[00:00:00] Marta: Welcome to Bestek, the public procurement podcast. Today, we’ll be talking about sustainability and public contracts.

[00:00:09] Bestek Intro/Outro: Welcome to Bestek, the public procurement podcast. In this podcast, Dr Willem Janssen and Dr Marta Andhov discuss public procurement law issues, their love of food, and academic life. In each episode, Willem, Marta and their guests search for answers to intriguing public procurement questions. This is Bestek. Let’s dish up public procurement law.

[00:00:40] Marta: Hello, and welcome back to the Bestek. It’s great to have you with me yet again for another aperitif episode. So our shorter format when it’s just me, uh, without Willem, and we tackling, uh, a short, pungent topic with contribution of some great experts, um, talking about the substance, uh, that has been discussed during a recent conference.

[00:01:07] This one is focused on a question that gets written into public procurement contracts more and more, um, but revisited relatively rarely. And that is, uh, we are putting sustainability into the contract, the environmental criteria, the social clauses, sometimes, uh, using the A- ESG language that everyone is so proud of at the award stage.

[00:01:34] And the question is simply, does anyone check what happens after the contract is concluded? So at the performance stage, do we enforce those clauses? Do we audit? Do we check them? At the, uh, before mentioned Public Procurement and Contracts Conference hosted by the PurpLE Project this summer, we had a panel called Sustainability and Performance of Public Contracts.

[00:02:04] It was moderated by PurpLE Project’s postdoctoral researcher, Ezgi Uysal, and she had four people, uh, up there with her at this stage from four completely different systems. Professor Sope Williams from Stellenbosch University in South Africa and currently affiliated with George Washington University in, uh, Washington, DC.

[00:02:33] Professor Gustavo Piga from the University of Rome Tor Vergata, Associate Professor Helen Yu from Wh- Swansea University in the UK, and Assistant Professor Désirée Klingler from University of St. Gallen in Switzerland. This panel covered a lot more than the question we’ll be tackling today. Corruption and the integrity, small and medium enterprises participation, how much transparency helps versus becomes its own burden, but this is an aperitif.

[00:03:06] And so let’s see what this expert panel had to say on this frequently marinated on concern, starting with Désirée, who shared something her own research turned up that she wasn’t expecting.

[00:03:21] Désirée: After our research, it took quite some research to find out are really, are they different? Are they the same? And we came to the conclusion that actually many of the contractual principles also in public procurements after, um, when we talk about enforceability and enforcement are actually similar or the same.

[00:03:40] So they’re closer to what we, um, know under private contract law than what you would think. So we would definitely we observed a, a convergence, like especially in the private law-oriented hybrid models that refers, uh, to our book, um, which means that we have, um, a public procurement law and then afterwards, usually, um, after the award, a private contract. So what we see is that we also have the freedom of contracts to, um, agree with the party, to agree on the contract.

[00:04:14] That applies also to procurement contracts. Although, um, we have, um, some limitations, but they also equally apply to, um, private contracts, so to both of them, which is, for example, public order or good morals that play an important role in many jurisdictions. For example, in Germany, Belgium, and Switzerland, that we looked a little bit deeper into.

[00:04:37] And what came up that we were looking into is the question of, well, are they, these sustainability requirements in the contracts, are they voluntary or mandatory? That is obviously a very, um, high topical question. We have a lot of people who require mandatory, um, sustainability criteria. Here, however, um, we believe that this distinction is rather moot when we’re in the enforceability stage, because once this authority decided to integrate those sustainability criteria, they become binding, and they become, um, inclu- I think in the enforceability stage, we have, um, less of that distinction between voluntary and mandatory ones.

[00:05:19] Marta: So once a clause is written into the public contract, right, the whole voluntary versus mandatory debate becomes a bit besides the point because it’s binding either way.

[00:05:32] And I think that’s useful to know if you’re the one drafting these things because the fight over whether a requirement should be mandatory ends up being a fight about optics more than it’s about enforceability. But knowing something is technically enforceable and getting it enforced in practice, those are two very different things, right?

[00:05:59] Sope Williams has spent years looking at exactly what happens in that gap when enforcement just doesn’t happen, and she’s got one of the more sobering examples I’ve come across on any panel this year.

[00:06:15] Sope: In South Africa, we, we have examples. So South Africa had a, a big, uh, power project to construct two gas, uh, gas-fired, uh, power plants in, in… called Medupi and, and Kusile in two different provinces. And because the… I mean, all the things that could go wrong were- went wrong with these projects. They were awarded, you know, there was a lot of corruption involved in the award of the contracts, so even the contract scopes were wrong, the designs were wrong.

