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COTTON ON

TO
FAIRTRADE
A GUIDE FOR PUBLIC SECTOR
PROCUREMENT STAFF

Fairtrade Cotton Procurement Guide

CONTENTS

3
Introduction to public procurement and Fair Trade
4 European Union rules and Fair Trade procurement:
an evolution
5
The 2012 North Holland Ruling by the CJEU
6
Implications of the North Holland ruling
7 Future outlook in the revised public
procurement directives
8
The case for Fairtrade certified cotton
10
Fair Trade cotton certification
11
Case study: London School of Economics

Fairtrade Cotton Procurement Guide

12
How to procure Fair Trade
13
Engaging with suppliers
14
Pre-qualification questionnaire (PQQ)
16
Case study: City of Paris
18
Technical specification
19
Evaluation of bids
20
Award criteria and contract performance conditions
21
Case study: Sheffield University
22
Supplier list and further links
23 References

INTRODUCTION TO PUBLIC PROCUREMENT


AS A TOOL TO PROMOTE FAIR TRADE
The rapid growth of Fairtrade sales in recent years
has demonstrated the great power that consumers
hold to make a positive difference to the lives of
farmers and workers who produce the things we
consume every day.

As a significant 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 procurement
accounts for approximately 18% of Gross
Domestic Product (GDP)1 and for over
a decade procurement policies have
increasingly embraced sustainability
considerations.
Through their purchasing decisions, public
authorities can influence market demand
by choosing products with sustainability
characteristics. Such procurement practices
encourage bidders to adapt their offers and
source products that are produced following
environmental and social standards that
ensure sustainability.
Public sector bodies have increasingly
adopted sustainability criteria in recent years
in a range of areas. This guide focuses on
Fairtrade public procurement as a variety
of socially responsible public procurement
(or ethical procurement) which specifically
takes into account Fairtrade standards2
in the procurement processes. It also
references some other considerations of
ethical procurement in the case of cotton
that fall outside the practices of Fairtrade
certification.

Fair Trade public procurement


There are a wide range of Fairtrade products
available in the market but the uptake
of edible products like coffee, tea and
bananas by contracting authorities has
been more widespread than the uptake of
non-edible products like cotton.
Nevertheless, there is an untapped potential
market for cotton products. Throughout
Europe the public sector represents nearly
half of the workwear market, valued at
4 billion in 2008, which represents an
enormous opportunity for public money to
be spent in ways that drives positive change
for cotton farmers3.
Some contracting authorities are already
asking for Fairtrade cotton in their public
tenders, for instance for fairly traded cotton
in their work and staff wear as well as
promotional items like T-shirts or bags.
Police officers, firefighters and nurses wear
Fairtrade cotton uniforms. In some hospitals
the bed linen is also made of fairly traded
cotton. In France there is very good practice
in this area, with many examples of public
contracts integrating this commodity,
some examples of which are featured
in this guide4.

Fairtrade Cotton Procurement Guide

EUROPEAN UNION RULES AND FAIR TRADE


PUBLIC PROCUREMENT: AN EVOLUTION
This section provides an overview of Fair Trade
in the procurement context beginning with the
legal principles and current European Union
(EU) legislation, its evolution since 2004 and
the interpretation of the Court of Justice of the
European Union (CJEU).

1 The 2004 Public


Procurement Directives

2 The European Commission


guidance of 2011

The legal framework for public procurement


in the EU is provided by Directives
2004/17/EC and 2004/18/EC and applies
to contracts with a total value above the
thresholds defined in Directive 2004/18/EC.

Buying Social
The European Commission (EC) published
the Buying Social Guide in 2011, which
focuses on Socially Responsible Public
Procurement. This is described by the
Commission as procurement operations
that take into account [] employment
opportunities, decent work, compliance
with social and labour rights [] taking
account of sustainability criteria, including
ethical trade issues []5.

To a certain extent, Directive 2004/18/


EC addresses how contracting authorities
may contribute to the protection of the
environment, but it is much less clear that
social considerations may be introduced.
Further, the directive is not explicit about
sustainability considerations where social
and environmental concerns overlap.

With regards to Fair Trade, the advice


given at EU level in the Buying Social Guide
is to include it in the contract performance
conditions:
If a contracting authority wants to
buy ethical trade coee 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.

Fairtrade Cotton Procurement Guide

Drawing on case law, the Buying Social


Guide sets rules for drafting award criteria
and on awarding contracts. Social award
criteria 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).

