norway ethical proc-guide

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Ethical Criteria in PublicSector Procurement

The Ethical Trading Initiative Norway has been commissioned by the Ministry of Children and Equality to produce this guide.


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The Ethical Trading Initiative Norway has been commissioned by the Ministry of Children andEquality to produce this guide as part of the follow-up of the 20072010 Action Plan: Environmentaland Social Responsibility in Public Procurement, developed by the Ministry of Children and Equality,the Ministry of Government Administration and Reform and the Ministry of the Environment.

During the development of the guide, professional advice was obtained from a reference group

consisting of representatives from the Ministry of Children and Equality, the City of Bergen, theMinistry of Government Administration and Reform, the Defence Logistics Organization, the orga-nisation Future in Our Hands, the Federation of Norwegian Commercial and Service Enterprises, theNorwegian Association of Local and Regional Authorities, the Norwegian Confederation of TradeUnions, the Confederation of Norwegian Enterprise, and the City of Stavanger. Feedback andcomments were also received from various other municipalities.

The cities of Bergen and Stavanger, and the Defence Logistics Organization, have utilised the ethicalcriteria in connection with procurements. The requirements and follow-up methods will be tested andevaluated during 2008 2010.

This translation into English is provided for information purposes only. The original

Norwegian-language version is authoritative and binding in all cases. For more information aboutthis guide, please contact the Ethical Trading Initiative Norway:

+47 22 41 66 64

www.etiskhandel.no

[email protected]

Version 1, second edition, 2009 (Based on the Norwegian publication of January 2009).

www.


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CONTENTS

ForewordSummary

1. Introduction1.1 Background and driving forces1.2 Definition of central terms1.3 The legal framework1.4 Which ethical criteria can be set?1.5 What is and is not covered by this guide?1.6 Complex supply chains

1.6.1 Mapping the supply chain

1.6.2 How far back in the supply chain are the criteria to apply?

2. Strategic assessments and decisions2.1 Political decisions/management decisions2.2 Action plan for ethical trade2.3 Skills and resources

3. Ethical criteria in public procurement: how to implement inpractice

3.1 Where in the procurement process is it appropriate to set

ethical criteria?3.1.1 Purpose and extent of procurement3.1.2 Ethical criteria as contract performance conditions

3.2 Follow-up methods3.2.1 Self-assessment from the supplier3.2.2 Structured follow-up dialogue3.2.3 Inspections at the production site

3.3 Certified producers

4. Appendices & resources

Appendix 1: Ethical criteria as contractual performance conditionsAppendix 2:The self-assessment questionnaire for agents and importers isonly available in Norwegian. The questionnaire can be downloadedfrom www.etiskhandel.no/offentlig_sektor. A revised version isbeing developed


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Foreword

The public sector is Norways largest buyer and consumer of

goods and services. Accordingly, it is vital that the public sector

requires its market counterparts to act ethically. Acting ethicallycentres on respect for basic workers and human rights.

Increasingly, the production of the goods we purchase is being

moved to non-industrialised and newly industrialised countries.We often receive reports of working conditions characterised

by excessively long work days, unviable wages, child labour,forced labour and dangerous workplaces. The goods deman-ded by the public sector may be produced in such conditions.

Norwegian municipalities and public institutions are part of the global economy, and so all

public procurements should be influenced by the ethical debate.

The Action Plan for Environmental and Social Responsibility in Public Procurement 20072010

highlights the public sectors role as a customer and consumer. In the action plan, the government

set itself clear goals:.

Incorporating ethical criteria into public procurements is very important in this context. As ageneral rule, these criteria apply to all stages of production. By setting criteria, the public sector

plays its part in ensuring decent working conditions in global supply chains. There is significantscope for setting ethical criteria during all phases of the procurement process. Ethical criteria

are particularly suitable for inclusion as contractual conditions.

The Ministry of Children and Equality has therefore commissioned the Ethical Trading

Initiative Norway to produce a practical guide on ethical criteria in public procurement. My

impression is that most public institutions wish to make ethical demands, but a lack of

knowledge and poor access to the relevant tools mean that very few do so. A simple way of

starting is to ask some strategic questions. For example: Are the purchases large or small? Arethe goods produced in a low-cost country? How important is this product to my business?

Public institutions should lead the way as responsible consumers who request environmentally

friendly goods produced in accordance with high ethical and social standards. I therefore urge

all public institutions to make ethical demands in connection with their own purchases of goods

and services. This guide and the resources offered by the Ethical Trading Initiative Norwaywould be a good place to start.

Minister of Children and Equality

Anniken Huitfeldt

Photo: Yann Anker


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Summary

Public institutions should lead the way in being responsible consumers who requestenvironmentally friendly goods and goods produced in accordance with high ethicaland social standards..1

This guide concerns ethical criteria in public procurements. It indicates which ethical criteriapublic institutions may set for their suppliers, at which stage of the procurement process it is

appropriate to set such criteria, and how observance of the criteria may be monitored.

