Cotton Procurement Guide

7/24/2019 Cotton Procurement Guide

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Fairtrade Cotton Procurement Guide 1

COTTON ON

TO FAIRTRADEA GUIDE FOR PUBLIC SECTORPROCUREMENT STAFF


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Fairtrade Cotton Procurement Guide2

CONTENTS

3 Introduction to public procurement and Fair Trade4 European Union rules and Fair Trade procurement:

an evolution5 The 2012 North Holland Ruling by the CJEU6 Implications of the North Holland ruling7 Future outlook in the revised public

procurement directives8 The case for Fairtrade certied cotton

10 Fair Trade cotton certication

11 Case study:London School of Economics

12 How to procure Fair Trade13 Engaging with suppliers14 Pre-qualication questionnaire (PQQ)

16 Case study:City of Paris18 Technical specication

19 Evaluation of bids20 Award criteria and contract performance conditions21 Case study:Shefeld University22 Supplier list and further links23 References


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Fair Trade public procurement

There are a wide range of Fairtrade productsavailable in the market but the uptakeof edible products like coffee, tea andbananas by contracting authorities hasbeen more widespread than the uptake ofnon-edible products like cotton.

Nevertheless, there is an untapped potentialmarket for cotton products. ThroughoutEurope the public sector represents nearlyhalf of the workwear market, valued at4 billion in 2008, which represents an

enormous opportunity for public money tobe spent in ways that drives positive changefor cotton farmers3.

Some contracting authorities are alreadyasking for Fairtrade cotton in their publictenders, for instance for fairly traded cottonin their work and staff wear as well aspromotional items like T-shirts or bags.Police ofcers, reghters and nurses wear

Fairtrade cotton uniforms. In some hospitalsthe bed linen is also made of fairly tradedcotton. In France there is very good practicein this area, with many examples of public

contracts integrating this commodity,some examples of which are featuredin this guide4.

As a signicant purchaser of many of

these products, large and small public

bodies hold enormous power to ensure

their buying decisions have a positive

impact for both people and planet.

Across Europe, public procurementaccounts for approximately 18% of GrossDomestic Product (GDP)1and for overa decade procurement policies haveincreasingly embraced sustainabilityconsiderations.

Through their purchasing decisions, publicauthorities can inuence market demand

by choosing products with sustainabilitycharacteristics. Such procurement practicesencourage bidders to adapt their offers andsource products that are produced followingenvironmental and social standards thatensure sustainability.

Public sector bodies have increasinglyadopted sustainability criteria in recent yearsin a range of areas. This guide focuses onFairtrade public procurement as a varietyof socially responsible public procurement(or ethical procurement) which specically

takes into account Fairtrade standards2in the procurement processes. It alsoreferences some other considerations ofethical procurement in the case of cottonthat fall outside the practices of Fairtradecertication.

INTRODUCTION TO PUBLIC PROCUREMENTAS A TOOL TO PROMOTE FAIR TRADE

The rapid growth of Fairtrade sales in recent yearshas demonstrated the great power that consumers

hold to make a positive difference to the lives offarmers and workers who produce the things weconsume every day.


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2 The European Commission

guidance of 2011

Buying Social

The European Commission (EC) published

the Buying Social Guide in 2011, whichfocuses on Socially Responsible PublicProcurement. This is described by theCommission as procurement operationsthat take into account [] employmentopportunities, decent work, compliancewith social and labour rights [] takingaccount of sustainability criteria, including

ethical trade issues []5

.

With regards to Fair Trade, the advicegiven at EU level in the Buying Social Guideis to include it in the contract performanceconditions:

If a contracting authority wants to

buy ethical trade coffee or fruits, it can,

for example, insert in the contract

performance conditions of the

procurement contract a clause

requesting the supplier to pay the

producers a price permitting them

to cover their costs of sustainable

production, such as decent salaries

and labour conditions for the workers

concerned, environmentally friendly

production methods and improvements

of the production process and

working conditions.6.

Drawing on case law, the Buying SocialGuide sets rules for drafting award criteriaand on awarding contracts. Social awardcriteria may be applied provided they: are linked to the subject-matter of the

contract; do not confer unrestricted freedom of

choice on the contracting authority; are expressly mentioned in the contract

notice and tender documents; and Comply with the fundamental principles

of EU law (see page 12 for further

explanation).

1 The 2004 Public

Procurement Directives

The legal framework for public procurementin the EU is provided by Directives2004/17/EC and 2004/18/EC and appliesto contracts with a total value above thethresholds dened in Directive 2004/18/EC.

To a certain extent, Directive 2004/18/EC addresses how contracting authoritiesmay contribute to the protection of theenvironment, but it is much less clear that

social considerations may be introduced.Further, the directive is not explicit aboutsustainability considerations where socialand environmental concerns overlap.

EUROPEAN UNION RULES AND FAIR TRADEPUBLIC PROCUREMENT: AN EVOLUTION

This section provides an overview of Fair Tradein the procurement context beginning with the

legal principles and current European Union(EU) legislation, its evolution since 2004 andthe interpretation of the Court of Justice of theEuropean Union (CJEU).



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specication, it considered that the criteria

underlying an ethical Fair Trade label couldnot be valid as a technical specication8.

However, the court accepted that Fair Tradecriteria could be either award criteria or acontract performance condition9.