[00:06:44] Um, there was the enviro- uh, environmental impact assessments were, were not done or were done, were done badly. They, there was no project management. And so these, um, projects that were supposed to take seven years to build, one of them took 14 years, the other one took up eigh- 18 years, and ended up about three times the cost.

[00:07:04] So from being, the initial cost of being about a, a billion US dollars ended up three times that, that amount. And, you know, it was found that they created a lot of problems, a lot of, of labour issues, a lot of environmental issues, as I, as I said. But because they were connected with the ruling party, there was no remediation.

[00:07:24] Marta: 14 to 18 years instead of seven, right? And at three times the cost because the contract scopes were wrong from the start and nobody was checking the environmental assessment as they went.

[00:07:41] And I don’t think that’s really a story about sustainability clauses failing on their own terms. It’s a story about the whole enforcement chain being broken well before the ink was even dry. So what fixes that then? Sope’s answer starts with a phrase you probably recognise if you’ve ever written a contract clause and then wondered how you even go about enforcing it yourself.

[00:08:08] Sope: Having better politicians and people would be great. But in the absence of that, I think one of the things that we, that, and, and many of our countries find is a lot of these sustainability requirements, not all of them, but some of them are, are drafted in ways in the contract that they’re so am- ambiguous that they cannot be enforced.

[00:08:26] So you would have a, a, a, a, a provision that says the contractor should use his best efforts. Well, it’s meaningless, right? What does that mean? So, um, a country that has actually done work on this is a country like Rwanda, where they made those t- those targets very specific, and they put them in all their, their standard bidding documents.

[00:08:45] So everyone knows that, okay, this is what my obligation is. I have to … So for instance, in cons- in construction contracts in, in Rwanda, if you’re buying cement, you have to buy from Rwandan cement com- companies. You can’t get cheaper cement elsewhere in Uganda or Kenya or whatever. You can’t. Having these provisions that are specific, that can be measured, um, and not, and are not left to the contractor’s discretion is, I think, the first place to start.

[00:09:11] Marta: If you’ve ever seen that phrase in a contract and wonder what it commits anyone to, well, the answer according to Sope is nothing, which is exactly why Rwanda stopped writing it altogether and started naming the real number instead. That’s the enforcement side sorted, in theory at least.

[00:09:31] But Gustavo Piga raises something that nobody else on this panel really gets to. Even when sustainability choice is completely genuine, it can still create a problem that nobody stress-tested for.

[00:09:44] Gustavo: A local example dear to my heart, that is very current right now in my island, Sardinia. It’s a very beautiful island. It’s got a lot of wind and a lot of beautiful, uh, natural habitat. What have we decided?

[00:09:58] We decided to use a huge amount of wind turbines. Now, that’s maybe a good thing, but Sardinians are furious. By the way, Sardinians say, “The wind is ours. The wind is Sardinia.” Just to give you a sense. Sardinians are furious, why? Because all these wind turbines are put in the middle of a beautiful sea, disrupting the natural, speaking of pigeons, disrupting the natural habitat and disrupting the, the natural resources, right?

[00:10:25] Have we thought about this? Have we not thought about this? So I wanna conclude just by saying that I suspect that this debate is rather absent. And then my key concern about sustainability, in fact, even, even before, since it’s a sort of new thing, even before we start talking about contractual management, is do we have the right governance in place to identify these issues?

[00:10:46] Marta: The wind is Sardinian. I love that line. And underneath the joke, there is a real point, I think, which is that you can pick the most defensible, sustainable criteria going and still get blindsided by the very community you’re supposed to serving, because nobody ever asked what enforcing one goal cost another.

[00:11:09] So let’s step back from the individual stories for a second to the real numbers. How much any of this is happening at scale? Back to Désirée with data from her own research in Switzerland that’s a little deflating.

[00:11:26] Désirée: I think, I think, um, it’s a matter of implementation, um, more than, um, regulation.

[00:11:34] Um, we had actually a similar reform like the UK, um, just a few years earlier in 2019, where we moved from the most economically advantageous tender to the most advantageous tender. Um, change is literally zero or al– close to zero if you look at the data that we have so far. So not, not a whole lot has changed even though the law has changed.

[00:11:58] So I do believe it’s, it’s a matter of implementation. And, um, what we saw is that, for example, and that is another, I think, very important part, we talked a lot in this panel about sustainability, but like what kind of sustainability, right? We have environmental, we have social, and we have also an economic, um, component of sustainability.

[00:12:19] And I think that that is very important that we, that we, um, that we distinguish what we’re talking about, um, because, uh, at least the data that I looked into, uh, public contracts in Switzerland, they showed that authorities after the reform were using only 4%, um, of environmental sustainability criteria, um, in tenders, um, of all construction contracts that I looked into.

[00:12:43] That’s pretty low. Social sustainability was even lower. It was close to 0%. So the question is a little bit what, what sustainability are we talking about?