The guide has been produced primarily for purchasers and managers in public institutions, andsupplements the Guide to Public Procurement Regulations published by the Ministry of

Government Administration and Reform. Suppliers to the public sector may also benefit from

the guide, and may use it to prepare for the requirements and expectations they will meet intheir future dealings with municipalities, county councils and other public bodies.

This guide is a tool. It contains suggestions for the inclusion of ethical criteria as contractual

conditions, templates for supplier follow-up, and examples of case presentations for integratingethical criteria into an institutions procurement policy. The guide also refers to other templates

and resource documents. These can be downloaded from www.etiskhandel/ offentlig_sektor.

(Templates, case presentations and resource documents are available in Norwegian only.)

Some themes in the guide are dealt with in significant detail, as the majority of public

institutions today have no experience of setting ethical criteria. Many institutions will therefore

need detailed information about how to proceed.

The public sector is Norways largest customer and consumer. As a result, it has great influence,

and thus a great responsibility. Most people would support the objective of ensuring that goodsprocured through public budgets are produced in a legal and ethically responsible manner. The

need of impoverished workers for protection and a better workday is the most important reason

for the public sector to set ethical criteria. However, such criteria serve several purposes. Inaddition to the more far-reaching and long-term political goals related to fairer globaldevelopment and combating child labour and poverty, more immediate goals like goodwill and

the confidence of the local population and employees can be very significant. Moreover, setting

criteria will contribute to fair and non-discriminatory competition.

Ethical trade in the public sector is an area that is undergoing rapid development and receiving

increased attention. This is a translation of thefirst version of this guide.

1www.regjeringen.no/Upload/MD/Vedlegg/Planer/T-1467.pdf


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1. INTRODUCTION

1.1 Background and driving forces

Setting ethical criteria does not mean exporting Norwegian labour and environmentalstandards to other countries. It concerns respecting basic workers and human rights.

The public sectors role as a customer and consumer has been put on the political agenda. This

is expressed in the governments Action Plan for Environmental and Social Responsibility inPublic Procurement 20072010, which states that public institutions should lead the way inbeing responsible consumers who request environmentally friendly goods and goods producedin accordance with high ethical and social standards. This guide is part of the follow-up of theaction plan. The public sector is Norways largest customer and consumer. According toStatistics Norway (SSB), NOK 272 billion worth of goods and services were procured in 20072, with NOK 107 billion being spent by municipalities and county councils. The administrationof such enormous sums entails a great responsibility to ensure that procured goods and servicesare produced in a legal and ethically defensible manner.

The public sector is part of the global trade in goods and services. A lot of the goods purchased

by public institutions, such as uniforms, hospital textiles, natural stone, equipment for day-carecentres, and water and drainage equipment are produced in low-cost countries, and often underinhumane conditions. In 2006, Sweden experienced itsfirst major scandal. The case concernedthe importation of paving stones from China by Gothenburg City Council. A radio documentaryalleged that child labour was involved3. The country was rocked by a further scandal thefollowing year, when the report andfilm The Dark Side of Healthcare (Vita rockar och vassasaxar), documented gross breaches of workers rights and childrens rights in the production ofequipment for Swedish hospitals.4

2Total purchases (NOK 329.9 billion) less the oil sector (NOK 57.9 billion) =NOK 272 billion. http://www.ssb.no/vis/emner/12/01/offinnkj/main.html3www2.trafikkontoret.goteborg.se/resourcelibrary/SocialaKravVidUpphandlingarTU061026.pdf4www.swedwatch.org


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Public procurement has also created headlines in Norway. The previous page shows a selectionof the media coverage in 2008.

An important argument for setting ethical criteria is that in many cases it may be discriminatory

not to set such criteria. Suppliers that invest in legal and appropriate working conditions maybe more expensive than their competitors. Demanding decent working conditions may prevent

poor and illegal working conditions from becoming price-reducing competitive advantages.

Setting ethical criteria will thus strengthen the principle of equality and non-discrimination in

public procurement.

1.2 Definition of key terms

Ethical trade; Ethical criteria

In the guide, the term ethical trade is used to describe socially aware business activity thatpromotes and protects decent working conditions in the supply chain. Ethical criteria, or

guidelines, describe the minimum working-condition standards applicable in the supply chain.

Such criteria apply independently of the nature of the good or service. Today, ethical criteria are

primarily applied to working conditions in work-intensive export industries in developingcountries. Ethical trade does not entail any guarantee, but rather emphasises continual

improvements in the supply chain.

Fair trade

Ethical trade is often mistaken for fair trade. Unlike ethical trade, fair trade is characterised by

the actual product bearing a guarantee mark that informs the consumer that the good has been

produced by certified producers. There are different fair trade standards. In Norway, FairtradeMax Havelaar is the most well-known. Other examples of fair-trade product marks are Utz

Certified and Rainforest Alliance.