THE 2012 NORTH HOLLAND RULING


BY THE CJEU

Implications for Fair Trade


public procurement under the
current Directive
In May 2010, The EC referred the
Netherlands to the European Court of
Justice (CJEU) for infringing Directive
2004/18/EC in a tender issued by the
province of North Holland for the supply
and management of automatic coffee
machines7.
This province clearly stated its intention
to source products of organic and Fair
Trade origin.
The Court examined the details of the
procurement as set out by the province
of North Holland, including:
the Max Havelaar (Fairtrade) and EKO
labels (Dutch organic standard and
labelling system) or equivalent in the
technical specifications concerning the
coffee and tea to be supplied
the sustainable purchasing and
socially responsible business measures
adopted 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 to
be supplied.
The court made a clear differentiation in its
treatment of the organic and the Fair Trade
characteristics of a product. While the CJEU
found that the underlying considerations
addressed by an eco-label for organic
agriculture were valid as a technical

specification, it considered that the criteria


underlying an ethical Fair Trade label could
not be valid as a technical specification8.
However, the court accepted that Fair Trade
criteria could be either award criteria or a
contract performance condition9.
Concerning the reference to labels, the
court considered that, by referring to a
label without listing its underlying criteria,
the North Holland province did not
comply with the provisions of the
(public procurement) Directive.
Link to the subject matter of
the contract
According to case law, the link to the
subject matter is a fundamental condition
that has to be satisfied by all award
criteria10. This point is often presented
as a barrier to the inclusion of social
and environmental considerations into
procurement processes.
The CJEU has interpreted this concept
several times. Previously in the Wienstrm11
judgement, it had confirmed that award
criteria could be considered to be linked
to the subject matter when related to
production processes rather than physical
characteristics (such as green electricity
in the case in question). It was not until the
North Holland case that the court had the
chance to decide on whether the same
reasoning applies to social aspects and
if the link to the subject matter test was
applicable to these aspects12.

Fairtrade Cotton Procurement Guide

IMPLICATIONS OF THE
NORTH HOLLAND RULING
ON THE TENDER PROCESS

Technical specifications
As mentioned earlier, the CJEU
considered that the reference to the Max
Havelaar label was not a valid technical
specification because its content applies
to the conditions under which the supplier
acquired them from the manufacturer13
and not to the characteristics of the
product itself.
Conversely, the EKO label was considered
characteristic of the product concerned, i.e.
coffee and therefore fell within the concept
of technical specification.
The implication of this ruling is that only
environmental characteristics of Fairtrade
products (such as the use of pesticides
and no Genetically Modified Organisms)
can be subject to technical specifications,
whereas the social and economic
characteristics that are inherent to
the Fair Trade concept cannot.
Verification
The court in the North Holland case
interpreted Article 23.6 of Directive
2004/18/EC in such a way as to ensure
there is an obligation for the contracting
authority to expressly mention the detailed
environmental (or social) characteristics it
intends to impose even where it refers to the
characteristics defined by an eco-label.

Fairtrade Cotton Procurement Guide

The province of North Holland had required


suppliers to show compliance with criteria
of sustainability of purchases and socially
responsible business and to state in what
way the economic operator contributed to
improving the sustainability of the coffee
market and to environmentally, socially and
economically responsible coffee production.
The Court considered that those
requirements purported to set a minimum
level of technical and professional ability for
the supplier (art.44.2). However, the Court
ruled that the specific requirements were
not in line with the factors permitted to be
considered under the provisions regarding
the technical and/or professional ability
of the economic operator (art.48) of the
Directive and were also in contradiction
with the obligation of transparency in art.2
of the Directive.
This means that contracting authorities
cannot ask for a bidder to have a Fair Trade
sourcing policy, but can only give preference
to the Fair Trade origin of a product in
question in the award criteria.

The awarding phase of the contract


As a result of the North Holland case
ruling it is clear that a contracting authority
can refer to considerations relating to
the three pillars (economic, social and
environmental) of sustainable development
in its award criteria.
The CJEU went on to state that award
criterion on Fair Trade14 concerned
characteristics falling within the scope
of Article 53(1) (a) of Directive 2004/18.15
The award criteria chosen by the province
of North Holland were validated by the
court insofar as they related to products
the supply of which constituted part of
the subject-matter of that contract16 and
it concluded that there is [...] nothing,
in principle, to preclude such a criterion
from referring to the fact that the product
concerned was of Fair Trade origin.17
Verification
The CJEU applied the same reasoning with
regards to the technical specifications i.e.
contracting authorities are required to spell
out the underlying criteria of a label at this
stage and to accept proof of compliance
with the criteria by all means.