[00:12:51] Marta: 4%. That’s how many Swiss construction tenders use environmental criteria after the law changed to make room for them, and social criteria came in at close to zero.

[00:13:06] Désirée’s point isn’t that the reform itself was a bad idea, it’s that changing the law and changing behaviour turned out to be two entirely separate projects, which I think is a distinction a lot of legislators still don’t fully reckon with. So does anyone get this right? Helen’s answer is the one that looks like it’s working, and it comes out of all places, the UK healthcare procurement system under a law that’s just over a year old.

[00:13:36] Helen: Now in the UK, we have a new Procurement Act, uh, that came into effect in February of 2025. Uh, one of the key changes in the Procurement Act is the introduction of four, uh, objectives that contracting authorities must have regard to, uh, when they’re carrying out a c- uh, a, a procurement.

[00:13:51] And these objectives include delivering value for money, uh, maximising benefit, um, sharing of information to allow suppliers and others to understand, um, procurement pol- uh, policies and decisions, and acting with integrity. Now, related to these, um, objectives is this new shift from MEAT to MAT. Um, so taking out that economically advantageous language to allow for, uh, a lot more autonomy and, and choice

[00:14:20] when it comes to assessing the tenders, especially tenders that best meet the criteria and provide, uh, the most overall value in terms of its, its sustainability and responsible initiatives. The Act also provides for something called the competitive flexible procedure.

[00:14:36] Uh, and it allows procurement professionals to design, uh, a-and tailor make, uh, tender procedures, uh, a-according to the market. So things like, um, co-designing outcome-based specifications, uh, negotiating risk and performance-linked payment models. And more recently, the UK also came up with a guidance and a methodology for value-based procurement for medical technologies, where there’s a mandatory, um…

[00:15:01] Well, first of all, they define five value domains. 60% of the decision has to be weighted– uh, procurement decision is weighted a-a-against these 60– sorry, these five, uh, value-based do-domains, with social value, which includes, uh, environmental sustainability, being mandated a minimum 10% weighting.

[00:15:20] Uh, cost can only account for 40%. So value-based procurement, um, really is part of a creating an economically and environmentally sustainable health system, and it helps avoid purchase of, of, of, um, low-cost products a-and delivering low-value care.

[00:15:39] Marta: Five value domains, sustainability weighted at a mandatory 10% minimum, cost capped at 40. That’s about as close as you can get on this panel to consider sustainability properly, built into how contracts get scored right, rather than just something you promise at a tender stage and then hope holds. And that, I think, is basically the answer to today’s question, mostly.

[00:16:09] Not yet, but the panel does give you a real roadmap for what checking would take. Désirée’s point is that these clauses, the sustainability clauses, are legally pretty ordinary. So ordinary contract enforcement tools already apply, which means the problem was never really a legal gap in the first place, according to her.

[00:16:37] Sope’s point is that specificity is what separates an enforceable clause from decoration, and that institutional capacity matters more than another round of legislation. Gustavo’s point is that every sustainability choice trades off against something else, and pretending otherwise is how you end up with furious Icelanders and a wind farm nobody wanted to build the way it got built.

[00:17:08] And Helen’s UK example shows what it looks like when you weigh the criteria into the scoring itself, rather than leaving it as a promise sitting on top of the deal. Put those four together, and I think what you get is less of a legal problem and more of an attention problem. Enforcement mostly fails where nobody’s job is specifically to check.

[00:17:33] That’s the value of an episode like this for people who spend years researching exactly why sustainability clauses succeed or fall. And next time you’re the one writing one into a contract or wondering whether the one you already signed is being enforced, you’ve got four different angles on what makes that happen.

[00:17:57] If you caught the last episode, you’ll hear this panel echo a little since Helen at one point referenced the very same reform panel that Willem and Roberto were on. Small conference, apparently. One last thing before I go. The panel was one of many at our Public Procurement and Contracts Conference this past June, hosted by PurpLE Project and funded by Carlsberg Foundation.

[00:18:25] More than 40 expert speakers joined us across those two days from across the globe, and there’s more from, and there’s more from this conference still coming in this aperitif run. If you want more on Désirée, Sope, Gustavo, or Helen, or the new book this whole conference fed into, Public Procurement and Contract Law: Exploring Intersections, Defining Boundaries, it’s all linked in the show notes.

[00:18:52] Oh, and the book, it’s in open access, so make sure you check it out. I’m Marta, this has been Bestek, the public procurement podcast, and I’ll catch you at the next aperitif.

[00:19:04] Bestek Intro/Outro: This was Bestek, the public procurement podcast. Do you want to contribute to today’s discussion? Then share your thoughts on LinkedIn or Twitter. Do you have an idea for a future episode? Write to us at www.bestekpodcast.com.

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