ILO core conventionsThe International Labour Organization (ILO) is the UNs specialist working-life body. The ILOis an amalgamation of representatives from national governments, worker organisations andemployer organisations. The ILO has drawn up many conventions, the most important andmost central of which are referred to as the ILO core conventions. The eight core conventionsdefine minimum standards for selected areas of working life. These standards include a ban onchild labour, the right to free and independent organisation and the right to collective bargaining,a ban on discrimination and a ban on forced labour. More information on the core conventionscan be downloaded from www.etiskhandel.no/ offentlig_sektor.


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Tenderer; Supplier

The terms tenderer and supplier are often used interchangeably. Tenderer describes someone

who submits a tender in an open competition. The winner of the contract is the supplier.

Sub-supplier

A sub-supplier is an individual or business which signs a contract to fulfil some or all of the

obligations in another partys contract. For example: in many cases, suppliers to the public

sector will buy goods, directly or via an intermediary, from other businesses, such as producersin low-cost countries. These producers may in turn engage the services of other local producers.

In such cases, both the intermediaries and the producers are deemed sub-suppliers.

Supply chain

Supply chain, value chain or production chain. In this guide, the term supply chain is used. A

supply chain consists of the parties involved in the manufacture of a good, from raw materials

tofinished product.

1.3 The legal framework

The regulations shall help to ensure that the public sector acts with great integrity,so that the general public has confidence that public procurements are made in asocially beneficial manner.

(Preamble to the Public Procurement Act)

Ethical criteria are only minimally touched upon in Norwegian procurement law, in EU directives

and in the World Trade Organization purchasing agreement. This has contributed to insecurity

concerning the legality of setting criteria, and it has been asserted that ethical criteria may

conflict with basic requirements related to competition, non-discrimination/ equal treatment,

proportionality, transparency and retrospective scrutiny. However, it is clear that national andinternational regulations are not a hindrance. Ethical criteria may be set, but they must be

followed up on. It should be added that public enterprises are not obliged to set ethical criteria.

In 2007, lawyers from the Swedish Association of Local Authorities and Regions (SKL) explored

the possibility of setting ethical criteria in connection with public procurements. Based on

correspondence with the European Commission, the SKL concluded that contractors are permittedto set certain ethical criteria. These cover article 32 of the UN Convention on the Rights of the

Child, the ILOs eight core conventions, and the labour laws of the producer country. SKL

recommends including the criteria as contractual conditions. It also emphasises that the contractor

is obliged to ensure that the criteria are followed up on. The result of the SKLs work is that publicinstitutions in Sweden are increasingly setting ethical criteria in connection with their procurements5

5SKLs suggested ethical criteria can be downloaded here: www.etiskhandel.no/offentlig_sektor


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In February 2008, a Norwegian legal review of ethical and social criteria connected to publicprocurement was completed. This review concluded that there is significant scope for setting

ethical criteria during all phases of the procurement process, and especially during the contract

performance phase, as it is less regulated than the other phases. The review emphasised that

the criteria must be formulated in such a way that they do not conflict with the requirements ofcompetition, non-discrimination/ equal treatment, proportionality, transparency and retrospective

scrutiny. The review further emphasised that the criteria must be followed up on.6

1.4 Which ethical criteria can be set?Public institutions may require of their suppliers that the goods purchased must be produced inconditions that are compatible with:

Article 32 of the UN Convention on the Rights of the Child, concerning childrens right toprotection from economic exploitation and their rights to education and personal development.

The ILOs eight core conventions: Conventions number 29 and 105 concerning the ban on forced labour Convention number 87 concerning the right to organise Convention number 98 concerning the right to collective bargaining Conventions number 100 and 111 concerning the ban on all discrimination with regard towork and wages

Convention number 138 concerning setting a minimum age to prevent child labour

Convention number 182 concerning the ban on the worst forms of child labour

The labour laws of the producer country

Appendix 1 contains a detailed description of the criteria, expressed as contractual conditions.

In addition to specifying the various criteria, the appendix describes how they can be followedup on, and the consequences of any breach. Additional information about the UN Convention

on the Rights of the Child and the ILO core conventions can be downloaded from

www.etiskhandel.no/offentlig_sektor.

The above criteria were included as contractual conditions in several procurements duringthe time that this guide was being prepared. It is interesting to note that none of theinstitutions has reported competition being impaired as a result of ethical criteria being set.

It is asserted that setting ethical criteria increases the price of products. However, it is importantto be clear about what is being compared. Child labour, forced labour and breaches of health,safety and environment regulations allow a producer to sell its goods at a cheaper price. Thisprice is artificially low, because it is based on illegal and undignified working conditions. Acorrect price is therefore a price that reflects legal and decent working conditions.

6The review can be downloaded here: www.etiskhandel.no/offentlig_sektor


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1.5 What is covered by this guide, and what is not

covered?This guide deals with working-condition criteria in connection with the procurement of goods,

as well as with methods, routines and systems for following up on these criteria. It does notspecifically discuss the purchase of services or building and construction works (ref. ILO

Convention No. 94). These are regulated by the Regulations relating to wage and working

conditions in public contracts. It is important to note in this respect that many service contractsalso cover goods, such as natural stone or other materials. The contractor should consider

whether to set criteria in relation to goods in its service contracts.