Concerning the reference to labels, thecourt considered that, by referring to alabel without listing its underlying criteria,the North Holland province did notcomply with the provisions of the

(public procurement) Directive.

Link to the subject matter of

the contract

According to case law, the link to thesubject matter is a fundamental conditionthat has to be satised by all award

criteria10. This point is often presentedas a barrier to the inclusion of socialand environmental considerations intoprocurement processes.

The CJEU has interpreted this conceptseveral times. Previously in the Wienstrm11judgement, it had conrmed that award

criteria could be considered to be linkedto the subject matter when related toproduction processes rather than physicalcharacteristics (such as green electricity

in the case in question). It was not until the

North Holland case that the court had thechance to decide on whether the samereasoning applies to social aspects andif the link to the subject matter test wasapplicable to these aspects12.

Implications for Fair Trade

public procurement under the

current Directive

In May 2010, The EC referred theNetherlands to the European Court ofJustice (CJEU) for infringing Directive

2004/18/EC in a tender issued by theprovince of North Holland for the supplyand management of automatic coffeemachines7.

This province clearly stated its intentionto source products of organic and Fair

Trade origin.

The Court examined the details of theprocurement as set out by the provinceof North Holland, including:

the Max Havelaar (Fairtrade) and EKO

labels (Dutch organic standard and

labelling system) or equivalent in the

technical specications concerning the

coffee and tea to be supplied the sustainable purchasing and

socially responsible business measuresadopted by operators to be considered

at selection stage the reference to the Max Havelaar and

EKO labels or equivalent at the award

stage concerning the ingredients tobe supplied.

The court made a clear differentiation in itstreatment of the organic and the Fair Tradecharacteristics of a product. While the CJEUfound that the underlying considerationsaddressed by an eco-label for organicagriculture were valid as a technical

THE 2012 NORTH HOLLAND RULINGBY THE CJEU


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The province of North Holland had requiredsuppliers to show compliance with criteriaof sustainability of purchases and sociallyresponsible business and to state in whatway the economic operator contributed toimproving the sustainability of the coffeemarket and to environmentally, socially andeconomically responsible coffee production.The Court considered that thoserequirements purported to set a minimumlevel of technical and professional ability forthe supplier (art.44.2). However, the Court

ruled that the specic requirements werenot in line with the factors permitted to beconsidered under the provisions regardingthe technical and/or professional abilityof the economic operator (art.48) of the

Directive and were also in contradictionwith the obligation of transparency in art.2of the Directive.This means that contracting authoritiescannot ask for a bidder to have a Fair Tradesourcing policy, but can only give preferenceto the Fair Trade origin of a product inquestion in the award criteria.

The awarding phase of the contract

As a result of the North Holland caseruling it is clear that a contracting authoritycan refer to considerations relating tothe three pillars (economic, social and

environmental) of sustainable development

in its award criteria.

The CJEU went on to state that awardcriterion on Fair Trade14concernedcharacteristics falling within the scopeof Article 53(1) (a) of Directive 2004/18.15

The award criteria chosen by the provinceof North Holland were validated by thecourt insofar as they related to productsthe supply of which constituted part ofthe subject-matter of that contract16 andit concluded that there is [...] nothing,in principle, to preclude such a criterionfrom referring to the fact that the productconcerned was of Fair Trade origin.17

Verication

The CJEU applied the same reasoning withregards to the technical specications i.e.

contracting authorities are required to spell

out the underlying criteria of a label at thisstage and to accept proof of compliancewith the criteria by all means.

Technical specications

As mentioned earlier, the CJEUconsidered that the reference to the MaxHavelaar label was not a valid technicalspecication because its content applies

to the conditions under which the supplieracquired them from the manufacturer13and not to the characteristics of theproduct itself.

Conversely, the EKO label was considered

characteristic of the product concerned, i.e.coffee and therefore fell within the concept

of technical specication.

The implication of this ruling is that onlyenvironmental characteristics of Fairtradeproducts (such as the use of pesticides

and no Genetically Modied Organisms)

can be subject to technical specications,

whereas the social and economiccharacteristics that are inherent tothe Fair Trade concept cannot.

Verication

The court in the North Holland caseinterpreted Article 23.6 of Directive

2004/18/EC in such a way as to ensurethere is an obligation for the contractingauthority to expressly mention the detailedenvironmental (or social) characteristics it

intends to impose even where it refers to thecharacteristics dened by an eco-label.

IMPLICATIONS OF THENORTH HOLLAND RULINGON THE TENDER PROCESS



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This contrasts with the narrow viewhighlighted in the recitals of Directive2004/18 and will hopefully open the door forthe future inclusion of social criteria relatingto all the people involved in the supplychain, including farmers.23

The future public EU procurement legislationis expected to reinforce the possibilityto exclude a bidder at the selectionstage if the bidder has breached the ILO

Core Conventions. This provision willallow contracting authorities to act on

infringements of environmental and sociallaws outside the EU.