FUTURE OUTLOOK IN THE REVISED PUBLIC


PROCUREMENT DIRECTIVES

Contract performance clauses


The court in the North Holland case ruled
that Fair Trade origin of products does not
correspond to the definition of the concept
of technical specification in the 2004/18
Directive18, but to that of conditions of
performance of contracts.19
The CJEU considered that the requirement
that the tea and coffee supplied must come
from small-scale producers in developing
countries, subject to trading conditions
favourable to them, falls within the contract
performance conditions.20
Consequently, if not included as award
criteria, the trade relationship between
the contracting authoritys supplier and
the other suppliers further down in the
supply chain can be taken into account
at this stage.21

The EC proposal for the revised Directive


on Public Procurement seeks to achieve
two complementary objectives: firstly, to
increase the efficiency of public spending
to ensure the best value for money and,
secondly, to allow procurers to make better
use of public procurement in support of
common societal goals.
It is expected that the future EU
procurement legislation will overcome the
existing dichotomy between social and
green procurement.
An important finding of the court in the
recent North Holland case was the breadth
of understanding of considerations of social
nature. Specifically the CJEU said that such
considerations may concern the persons
using or receiving the works, supplies or
services which are the object of the contract
but also other persons.22

This contrasts with the narrow view


highlighted in the recitals of Directive
2004/18 and will hopefully open the door for
the future inclusion of social criteria relating
to all the people involved in the supply
chain, including farmers.23
The future public EU procurement legislation
is expected to reinforce the possibility
to exclude a bidder at the selection
stage if the bidder has breached the ILO
Core Conventions. This provision will
allow contracting authorities to act on
infringements of environmental and social
laws outside the EU.

Fairtrade Cotton Procurement Guide

THE CASE FOR FAIRTRADE


CERTIFIED COTTON

Global context24
People farm cotton in more than 80 countries worldwide
by 50-100 million farmers on about 2.5% of the worlds
arable land, with the largest producers being China,
India, the USA and Pakistan. Yields vary from place
to place, but globally they are increasing. The largest
consumer 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 top
consumers, overall trading is on average less than onethird of world output and represents only 0.1% of total
world 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 exporter
since 1834, followed by India which has become the
second largest exporter in the past five 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, an
imbalance that the World Trade Organizations Doha
round of talks has not been able to address properly.
In these four West African countries cotton is grown
more cheaply than anywhere else because the climatic
conditions allow sustainable production, with low water
and pesticide use, and a smaller ecological footprint.27
Furthermore, African cotton has the advantage of an
intrinsic long lasting fibre quality and is harvested
by hand.28
With 80% of the population working in agriculture
and an average GDP per capita below $1,500, the C4
countries rely on cotton to guarantee basic livelihoods
and to build roads and other necessary infrastructures.
Almost 50 million families in developing countries
depend on cotton29, yet faced with a declining world
price over the past 60 years, and huge subsidies by
American, Chinese, and to a lesser extent European
governments, they struggle to compete in a deeply
unfair world market.30

Fairtrade Cotton Procurement Guide

The situation is similar for Indian cotton farmers,


despite the countrys robust economic growth in recent
years.31 Agriculture provides employment for the 56%
of the workforce and small farmers account for 53%
of the population. They are more weather-dependent
since they cannot afford irrigation systems and struggle
to buy expensive Genetically Modified Organisms
(GMO) seeds.32 Therefore cotton farmers in India are
dangerously dependent on market price and thousands
have committed suicide due to overwhelming debts
and bankruptcies.33
Environmental impact of cotton
Conventional cotton farming relies heavily on
agrochemicals with serious implications for human and
ecosystem health, while water and soil use is also a key
challenge to sustainable production.34 Cotton growing
uses 14.1% of all insecticides used globally, and 6% of
the pesticides sold in the world are used on only 2.5%
of the worlds cultivated land. In addition, the use of
genetically modified varieties may increase yields but
poses risks for human health and biodiversity.35
According to a study edited by the Aid by Trade
Foundation, cotton grown in Africa releases 1.9
kilograms of greenhouse gases per kilogram of
cotton grown, compared to 4.6 kilograms emitted
in conventional cotton farming. African cotton is also
grown only using rain-fed cultivation giving this type
of cotton a clear ecological advantage over
conventional cotton.36
Besides the economic and environmental challenges,
other cotton producing countries in the developing
world present serious cases of forced child labour in
their cotton fields. Uzbekistan, the sixth largest cotton
producer and main exporter to China and Bangladesh,
is the most striking example. The EU has repeatedly
called on the Uzbekistan government to put an end
to these systematic human rights violations and allow
an International Labour Organization (ILO) monitoring
mission into the country.37

Fairtrade Cotton Procurement Guide

FAIR TRADE COTTON CERTIFICATION


There are two internationally recognised Fair Trade
organisations that set standards and certify Fair Trade
Fairtrade International* and the World Fair Trade
Organization (WFTO)**.
Both are co-signatories of the Charter of Fair Trade principles38 * which certifies products
including cotton, and ** which certifies organisational compliance.