Many businesses have developed internal guidelines, for example on combating corruption.These are the businesses internal concern, and are not discussed here. Nor are product

labelling schemes such as Fairtrade Max Havelaar, Utz Certified, Rainforest Alliance, etc. These

are discussed in the Guide to Public Procurement Regulations. Further, criteria related to socialconditions, such as the utilisation of the long-term unemployed, the employment of disabled

persons, etc. are not discussed here either.

1.6 Complex supply chainsOne challenge faced by public institutions is linked to the organisation of supply chains.Global trade can make it difficult, if not impossible, to obtain an overview of all the links in

a supply chain. For example, in the production of hospital uniforms, the supply chain willtypically involve many parties, often from several countries: raw cotton from one country;spinning and dying in another; production of textiles in a third; cutting and assembly of thehospital uniforms in a fourth. In addition, there are sub-suppliers of sewing thread, buttons,Velcro, banding, etc., as well as of plastic and cardboard for packaging and shipment (seeillustration below).

1.6.1 Traceability: mapping the supply chain

Even though many supply chains are complex and difficult to grasp, a contractor should be ableto expect the supplier to know where the goods are produced. If the supplier does not know,

Smaller local producersProducers

Agent/ Intermediary

Supplier

Public Institution

Sub-Supplier

Sub-Supplier

Sub-Supplier

Sub-Supplier


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this will at least tell the contractor that the supplier does not supervise production, and thusthat the supplier does not monitor the working conditions at the production site. This does notnecessarily mean that the working conditions are poor, but it will be impossible to follow up onthe ethical criteria, for example by conducting inspections at the production site.

Some suppliers consider information about sub-suppliers to be competitively sensitive. Suchobjections from suppliers must be assessed in the light of the Norwegian Freedom of InformationAct and the Norwegian Public Administration Act. They may also be considered in the lightof the contractors right and duty to reject suppliers. This is discussed in the Guide to PublicProcurement Regulations. The experiences of Gothenburg City Council in Sweden indicate thatrequiring information about sub-suppliers is not a problem. Thus far, none of the city councilssuppliers have opposed the requirement.

1.6.2 How far up the supply chain should the criteria apply?As a general rule, the ethical criteria apply to every link in the supply chain. However,obtaining a full overview of, and control over, the entire supply chain will be difficult in practice.It would be sensible to start by addressing one or more links, depending on how the supplychain is organised. To use the example of hospital uniforms: a minimum requirement should bethat the ethical criteria will apply to the producer who completes the uniforms. Thereafter, thoseproducing the textiles used in the uniform should be included. As the contractor gains a betteroverview, the criteria can be applied further up the supply chain.

It is important to be aware that sub-suppliers can be both parallel and subordinate. Parallel

sub-suppliers carry out the same tasks as the main producer (in our example, sewing andcompletion of the hospital uniforms). They are engaged by the main producer when the mainproducer has insufficient capacity or suffers a stop in production. Subordinate sub-supplierssupply factor inputs (in our example textiles, buttons, zippers, etc.), to the main producers.If changes arise in the supply chain during the agreement period, the contractor must assesswhether it needs to request information about these changes. Such information will be relevantif inspections are to be carried out, and in connection with follow-up on the supplier during theagreement period.

As a rule, working conditions worsen further up the supply chain. An additional challenge is thatthe opportunities to effect change are reduced further up the chain. However, product groupsand branches vary considerably in this regard. Once again, it is important to emphasise that thecontractor is not responsible for ensuring that the criteria are satisfied in the supply chain. Thisis the suppliers responsibility. Suppliers with experience of ethical trade are likely to have mademore progress in gaining an overview of, and influence over, the supply chain.


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2. STRATEGIC ASSESSMENTS ANDDECISIONS

Experience from the private sector indicates that ethical trade requires broad management

support to achieve results. The illustration below sets out a suggested procedure for building

such support. I t consists of several parallel processes: political decisions/management decisions,preparation of an action plan, an the i entification of skill an resource nee s.

2.1 Political decisions/ management decisionsThe support of political and administrative managers is vital for ensuring that a systematic and

goal-oriented approach is taken to ethical trade efforts. In some institutions, such as municipalitie

and county councils, this requires a political decision. In other pu lic institutions, the decision istaken by the board of directors. Below, we focus on the situation in municipalities, but the

approach would be almost identical for other public institutions.

2.2 Action planThe drawing up of an action plan is a key part of building political/management support. The

action plan will function as a steering tool, setting out specific measures and goals. It shouldcove :

Why is ethical trade important to the institution?

Which criteria should the institution set, and how should they be followed up on?

Strategic assessments and decisions (chapter 2)

Ethical trade in practice (chapter 3)

Political decisions/management decisions

Action plan Skills and resources

Ethical criteria in the procurementprocess

Follow-up of the criteria


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Which procurements should be made subject to criteria?