Contract performance clauses

The court in the North Holland case ruledthat Fair Trade origin of products does notcorrespond to the denition of the concept

of technical specication in the 2004/18

Directive18, but to that of conditions ofperformance of contracts.19

The CJEU considered that the requirementthat the tea and coffee supplied must comefrom small-scale producers in developingcountries, subject to trading conditionsfavourable to them, falls within the contract

performance conditions.20

Consequently, if not included as awardcriteria, the trade relationship betweenthe contracting authoritys supplier andthe other suppliers further down in thesupply chain can be taken into accountat this stage.21

The EC proposal for the revised Directiveon Public Procurement seeks to achievetwo complementary objectives: rstly, to

increase the efciency of public spending

to ensure the best value for money and,secondly, to allow procurers to make betteruse of public procurement in support ofcommon societal goals.

It is expected that the future EUprocurement legislation will overcome theexisting dichotomy between social andgreen procurement.

An important nding of the court in the

recent North Holland case was the breadthof understanding of considerations of socialnature. Specically the CJEU said that such

considerations may concern the personsusing or receiving the works, supplies orservices which are the object of the contract but also other persons.22

FUTURE OUTLOOK IN THE REVISED PUBLICPROCUREMENT DIRECTIVES


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The situation is similar for Indian cotton farmers,despite the countrys robust economic growth in recentyears.31Agriculture provides employment for the 56%of the workforce and small farmers account for 53%of the population. They are more weather-dependentsince they cannot afford irrigation systems and struggleto buy expensive Genetically Modied Organisms

(GMO) seeds.32Therefore cotton farmers in India aredangerously dependent on market price and thousandshave committed suicide due to overwhelming debtsand bankruptcies.33

Environmental impact of cotton

Conventional cotton farming relies heavily onagrochemicals with serious implications for human andecosystem health, while water and soil use is also a keychallenge to sustainable production.34Cotton growinguses 14.1% of all insecticides used globally, and 6% ofthe pesticides sold in the world are used on only 2.5%of the worlds cultivated land. In addition, the use ofgenetically modied varieties may increase yields but

poses risks for human health and biodiversity.35

According to a study edited by the Aid by TradeFoundation, cotton grown in Africa releases 1.9kilograms of greenhouse gases per kilogram ofcotton grown, compared to 4.6 kilograms emitted

in conventional cotton farming. African cotton is alsogrown only using rain-fed cultivation giving this typeof cotton a clear ecological advantage overconventional cotton.36

Besides the economic and environmental challenges,other cotton producing countries in the developingworld present serious cases of forced child labour intheir cotton elds. Uzbekistan, the sixth largest cotton

producer and main exporter to China and Bangladesh,is the most striking example. The EU has repeatedlycalled on the Uzbekistan government to put an end

to these systematic human rights violations and allow

an International Labour Organization (ILO) monitoringmission into the country.37

Global context24

People farm cotton in more than 80 countries worldwideby 50-100 million farmers on about 2.5% of the worldsarable land, with the largest producers being China,India, the USA and Pakistan. Yields vary from placeto place, but globally they are increasing. The largestconsumer countries (importing cotton for processing)

are China, India, Pakistan and Turkey. Over 150

countries are involved in the export or import of cotton,but as many of the top producing countries are also topconsumers, overall trading is on average less than one-third of world output and represents only 0.1% of totalworld product exports. The expanding textile industry in

Asia has led to it becoming the leading importing region.The US has been the worlds largest cotton exportersince 1834, followed by India which has become thesecond largest exporter in the past ve years.25

The plight of cotton farmers in the South

The current situation of the so-called C4 countries26

(Benin, Mali, Chad and Burkina Faso) shows the drastic

injustice at the heart of the global trade system, animbalance that the World Trade Organizations Doha

round of talks has not been able to address properly.In these four West African countries cotton is grownmore cheaply than anywhere else because the climaticconditions allow sustainable production, with low water

and pesticide use, and a smaller ecological footprint.27Furthermore, African cotton has the advantage of anintrinsic long lasting bre quality and is harvested

by hand.28

With 80% of the population working in agricultureand an average GDP per capita below $1,500, the C4countries rely on cotton to guarantee basic livelihoodsand to build roads and other necessary infrastructures.Almost 50 million families in developing countriesdepend on cotton29, yet faced with a declining worldprice over the past 60 years, and huge subsidies byAmerican, Chinese, and to a lesser extent European

governments, they struggle to compete in a deeplyunfair world market.30

THE CASE FOR FAIRTRADECERTIFIED COTTON



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Fairtrade Standards for cotton

Among other things Fairtrade Standards incotton ensure the following:

The Fairtrade Minimum Prices forcotton differs depending on theproducing region. The Minimum Pricesalways cover the costs of sustainableproduction. If the market price is higherthan the Fairtrade Minimum Price, themarket price applies

Fairtrade Minimum Prices for organiccotton are 20% higher than the price

for conventional Fairtrade cotton In addition to the Fairtrade price, the

buyers must pay a Fairtrade Premiumof 0.05 cents cents per kilogram ofFairtrade seed cotton. This is used bythe producer organisations for socialand economic investments suchas education and health services,processing equipment and loansto members

Environmental standards restrict theuse of agrochemicals and encouragesustainability

Pre-export lines of credit are given to

the producer organisations if requested,of up to 60% of the purchase price.42

More information is available atfairtrade.org.uk/cotton

The WFTO certication system

The World Fairtrade Organization (WFTO)

is a membership organisation that includesFair Trade Organisations (FTOs) across

the entire supply chain, from producers,to importers, wholesalers and retailers.Its certication system focuses on the

practices of its members rather than onproduct certication: WFTOs Fair Trade

Standard is based on 10 principles thatFTOs must commit to follow in their

day-to-day work, which is then monitoredby the WFTO:

