion meet the promised CO2-ambition level. This is checked by an auditor.
Although the Ladder is a voluntary criteria, the vast majority of parties in practice choose this option. After all, a Ladder certification for the entire organisation can be used by companies in all other tenders using the ‘CO2 Performance Ladder’ BPQR-award criterion.
It is important to use the Ladder as a BQPR-award criterion as described above and not as a suitability or selection requirement, because this is the legally correct way to use the Ladder in procurement. There are three important reasons for this:
Requirements set in a tender must always be related to the subject matter of the contract. If only a certificate can be used to demonstrate this, the link isn’t present because the certificate relates to the contractor’s entire organisation, while the contract may only account for a small part of its turnover. For that reason, it should also be possible to demonstrate that the project is being carried out at a certain CO2 ambition level with a project statement. It is also possible to provide proof that the project-level requirements are being met with a CO2 Performance Ladder certificate, because the CO2 Performance Ladder Handbook explicitly states requirements for projects that have been awarded to the organisation through a tender process involving the Ladder. This means that the specific assignment becomes part of the certificate and a certified company must organise the project in such a way that it meets the project-specific requirements. These requirements for projects are also part of the CO2 Performance Ladder audit that is carried out annually at the organisation.
For reasons of non-discrimination, you may not require parties to be certified prior to the contract or to have a minimum level of certification. Such a requirement is not only insufficiently related to the subject matter of the contract (see 1), but would also exclude all parties that are not yet certified, which is discriminatory towards parties that do not want to certify their entire organisation or, for example, foreign parties.
It is disproportionate to only accept an organisation-level certificate as proof because you then oblige parties to take measures at the organisational level in order to gain an award advantage. This is why it must also be possible to provide a project statement as proof.
Tendering parties should always be given a certain period of time after the award to show that they meet the set ambition level. We recommend a period of one year, but as contracting authority you are free to adjust this. The period you choose should be laid down in the tender document.
If the party that carried out the work fails to meet the requirements within this period, there will be consequences. For example, you can impose a penalty, such as a fine that is higher than the award advantage enjoyed when tendering. This prevents companies from tendering strategically and promising something they ultimately fail to deliver. You lay down the penalty for non-compliance in the tender document and a contract clause.
Although it is required to include such penalty provisions in your tender documents and contracts, in reality fining a supplier due to non-performance happens extremely rarely. Good market engagement before the publication and award of the tender will ensure (potential) tenderers understand what is expected of them in relation to their promised CO2-ambition level, reducing the chance of them failing to achieve it.
Do you still have questions about tendering with the CO2 Performance Ladder? In our Procurement Guide you will find all the information on how to apply the Ladder in your procurement. Check out the Legal FAQ for answers to legal questions. You can also contact us.
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