Skill and resource needs.

Action plan examples can be downloaded from www.etiskhandel.no/ offentlig_sektor.

Why is ethical trade important to the institution?

There may be several reasons for this:

The institution wishes to contribute to fair global development

The institution may refer to section 1-1, second sentence, of the Public Procurement Act:The regulations shall also help to ensure that the public sector acts with great integrity, sothat the general public has confidence that public procurements are made in a sociallybeneficial manner.

The institution does not wish community resources to be used on goods produced in anillegal and unethical manner, and which destroy the life and health of other people

The institution may argue that ethical criteria will contribute to non-discriminatorycompetition, and that this will help to prevent the allocation of contracts to parties who donot respect basic workers rights

The institution emphasises the link between social responsibility and trust: a focus on socialresponsibility is important in order for employees, taxpayers/ the local population, suppliers,customers and others to have confidence in the institution/municipality.

Which criteria should the institution set, and how should they be followed up on?

As regards criteria and their follow-up, it is recommended that the institution proceeds on the

basis of the contractual conditions as formulated in Appendix 1. (A more general list of thecriteria can be found in section 1.4.) Alternatively, the institution may adapt the criteria to

different branches/procurements. This approach is adopted by the City of Gothenburg Traffic

and Public Transport Authority, which sets special criteria in connection with the procurementof stone.

Which procurements should be made subject to criteria?The goal should be set ethical criteria in all procurements. For most institutions, such a goal will bedifficult to achieve immediately. The selection of the procurements which are to be made subject

to ethical criteria should be ambitious but realistic. Therefore, the ethical challenges linked to

different types of procurements must be assessed. As experienced is gained, the level of ambition

can be raised, and criteria can be set in an increasing number of procurements.

The following questions are key to making strategically correct decisions in the context of such

prioritisation. Are the purchases large or small? This must be considered in conjunction with

the principle of proportionality, among other things. Is it a one-off purchase or a frameworkagreement? Follow-up of the criteria can be completed in a more structured and systematic


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manner in the case of framework agreements. However, it may also be appropriate to set ethical

criteria in connection with larger one-off purchases. A third, important question is linked to therisk of a breach of the criteria: Is the good produced in a low-cost country in which workers

health and rights are often poorly protected, or is the good produced in countries in which such

protection is better? A final question concerns the products symbolic value, and whether theuse of the product is in any way critical for the institution. This question is important because,

legally, public purchasers cannot subject their suppliers to requirements and obligations that are

deemed unnecessarily burdensome relative to the procurement (ref. the principle of proportionality).The more important a good is to the institution, and the more it symbolises the institution, the

more reason the institution has to set criteria. This therefore introduces the possibility of setting

ethical criteria even in connection with relatively small procurements. Examples of products

with great symbolic value include equipment for day-care centres and hospital equipment.

The questions can be asked in different ways. Let us consider a procurement of natural stone

for a municipality. Below are questions and answers from the municipalitys assessment process.

The procurement is assessed as a large, one-off purchase, and it is likely that the stone is produced

in a risk country. In addition, the municipality believes that the stone has a limited symbolic

value. Based on this assessment, the planned purchase is incorporated into the action plan.

2.3 Skills and resourcesFor many public-sector purchasers, ethical trade is a new topic that requires new knowledge.

Those who are to set the criteria must know what the various criteria mean, and must be aware

of different follow-up methods. Many purchasers will therefore require courses and other

training. The Ethical Trading Initiative Norway offers training courses on ethical trade forpublic-sector purchasers and managers.

The action plan should list the skills and resources required by the institution. This need will

vary, however. While some institutions have large purchasing departments, others have morelimited resources. Smaller municipalities may well face particular difficulties, although many of

Yes No

Is it a major purchase for the institution? X

Is it a framework agreement? X

Is it likely that the good has been produced in a country in rela-tion to which there are frequent reports of serious breaches of

workers rights?

X

Does the good have great symbolic value, or is its use in any waycritical for the institution?

X


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them have joined purchasing cooperatives, enabling them to develop a shared set of skills.

During the course of 2009, the authorities have established a node in each county inNorway. The nodes will function as specialist resource centres and networks for purchasers in

each region.

Establishing a project position may be an effective means of building up skills and initiating

these efforts.

In addition to defining the need for skills and resources, the action plan should also address theneed to form links with external professional bodies. The Agency for Public Management and

eGovernment (Difi) can provide general advice about procurement. The Ethical Trading

Initiative Norway is a resource centre with knowledge about ethical trade.

An action plan should contain information about why ethical trade is important to theinstitution, which ethical criteria should be set and how the criteria should be followed upon, in which procurements criteria should be set, and the need for skills and resources. Theaction plan forms part of the institutions procurement strategy/purchasing guidelines.

Examples of an action plan, case presentations and resolutions can be downloaded from

www.etiskhandel.no/offentlig_sektor.