1 Creating Opportunities for

Economically DisadvantagedProducers (economic and social

empowerment)

2 Transparency and Accountabil ity3 Fair Trading Practices (long-term,

solidarity, pre-nancing, assistance)

4 Payment of a Fair Price5 Ensuring no Child Labour and

Forced Labour6 Commitment to Non-Discrimination,

Gender Equity and Freedom ofAssociation

7 Ensuring Good Working Conditions8 Providing Capacity Building9 Promoting Fair Trade10 Respect for the Environment

More information is available at wfto.com

The Fairtrade model

Since the introduction of the rst Fairtrade

Minimum Prices for cotton in 2004,Fairtrade has demonstrated it cansubstantially improve the lives of cottonproducing communities. By selling theircotton on Fairtrade terms, cotton farmershave the security that they will receive aMinimum Price which aims to cover theiraverage costs of sustainable production.41

In addition to stable prices, producerorganisations are paid a Fairtrade Premium

these are additional funds which godirectly to the farming community whohave produced the Fairtrade product andwhich they invest in social or economicdevelopment projects. The premium is,amongst other things, invested in farmimprovements to increase yield and qualityor processing facilities to increase income.Producer organisations may also choose toinvest in social projects such as providingclean water, health or education facilities.Therefore, the premium is linked to thefarming community and can bring changeto the entire community by improving its

quality of life and enhancing sustainableproduction systems.

FAIR TRADE COTTON CERTIFICATIONThere are two internationally recognised Fair Tradeorganisations that set standards and certify Fair Trade Fairtrade International* and the World Fair TradeOrganization (WFTO)**.

Both are co-signatories of the Charter of Fair Trade principles38* which certies productsincluding cotton, and ** which certies organisational compliance.



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In January 2012 the London School ofEconomics (LSE) Estates Division started

a new initiative to purchase staff uniformsfrom Fairtrade suppliers. Since then CottonRoots, an ethical clothing provider, hassupplied around 270 individually brandedFair Trade Certied cotton polo shirts

for the universitys portering, post room,maintenance and cleaning teams.

Julian Robinson, LSE Director of Estates,stressed this initiative aligned closely tothe Schools environmental sustainability

commitments and core values:

As we pay the London Living Wage,Fairtrade uniforms seemed an obviouscompanion. Hopefully if other HigherEducation Institutions (HEIs) follow the

LSEs lead, then a critical mass can beestablished and the unit costs driven downso Fairtrade work-wear has the samedominant position on university campusesas Fairtrade coffee, he said.

A signicant amount of research was

needed to nd an appropriate supplier

but the Estates Division has been happy

with the results and is encouraging otherdivisions to switch their uniforms toFairtrade cotton.

LONDON SCHOOL OF ECONOMICSCASE STUDY



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UK Central government has issued

clear advice on the subject of ethicalprocurement. The governments policy isfor public procurers to assess the relevanceof ILO labour issues to their individual

procurements and where these issues areassessed as either relevant to the subjectmatter of the contract or where they relateto the performance of the contract, thisshould be reected as appropriate in the

procurement process.

Legislation has never actually forbidden

the procurement of ethically sourcedmaterials43however the North Holland case(CJEU claried on 12 May 2012) explicitly

refers to the acceptability of relevant labelsproviding the criteria are detailed:

Concerning the reference to labels, the

Court considers that, by referring to a label

without listing the underlying criteria of this

label, the North-Holland Province did not

comply with the provisions of the Directive.

The Court is of the view that it is necessary

to specify the underlying criteria of labels,

such as Fair Trade labels. Labels are

nevertheless considered by the Court as

a valid means of proof of compliance with

such criteria, provided that other means

of proof are allowed.44

The EU Procurement Directives are lessconcerned with what is bought rather thanhow it is procured45. Therefore, publicbodies must adhere to the principlesof the Treaty and the rules set out in theEU Directive and UK Regulations:

Value for money Acting fairly, dened as:

Non-discrimination, equal treatment,transparency and proportionality.

EU Procurement Thresholds

The European Public Contracts Directivedescribes certain nancial thresholds

below which its provisions do not applyand public procurement is subject tonational law. Currently the threshold forsupplies is 173,934 and for small lotsis 69,574. Though it is likely that manycotton procurement exercises wouldfall beneath this threshold, the basicprinciples of EC law (equal treatment,

non-discrimination, transparency and thefundamental freedoms) still apply.46

Despite the public demand for moresustainably sourced products and thelegislative framework existing to allow this,the public sector still faces a number ofbarriers to procuring Fair Trade products atscale, particularly on cotton. This guide aimsto demonstrate that these barriers can andhave been overcome, and how public sectorbodies can procure Fair Trade productsat scale.

This guide aims to demonstrate that thesebarriers can and have been overcome,

and how public sector bodies can procureFair Trade products at scale.

There is an understandable focus oncost and a requirement for the publicsector to achieve value for money whenawarding contracts.

However, as the market for Fairtradeproducts has grown in recent years andeconomies of scale have been realised,it is no longer true that Fairtrade optionsare always more expensive particularlyat scale. In some cases there will still be a

slight differential it costs more to ensurethat producers receive a price that coverstheir sustainable costs of production,and can operate in a socially andenvironmentally sustainable way.

