Public Contracts Regulations 2015 - Regulation 43

Regulation 43 - Labels

Regulation 43 defines a number of rules regarding the use of labels in public procurement, transposing Article 43 of Directive 2014/24/EU into England, Wales and Northern Ireland. Labels - at least with this level of detail - are a new addition to the European legal framework. In Directive 2004/18 they were only mentioned in Recital 29 and Article 23, in both instances connected with environmental considerations. The lack of detailed rules on labels was behind at least one important CJEU decision, the Dutch Coffee case (Case - C-358/10 Commission v Netherlands).

In Regulation 43 we can find a number of do's and don'ts regarding the use of labels, most of them concerned with making sure that the use of labels are not a roundabout way to discriminate against bidders, particularly foreign bidders. The rules are particularly detailed and imply an attentive look by contracting authorities to ensure compliance. There are no clear prohibitions of national labels, but the way Regulation 43 is designed makes them almost impossible to use for their intended purpose and potentially leave contracting authorities with a lot of work to do in compliance assessment. Some of the caveats also imply a very good degree of knowledge of the labels being asked and the actual technical requirements imposed by the standard.

As a general rule, labels can be used for environmental and social requirements in technical specifications as long as they are connected with the subject matter of the contract. However, they will have to comply with the four cumulative requirements set in paragraph 1:

i) be linked with subject matter;

ii) be based on objective and non-discriminatory criteria;

iii) have been established in an open and transparent procedure involving all stakeholders;

iv) be accessible to all interested parties:

v) economic operator not having undue influence over standard setter:

These requirements effectively force the contracting authority to undertake a reasonable due diligence on the assessment of the label. I suspect that the third and fourth requirements will be hard to judge by a contracting authority. After all the job to be done by using a label is to out source having to comb through information to make an assessment on specific characteristics and those two requirements imply making an assessment on the label requirements themselves and even the creation process.

Regulation 43 also includes a number of caveats which may hollow out the benefits of using labels in the first place. For example, if a label is legally available, economic operators can provide evidence that they comply with an "equivalent" label, letting the contracting authority to check if they are indeed "equivalent" or not. Furthermore, under certain circumstances economic operators can also provide evidence that they comply with the substantive requirements set by a label even though they do not have the certification in itself, forcing the contracting authority to check the necessary documentation to see if it complies with the required label or not.

It may well be that using labels will not be a time-saving exercise that perhaps contracting authorities are expecting.