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3. ETHICAL TRADE IN PRACTICE

In this chapter, we show by reference to specific examples how the ethical criteria can beapplied in procurements. We will first discuss at what stage of the procurement process it is

most appropriate to set criteria. We will then present a variety of follow-up methods. The

illustration below shows how ethical trade works in practice.

3.1 At what stage of the procurement process is it

appropriate to set ethical criteria?The procurement process has several phases, and the institution should assess the need for ethical

criteria when identifying needs at the outset. Below, the phases of the procurement process areshown as they are expressed in typical tender documents. The phases in bold typeare those in

which it is most relevant to set ethical criteria. This does not mean that setting such criteria in

other phases is illegal, but technical matters and a lack of experience make it more demanding

initially7

.

1. The objective and scope of the procurement

2. Description of the delivery

3. Requirements relating to the suppliersqualifications

4. Allocation criteria

5. Contractual conditions

6. Rules for holding the competition

7. Requirements relating to the form andsubmission of the bid

8. Contact information

Strategic assessments and decisions (chapter 2)

Ethical trade in practice (chapter 3)

Political decisions/management decisions

Action plan Skills and resources

Ethical criteria in the procurementprocess

Follow-up of the criteria

7Ethical Trading Initiative Norway and several large municipalities established a working group in the autumn of 2009 to formulateethical criteria in the form of qualification criteria


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3.1.1 Objective and scope of the procurementIn this phase, the contractor describes the objective of the contract and which goods/ servicesare required. In addition, the contractor may highlight other considerations it wants to be

safeguarded, such as ethical considerations. When the contractor clarifi

es and communicatessocial responsibility and ethical considerations early on in the procurement process, the suppliers

are already made aware from the outset that the contract has an ethical dimension.

Information meeting with tenderers

In addition to promoting social responsibility and ethical considerations in the description of

the objective and scope of the procurement, the contractor can invite tenderers to an openinformation meeting in the period between announcement and the deadline for tenders. The

invitation to attend such a meeting can be included as a separate point in the tender documents.

Even if the ethical criteria have already been presented in the tender documents, a meeting of

this kind gives the contractor an extra opportunity to inform the tenderers about the criteria.

For their part, the tenderers are able to prepare for what lies ahead. The information meeting

can also be used to clarify anything that is unclear with regard to technical specifications, qualityrequirements, environmental requirements, etc. The contractor should not enter into dialogue/

negotiations with the tenderers. Questions and answers from the meeting (minutes) are to be

made available to other interested parties at www.doffin.no.

Information meetings are not particularly resource-intensive. A draft information meeting

agenda can be downloaded from www.etiskhandel.no/offentlig_sektor.

3.1.2 Ethical criteria as contractual conditionsThe contract-performance phase is the least regulated phase under the regulations relating topublic procurements. This means that ethical criteria are especially suitable for inclusion as

contractual conditions. Appendix 1 sets out ethical criteria in the form of contractual conditions.

The contractual conditions specify the criteria and provide descriptions of follow-up methodsand possible consequences of breaches.

The contractual conditions can be downloaded from www.etiskhandel.no/ offentlig_sektor, and

cut-and-pasted into the tender documents. Examples of contractual conditions used byNorwegian and Swedish public institutions can be downloaded using the same link.


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3.2 Follow-up of the criteriaProcurement legislation requires the contractor to follow up on the criteria. Follow-up duringthe contract-performance phase can take different forms:

Self-assessment questionnaire completed by the supplier and/or producer

Structured follow-up dialogue

Inspections at the production site

Use of certified producers

The contractor can use one or several of the methods. When following up on the criteria and thesuppliers, the contractor should focus on improvements. Reducing, and preferably eliminating,

child labour, forced labour and other inhumane working conditions is a long and complicatedprocess. The contractor should therefore conduct a dialogue with the suppliers, before andduring the procurement process, to create a common understanding that working conditions willchange gradually and over time. In the event of a breach of the criteria, the aim is to correct thefailings. A description of the different follow-up methods is given below.

3.2.1 Self -assessment by the supplierThe contractor may require the supplier to account for how the supplier is working, or intends

to work, to satisfy the criteria during performance of the contract. This information can begathered by means of self-assessment questionnaires.

A supplier to the public sector will often not itself be the producer, but instead function as an

intermediary (agent/ importer). Appendix 3: Self-assessment questionnaire for agents/ importers

is an example of self-declaration by an intermediary (Appendix 3 is not included in the English

version of this guide. A new version of the questionnaire is being developed. The currentquestionnaire is only available in Norwegian, and can be downloaded from www.etiskhandel.

no/ offentlig_sektor.). The questionnaire supplies information about how the supplier works,

or should work, strategically and operationally within the business and in the supply chain, to

satisfy the ethical criteria in the contract. The contractor should send the form to the suppliershortly after the contract has been signed, stating a deadline for when it is to be returned.