Coupled with this, public bodies are alsopermitted to consider the full life-cyclecost of products that provide best value.This doesnt necessarily mean the lowestpriced product, but the one that offers bestvalue over the time it is used. As well asfullling social and environmental criteria,

Fairtrade products can be of a higher qualitythan conventional products.

HOW TO PROCURE FAIR TRADE:A STEP-BY-STEP GUIDE

There are many ways public bodies conductprocurement, and possibilities for Fair Trade aredifferent with each approach. The remainder of

this guide considers each stage of a procurementprocess for higher value contracts where a formalcall to tender is issued.


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will enable all bidders to discusspracticalities including product availability,wholesaler relationships and prices.

3 Ensuring compliance with UK

regulations and wider EU Treaty

principles, including transparency

and equality

It is possible to inadvertently restrictsuppliers access to contracts by not beingopen enough about what is being procuredand how tenders will be evaluated.

By hosting supplier events, public bodiescan demonstrate that they have givensuppliers particularly SMEs (small and

medium-sized enterprises) maximum

opportunity to participate in the tenderingexercise. The selection and evaluationcriteria are then set out in the PQQ and

ITT documents. Once these have been

published there is very little scope tochange them as clarication meetings,

which are held after bids have beensubmitted, may take place too late toalter the content of the bid.

General supplier days where public bodiesengage with potential providers offer anopportunity to promote the organisationalpolicies of procuring Fair Trade.

This sends a strong message to the marketabout expectations from the start andprovides suppliers with plenty of notice toprepare for your requirements.

This serves three purposes:

1 Helping to understand the market

place and the products availableBy engaging in a timely and effectiveway with suppliers, public bodies canunderstand what the market can provide.Public bodies should consider which socialissues or obligations are likely to be relevantto what they need to buy.47Ensure thatthe results of the dialogue (i.e. the nal

tender documents) do not confer an unfair

advantage to any of the suppliers thatparticipated. Letting the market know wellin advance about tenders, which includesinforming suppliers about ethical criteria,

is advisable.

2 Helping suppliers understand

the requirements

Contracting authorities should consultstakeholders including customers andinterest groups to help them understandwhat is needed. In the case of Fairtradecotton, this would be an opportunityfor those clothing suppliers that do notcurrently purchase Fair Trade cotton to learnwho the suppliers are. Covering ethics in

supplier meetings (pre-procurement) and inclarication meetings (during procurement)

ENGAGING WITH SUPPLIERSSupplier engagement and pre-qualication questionnairesare an opportunity to promote your organisationalcommitment to Fair Trade and sustainable sourcing topotential suppliers, and make it clear Fair Trade options

are welcomed.


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At this stage any institution that wishesto address poverty as a serious issue inprocurement should add questions whichrelate to poverty considerations. It is unlikelythat all suppliers will have taken poverty intoconsideration. However, inclusion of suchissues at the qualication and appraisal

stages will send a powerful message fromthe public sector that this is an increasinglyimportant issue. Encourage suppliers toprovide information on their awareness ofand responses to poverty and other socialissues. Example questions can include:

Does your organisation have asustainability or corporate social

responsibility (CSR) policy?

(if so, please include a copy)

Does your organisation have aFair Wages policy?

(if so, please include a copy)

Do you supply any products whichhave Fairtrade or equivalent labels?(if so, please specify).

These questions to suppliers will not becapable of excluding suppliers from theprocurement process or inuencing a

purchasing authoritys decision on contractaward, but they do present an importantopportunity to raise awareness.

Most institutions make potentialsuppliers complete a Supplier Appraisalquestionnaire to check legal and nancial

credentials of potential suppliers, howeverthese questionnaires are increasingly beingused to check the environmental andsustainability policy/performance credentialsof potential suppliers.48

Ethical and Fair Trade criteria

PQQs are primarily concerned with

contractors ability to deliver services,but they could also be an opportunity

to point out that:

The council has an ethical procurement

policy which it would like contractors

to support where possible.Referring

to the policy may help contractors to

establish supplies of relevant products at

an early stage.

PRE-QUALIFICATIONQUESTIONNAIRE (PQQ)



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Verication

The technical specications specied the

requirements in terms of social progressand environmental and health protectionas follows:

1 The fabric dyes must not contraveneEuropean Directives on health andenvironmental protection

2 Limit environmental pollution using bettertechniques and processes

3 List all the organisations in theproduction line to ensure traceability

4 Implement all necessary procedures toensure compliance with the eight coreILO Conventions regarding the principles

and fundamental rights to work, adoptedin 1998

5 Agree to be monitored on the abovepoints by an independent non-governmental organisation approvedby the administration.

Introduction

In 2008, Paris, operating within itssustainable development policy, issued anopen tender for ethical clothing (including

Fair Trade cotton) for nearly 5,000 of its

technical agents.

The city rst checked that the technical

performance of the clothing met itsdemands. It veried that the supply chains

were reliable and that the guarantees forFairtrade cotton were transparent andguaranteed that a fair price had been paid

to the producers. Once these requirementswere conrmed, the city awarded a public

contract for Fairtrade cotton for three years.

The contract was renewed in 2012 andhas been extended to 9,000 agents. Thiscontract amounts to more than 1 million.