The contractor may also want information about the conditions at the production site. Theself-assessment questionnaire for producers (Production Facility Profile) can be downloaded

from www.etiskhandel.no/offentlig_sektor (available in English). The form is used as follows:

The contractor sends the form to the supplier, which in turn sends it to its sub-suppliers. Theform is returned to the supplier, and then sent to the contractor. The contractor may ask the

supplier to remedy any defects on the basis of the information provided.

The self-assessment form for producers can also be used as part of an escalation plan agreedwith the supplier. When a contract is concluded, for example a framework agreement, the


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suppliersfirst report must be based on Appendix 3: Self-assessment questionnaire for agents/

importers. Later on during the agreement period, the contractor will ask for a status report onthe conditions at the production sites. In this connection, the contractor may, for example,

require an independent party to document that the working conditions are ethically justifiable,

and state that this is a prerequisite for extension of the contract.

The advantage of using self-assessment questionnaires is that they are simple to use. This type

of follow-up is criticised for involving a risk of incorrect reporting. Accordingly, self-assessment

should be used in combination with structured follow-up dialogue, and possibly random checks.

3.2.2 Structured follow-up dialogue

The completion of a self-assessment questionnaire by a supplier provides a good basis forfollow-up dialogue during performance of the contract. During such dialogue, the contractor

will gain a more complete picture of the suppliers efforts to comply with the ethical criteria. Asuccessful follow-up dialogue is conditional upon an open exchange between the parties, and the

parties having a shared understanding about creating improvements. This implies that follow-up

dialogue is particularly suited to framework agreements.

The appropriate content of a follow-up dialogue is dependent on the information held by the

contractor concerning the status of the supplier. If the contractor has asked for clarification, for

example Appendix 3: Self-assessment questionnaire for agents/ importers, this should form the

starting point for the dialogue. If the dialogue reveals that the supplier has not secured managementsupport for ethical trade in its own business, and that it has no systems for surveying risks and

following up on sub-suppliers, the contractor may request that these things be remedied withinthe deadline set by the contractor. Remediation and rectification of defects is described in the

contractual conditions (Appendix 1). If there are other defects, these must also be remedied

within the agreed deadline. The contractor must request that the improvements be documented

in writing. Minutes of the follow-up dialogue, describing what is to be done, and when, must beprepared. The minutes must be signed by both parties. In order to save resources, the follow-up

dialogue may be combined with other follow-up measures.

3.2.3 Inspections at the production siteIn addition, or as an alternative, to the methods listed above, inspections can be conducted at the

production site. An inspection may be announced or unannounced, and will comprise a surveyof the working conditions with a particular focus on the ethical criteria in the contract. The

contractor may carry out the inspection itself, or pay for the service. Alternatively, the contractual

conditions may state that the supplier is to be responsible for the inspection. Both commercialcompanies and non-profit bodies may carry out inspections. The Ethical Trading Initiative

Norway is linked to an international network of qualified non-profit bodies which can carry

out inspections and assist in efforts to make improvements. An overview of commercial,


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quality-controlled bodies that can carry out inspections can be found here:

www.saasaccreditation.org/accredcertbodies.htm.

If an inspection reveals breaches, the contractor may require the defects to be rectified. Some

defects are simple to remedy, such as measures related tofire safety. Others, such as unlawfulworking hours and a lack of overtime payment, will require a different approach. It is again

important to take a long-term view, and to proceed on the basis that the improvements will be

made gradually. If suppliers do not rectify matters within the deadline, the contractor may demandprice reductions or, as afinal resort, terminate the contract. The contractual conditions in the

guide describe possible consequences of contractual breaches.

It is also possible to cooperate with regard to inspections. When Gothenburg City Councilprepares such measures, it invites other Swedish municipalities to participate. This also reduces

the costs involved.

3.3 Certification of producersA final form of follow-up is certification of producers. SA8000 is an example of an internationalstandard covering working conditions8. The standard is considered the most comprehensive

working-conditions standard. If a supplier to a municipality uses SA8000-certified producers,

this means that the producers satisfy the criteria relating to working conditions set out in the

contractual conditions. The SA8000 standard does not cover environmental conditions.

The public procurements legislation does not permit contractors to request a specific standard.

Therefore, the following text should be added: SA8000 or equivalent. This has been donein the contractual conditions in Appendix 1.

7www.sa-intl.org/_data/n_0001/resources/live/2008StdEnglishFinal.pdf


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4. APPENDICES AND RESOURCES

APPENDICESAppendices and resources such as ILO core conventions, the UN Convention on the Rights of theChild, contractual conditions, templates, the action plan for ethical trade, self-assessmentquestionnaire for agents/ importers and the self-assessment questionnaire for producers, can bedownloaded from www.etiskhandel.no/offentlig_sektor. Most of these documents are only availablein Norwegian.

Appendix 1: Ethical criteria contractual conditions ................................................ page 23Appendix 2: Self-assessment questionnaire for agents/ importers ........................... not included

Appendix 2 is not included in the English version of this guide. A new version is being

developed. The current questionnaire is only available in Norwegian, and can be

downloaded from www.etiskhandel.no/ offentlig_sektor.


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OTHER RESOURCES:

The Agency for Public Management and eGovernment (Difi):

www.difi.no

Ethical Trading Initiative Norway:

www.etiskhandel.no

Ethical Trading Initiative England:

www.ethicaltrade.org

Guide to Public Procurement Regulations:

www.regjeringen.no/ upload/FAD/Vedlegg/ Konkurransepolitikk/ Anskaffelser/ Veileder_re-glene_offentlige_anskaffelser_komp.pdf

Legal review of ethical and social requirements in public procurements (2008):

www.etiskhandel.no/Offentlig_sektor

Regulations relating to wage and working conditions in public contracts:www.lovdata.no/ for/ sf/ fa/ xa-20080208-0112.html

Guide to ethical public procurement

www.genombrott.se

Carpe guide to responsible procurement:

www.eurocities.org/carpe-net/ site/ article.php?id_article=50

Tender portal:

www.udbudsportalen.dk/ socialaftalen


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Appendix 1: Ethical criteria contractual conditions

Our suppliers and partners shall respect basic human rights, workers rights and the environment.

Goods supplied to (name of contractor) shall be produced under conditions that are compatible

with the criteria listed below. These criteria are based on key UN conventions, ILO conventionsand national labour legislation at the place of production.

The criteria describe minimum standards. Where conventions and national laws and regulationsaddress the same issues, the highest standard shall always apply. If a supplier uses sub-suppliers

to fulfil this contract, the supplier shall be obliged to promote compliance with the criteria by

the sub-suppliers.

1. CRITERIAHuman Rights

The supplier shall respect the UN Universal Declaration of Human Rights.

National legislation

The labour legislation applicable where production takes place shall be followed. Particularlyrelevant issues include wages and working hours, occupational health and safety, statutory insurance

and social systems, and regular employment conditions (including employment contracts).

Ban on child labour (Article 32 of the UN Convention on the Rights of the Child, ILO Convention nos.138 and 182)

Children have the right to be protected against economic exploitation in work, and againstcarrying out work which may undermine their educational and developmental opportunities.

The minimum age shall in no event be lower than 15 years (14 or 16 years in somecountries).

Children under 18 shall not carry out work which endangers their health or safety, includingnight work.

If child labour is used, a speedy phasing-out shall be sought. At the same time, a system

shall be put in place to ensure that the children are provided for and are able to pursue aneducation until they are no longer of school age.

Forced labour/ slavery (ILO Convention nos. 29 and 105)

No form of forced labour, slave labour or involuntary work shall be permitted.

Workers shall not be required to pay a deposit or surrender their identity papers to theiremployer, and shall be free to terminate their employment contracts upon reasonable notice.

Discrimination (ILO Convention nos. 100 and 111)

No discrimination shall be permitted in working life on the basis of ethnicity, religion, age,

disability, gender, marital status, sexual orientation, union membership or political affiliation.


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The right to form trade unions and the right to collective bargaining (ILO Convention nos. 87 and 98)

Workers shall, without exception, have the right to join or form trade unions as theychoose, and to bargain collectively.

If these rights are restricted or under development, the supplier shall facilitate meetingsbetween the employees and management to discuss wage and working conditions, and theworkers shall not suffer negative consequences as a result.

2. FOLLOW-UP

The supplier shall comply with the aforementioned criteria in connection with its own business

activities, and assist the sub-suppliers who participate in the completion of the contract incomplying with them. At the request of (name of contractor), this work shall be documented

within a reasonable period of time through:

self-assessment by the supplier and/ or sub-supplier;1 and/ or

follow-up meetings with the contractor; and/or

a check by an independent party of the working conditions at the production site. If thismethod is chosen, information shall be supplied about who has completed the check andwhich inspection methods have been used; and/or

certification of the producer: SA8000 or equivalent

The contractor, or a party authorised by the contractor, shall have a reserved right to conduct

announced and unannounced inspections at the production site during the contract period. Inthe event of an inspection, the supplier shall be obliged to provide the names of and contact

information for sub-suppliers. Contact information shall be treated confidentially.

3. BREACHES

Breaches of section 1 or section 2 shall constitute breaches of contract. In the event of

contractual breaches, the supplier shall be obliged to remedy the highlighted failings within the

deadline set by (name of contractor), as long as this is not unreasonably short. The rectificationsshall be documented in writing and in the manner decided by (name of contractor). If rectifications

are not made,fines (state amount) may be imposed. Thefines shall be proportionate to the type

and extent of the breaches. The contractor shall also be entitled to claim compensation or a

price reduction proportionate to the breach and the contractorsfinancial interest in compliancewith the criteria. The contractor shall be entitled to terminate the contract in the event of a

material breach of section 1 or section 2, or if a breach is not rectified.

1 The Self-assessment questionnaire is based on a form drawn up by the contractor.


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Layout: Steinar ZahlVersion 1, second edition, 2009, (Based on the Norwegianpublication of J anuary 2009)

norway ethical proc-guide

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