CITY OF PARIS:STAFF WORKWEAR MADE WITH

FAIRTRADE CERTIFIED COTTON



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Declaration on social and environmentalcommitments:

The contracting authority can carry outon-site checks of compliance of all socialand environmental criteria mentioned, atevery stage of the production process,by an independent entity or a non-governmental organisation.

Award/evaluation criteria (if applicable):

1 Technical value: 40%

Quality of manufacture of the nal

product Compliance of technical documentation

provided by the candidate with thetechnical specications required by the

contracting authority Quality of nishing

2 Price (30%)

3 Delay of delivery (20%)

4 Environmental value (10%)

Annex IV of the tender documents requiredevidence in the form of certicates from

the certifying body of Fair Trade cottonproduction:

List the organisations in the productionline (cotton producers, cotton companies,

textile and manufacturing companies) as

well as the different certication reports,

approvals, and licences guaranteeingFair Trade standards and the fairnessof the production

Provide the licence from an accredited

independent body which provescompliance with Fair Trade principles

Provide the percentage of the royaltypaid to the labelling system that aimsto improve the working conditionsof producers

Join the yearly audit certicate by

an approved international body.This certicate is to be sent to the

administration by its holder every year Provide the Fair Trade turnover laid down

by the company Name the labelling organisation that meets

the international Fair Trade standards List the projects that will be nanced by

the Fair Trade premium.



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TECHNICAL SPECIFICATIONTechnical specications must only include criteriawhich determine the characteristics of the nishedproduct not the conditions under which a supplierpurchases them and not simply require a specic

label, such as the FAIRTRADE Mark.

Subject matter

The subject matter of the procurementexercise (the product which is being

bought) is the most important aspect in the

tendering process because it determineshow and where criteria can be allocatedwith regards to fairly traded goods fromsuppliers. The European Fair TradeAssociation (EFTA) advocates using a Fair

Trade title to illustrate the subject matterof the contract such as Fair Trade coffeesupply or Fair Trade Catering Serviceand cites the example of the City of Madrid

publishing a call for tender entitled, Supplyof Fair Trade T-shirts to promote Madrid asthe site of the Olympic Games.49

However, this approach has not been testedbefore the courts and carries with it a riskof breaching regulation 9(16) of the Public

Contracts Regulations. Before doing this,we would advise taking legal advice on themost up-to-date position with respect tosubject matter of procurement exercises.

Technical specications need to be related

to characteristics of the supply or servicebeing purchased and not to the generalcapacities or qualities of the operator,and must relate to the subject matter ofthe contract. This means that rather thanrequesting products with the FAIRTRADEMark in technical specications, contracting

bodies should instead refer to the underlyingFair Trade Criteria which are linked to thesubject matter of the product in question.(see page 5-6).

Current interpretation of EU and UKprocurement guidelines suggest thatenvironmental criteria (included within

Fairtrade standards) are considered to

be product characteristics acceptable intechnical specications, while social and

economic criteria are not and shouldnt beincluded in a technical specication.

A certication standard, such as Fairtrade,

can only be used as a means of verication

and must be accompanied by the wordsor equivalent In tender documents.To demonstrate equivalence, suppliers

submitting tenders should be allowed to useany form of evidence (such as a technical

dossier of the manufacturer or a test reportfrom a recognised body) that shows the

technical specication criteria are met.


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Choosing the procedure

The preparatory stage of any procurementprocedure is crucial. When choosing aprocedure, public bodies should considerat what stage they will be able to applyFair Trade criteria or considerations.For example:

In an open procedure any operator maysubmit a tender. All operators submittingtenders that meet the pass/fail conditionspublic bodies have specied will be eligible

to have their tenders assessed. Public

bodies will have access to the maximumchoice of potential ethically-procuredsolutions but they will not be able to selectwhich suppliers are invited to tender basedon their ethical credentials. An advantageof this procedure is the shorter time takenwhen conducting the tender.

In a restricted procedurepublic bodiescan assess technical criteria in a prior stageand cut down the number of operatorsinvited to tender. A minimum number ofve must be invited to tender, provided

there are sufcient suitable candidates.

This staged procedure may help publicbodies to determine the appropriate levelof ethical qualications to aim for in their

specications, award criteria and contract

performance clauses. However, by limitingthe number of competitors, it is possiblethat public bodies will miss out on offerswith high ethical performance.

EVALUATION OF BIDS TWO AWARD BASES

The Most Economically Advantageous Tender(MEAT) award basis is the only option inwhich public bodies can specify fairly traded

products. The lowest price award basis canonly be evaluated on price.

Note: The assumption here is that clothing

procurement will be met by one of the

above procedures rather than by the

negotiated and competitive dialogue

procedures which are for more complex

procurements.

Each of the above procedures offera number of stages where Fair Tradeconsiderations can be applied:

Subject matter and technicalspecications

Selection criteria (i.e. exclusion criteria,nancial capacity and technical capacity

criteria)

Award criteria Contract performance clauses

However, the scope for applying Fair Tradecriteria is limited in the subject matter andthe technical specication stage and it is

not until the award criteria stage that FairTrade considerations can really begin toinuence the procurement process.


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Weighting criteria

The contract will be awarded to themost economically advantageous offerdetermined by the criteria establishedby the contracting body in the contractdocuments.

Public bodies should set the weighting ofcriteria for awarding contracts, taking intoaccount the number of potential offersand sustainable development goals, whilekeeping in mind proportionality with regardsto more conventional criteria.

The weighting of social and environmentalcriteria, may for example, account forbetween 10-20%, with more conventionalcriteria such as price, quality and technicalcriteria accounting for the rest.

Conditions for Performance

of Contracts

Providing it is clear from the outset(in the contract notice or specications)

that ethical criteria will be a contractperformance requirement, it is possibleto require that suppliers provide ethically

sourced products or review theirimplementation of codes of conduct aspart of contract performance conditions.

Asking for evidence of how suppliers ensurecompliance with local labour laws or ILO

conventions is also allowed for the samereason. Other issues then arise: dening

standards; what evidence it is reasonable toexpect and whether evidence is requestedor required. In practice such matters formpart of a process of engagement withsuppliers, adapted to market conditions

for particular product categories.

Smaller lots

Suppliers with high ethical standardsmay be able to provide competitivelypriced products for some items withoutbeing able to supply the whole range.In these cases, there may be a possibilityof dividing contracts into separate, smallerlots to enable smaller and/or more ethicalcompanies to bid for them. This mightincrease the chances of being able toselect more ethically sourced products onthe grounds of cost and quality, within thelegal requirement to achieve best value.

It would also t other objectives, includingto avoid discriminating against SMEs andto encourage social and ethical enterprises.Under UK Procurement Regulations, the

combined value of the smaller lots will needto be aggregated and taken into accountwhen deciding whether the procurementis above threshold.

Award Criteria Similar labels

Specifying Fairtrade products exclusivelyis not legally allowed as it could restrictcompetition with other labelling schemesthat meet the same underlying criteria,or with uncertied items supported by

appropriate evidence of compliance.However, Fairtrade certication can be

cited as an example of a scheme whichmeets the underlying Fair Trade criteria.

The CJEU concluded from the NorthHolland case that referring to the three

pillars of sustainability (economic, social andenvironmental) is permitted at the award

criteria stage (see page 6).

It is essential that in the tender document,contracting bodies set out clearly theaward criteria that they require to be met(remembering they must be linked to the

subject matter of the contract). Examples of

labels which could be accepted as meetingthe standards set out as necessary in thecriteria. This list cannot be exhaustive socontracting bodies must state, for example,FAIRTRADE Mark or equivalent.

Economic operators can use any form ofevidence to demonstrate equivalence to theunderlying standards set out in the criteria.It is the responsibility of the contractingbodies to prove lack of equivalence.50

AWARD CRITERIA AND CONTRACTPERFORMANCE CONDITIONSIt is possible to include Fair Trade criteria atthis stage of the tender, providing they referto the subject matter of the contract, and

any reference to the FAIRTRADE Mark isaccompanied by or equivalent.


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SHEFFIELD UNIVERSITY

The University of Shefeld does not

currently hold records of the total amount ofgarments it purchases, though the universitywas the rst in the UK to afliate to the

Workers Rights Consortium (WRC).

The WRC is an independent monitoringorganisation that supports workers inthe garment industry in defending theirworkplace rights. Rather than relyingon infrequent checks by an outsiderwith a clipboard, workers are trained inlabour rights and can lodge a condential

complaint if they believe that there is aviolation in their workplace. The WRCthen conducts an independent in-depthinvestigation and makes the results public.

Since afliating to the WRC in 2011,

the university has developed a code ofconduct for suppliers, which sets out whatthe university requires from suppliers interms of labour rights for their workers.This code is the minimum that the universityexpects from its suppliers and if as maybe disclosed in WRC factory reports university suppliers are breaking this code,then the university engages with the supplierin question to make sure that it meetsthese minimum requirements.

After talking to students who expressedthat Fairtrade was an important issue, theStudents Union led the way on Fairtradecotton uniforms for staff by switchinguniforms to Fairtrade cotton through policychanges and embedding this in operationalprocedures. In 2012, 10% of all staffuniforms were changed over to Fairtradecotton and this was due to increase toaround 50% of all uniforms at the time ofwriting. This yearly expenditure of around7,500 marks a signicant cultural shift.


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Further links:

European observatory on FairTrade Public Procurementfairprocurement.info

Fairtrade Foundation:fairtrade.org.uk

People and Planet:

peopleandplanet.org.uk

Fairtrade cottonworkwear suppliers:

Alvastonealvastone.com

Cotton Rootscottonroots.co.uk

David Lukedavidluke.com

EponaEponaclothing.com

Kool Skools

koolskools.co.uk

Tarameentarameen.com

For larger contracts, there maybe suppliers based in otherEuropean countries who canmeet your demands. [email protected]

SUPPLIERSIt is recommended to make all existing suppliers aware of yourFair Trade requirements when sourcing products in any type ofprocurement. For a full list of all suppliers, wholesalers and contractcaterers offering Fairtrade, use the National Fairtrade Purchasing

Guide available at fairtrade.org.uk/business.


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21The Link to the subject-matter of the contractin green and social procurement Marc Martensand Stanislas de Margerie, EPPPL

22Para 85 of the judgement(see footnote) 47

23The Link to the subject-matter of the contractin green and social procurement Marc Martensand Stanislas de Margerie, EPPPL

24Source: Valerie Nelson & Sally Smith Fairtradecotton: assessing impact in Mali, Senegal,Cameroon and India http://www.fairtrade.net/leadmin/user_upload/content/2009/

resources/2011_Fairtrade_Cotton_Assessing_

Impact_in_Mali__Senegal__Cameroon_and_

India__summary.pdf

25http://www.ideascentre.ch/documents/Newsletter101-Lastbutnotleast-EN_000.pdf

26Mali, Burkina Faso, Benin and Chad. Thesecountries form a specic coalition involved in

cotton negotiations at WTO ( http://www.wto.

org/english/tratop_e/agric_e/negoti_groups_e.

htm).

27http://www.cotton-made-in-africa.com/en/cmia-news/news/detail/article/cotton-made-in-africa-conserves-water-and-reduces-greenhouse-gas-emissions-1.html

28http://www.befair.be/sites/default/les/all-les/

brochure/En%20version_0.pdf

29http://www.solidaridadnetwork.org/cotton

30Fairtrade Foundation, Great Cotton Stitch-Up http://www.fairtrade.org.uk/includes/documents/cm_docs/2010/f/2_ft_cotton_

policy_report_2010_loresv2.pdf

31http://www.tradingeconomics.com/india/gdp-growth

32http://www.igidr.ac.in/pdf/publication/WP-2012-014.pdf, http://farmersforum.in/policy/study-on-socio-economic-impact-assessment-of-bt-cotton-in-india/

33http://www.tompietrasik.com/2011/01/24/india-cotton-farmers-suicide-trade-debt/

34Source: Valerie Nelson & Sally Smith Fairtradecotton: assessing impact in Mali, Senegal,Cameroon and India http://www.fairtrade.net/leadmin/user_upload/content/2009/

resources/2011_Fairtrade_Cotton_Assessing_

Impact_in_Mali__Senegal__Cameroon_and_

India__summary.pdf

35http://www.befair.be/sites/default/les/all-les/

brochure/En%20version_0.pdf

36http://www.cotton-made-in-africa.com/en/

cmia-news/news/detail/article/cotton-made-in-africa-conserves-water-and-reduces-greenhouse-gas-emissions-1.html

37http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P7-TA-2011-586

38World Fair Trade Organisation and Fairtrade

Labelling Organisation A charter of Fair Trade

principles http://fairtrade-advocacy.org/

ftao-publications/other-publications-on-fair-trade/74-charter-of-fair-trade-principles

39Resolution of the European Parliament of 6July 2006 on Fair Trade and development(2005/2245(INI))

40Communication from the Commission to theCouncil, the European Parliament and theEuropean Economic and Social CommitteeContributing to sustainable development: therole of Fair Trade and non-governmental trade-related sustainability assurance schemesCOM (2009) 215, 5 May 2009

41Source: http://www.fairtrade.net/cotton.html

42Ibid

43EFTA, Fair Procura: Making Public Authoritiesand Institutional Buyers Local Actors ofSustainable Development, 2005, p16

44 http://www.fairtrade-advocacy.org/ftao-publications/press-releases/390-european-court-conrms-possibility-to-demand-fair-trade-

criteria-in-public-procurement

45EFTA, p19

46OGC Buy and make a difference, 2008

47EAUC, Poverty Aware Procurement: Guidancefor changing the procurement process, 2010,p13

48EFTA, p2049Ibid, p1950Ibid, p20

1 European Commission, Proposal for a Directiveof the European Parliament and of the Councilon public procurement COM (2011) 896 1http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0896:FIN:EN:PDF

2 www.fairtrade.net/standards.html

3 Mode demploi de lachat public cologiqueet socialement responsable achACT andcoconso, p.9, November 2012

4Fair Trade public procurement in France, EPPPLspecial issue on sustainable procurement,Lexxion, 2013 vol 8 number 1

5EUROPEAN COMMISSIONBuying Social: A Guide to Taking account of

Social Considerations in Public Procurement,

2011

6Ibid

7Case C-386/10, Commission v Kingdom of the

Netherlands, judgement of May 2012

8Client Earths brieng Distinguishing technical

specications and award criteria on the basis of

role, not content; May 2012

9Ibid

10Client Earths brieng The link to the subject

matter a question of importance forsustainable public procurement; January 2013

11Case C-448/01 of 4 December 2003

12Client Earths brieng

13Client Earths brieng Distinguishing technical

specications and award criteria on the basis of

role, not content; May 2012

14Paras 73 and 89 of the judgement (see

footnote) 47







REFERENCES


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www.fairtrade.org.uk

Fairtrade Foundation, 3rd Floor,Ibex House, 42-47 Minories,London EC3N 1DY

Tel: +44 (0) 20 7405 5942 Email: [email protected]

RegisteredCharity No 1043886

This document has been produced with the nancial assistanceof the European Union. The contents of this document are thesole responsibility of FTAO, Fairtrade Foundation and People

and Planet and can under no circumstances be regarded asreecting the position of the European Union.

The Fairtrade Foundation is very grateful to Catherine Wolfendenof Osborne Clark, Christine Storry of Bristol City Council, Elba

Estrada from FTAO, and Ruth Millard for their contribution to

the production of this guide.

Cotton Procurement Guide

Documents

Transcript of Cotton Procurement Guide