The Fairtrade model


Since the introduction of the first Fairtrade
Minimum Prices for cotton in 2004,
Fairtrade has demonstrated it can
substantially improve the lives of cotton
producing communities. By selling their
cotton on Fairtrade terms, cotton farmers
have the security that they will receive a
Minimum Price which aims to cover their
average costs of sustainable production.41
In addition to stable prices, producer
organisations are paid a Fairtrade Premium
these are additional funds which go
directly to the farming community who
have produced the Fairtrade product and
which they invest in social or economic
development projects. The premium is,
amongst other things, invested in farm
improvements to increase yield and quality
or processing facilities to increase income.
Producer organisations may also choose to
invest in social projects such as providing
clean water, health or education facilities.
Therefore, the premium is linked to the
farming community and can bring change
to the entire community by improving its
quality of life and enhancing sustainable
production systems.

Fairtrade Standards for cotton


Among other things Fairtrade Standards in
cotton ensure the following:
The Fairtrade Minimum Prices for
cotton differs depending on the
producing region. The Minimum Prices
always cover the costs of sustainable
production. If the market price is higher
than the Fairtrade Minimum Price, the
market price applies
Fairtrade Minimum Prices for organic
cotton are 20% higher than the price
for conventional Fairtrade cotton
In addition to the Fairtrade price, the
buyers must pay a Fairtrade Premium
of 0.05 cents cents per kilogram of
Fairtrade seed cotton. This is used by
the producer organisations for social
and economic investments such
as education and health services,
processing equipment and loans
to members
Environmental standards restrict the
use of agrochemicals and encourage
sustainability
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 at
fairtrade.org.uk/cotton

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Fairtrade Cotton Procurement Guide

The WFTO certification system


The World Fairtrade Organization (WFTO)
is a membership organisation that includes
Fair Trade Organisations (FTOs) across
the entire supply chain, from producers,
to importers, wholesalers and retailers.
Its certification system focuses on the
practices of its members rather than on
product certification: WFTOs Fair Trade
Standard is based on 10 principles that
FTOs must commit to follow in their
day-to-day work, which is then monitored
by the WFTO:
1 C
 reating Opportunities for
Economically Disadvantaged
Producers (economic and social
empowerment)
2 Transparency and Accountability
3 Fair Trading Practices (long-term,
solidarity, pre-financing, assistance)
4 Payment of a Fair Price
5 Ensuring no Child Labour and
Forced Labour
6 Commitment to Non-Discrimination,
Gender Equity and Freedom of
Association
7 Ensuring Good Working Conditions
8 Providing Capacity Building
9 Promoting Fair Trade
10 Respect for the Environment
More information is available at wfto.com

LONDON SCHOOL OF ECONOMICS


CASE STUDY

In January 2012 the London School of


Economics (LSE) Estates Division started
a new initiative to purchase staff uniforms
from Fairtrade suppliers. Since then Cotton
Roots, an ethical clothing provider, has
supplied around 270 individually branded
Fair Trade Certified cotton polo shirts
for the universitys portering, post room,
maintenance and cleaning teams.

As we pay the London Living Wage,


Fairtrade uniforms seemed an obvious
companion. Hopefully if other Higher
Education Institutions (HEIs) follow the
LSEs lead, then a critical mass can be
established and the unit costs driven down
so Fairtrade work-wear has the same
dominant position on university campuses
as Fairtrade coffee, he said.

Julian Robinson, LSE Director of Estates,


stressed this initiative aligned closely to
the Schools environmental sustainability
commitments and core values:

A significant amount of research was


needed to find an appropriate supplier
but the Estates Division has been happy
with the results and is encouraging other
divisions to switch their uniforms to
Fairtrade cotton.

Fairtrade Cotton Procurement Guide

11

HOW TO PROCURE FAIR TRADE:


A STEP-BY-STEP GUIDE
There are many ways public bodies conduct
procurement, and possibilities for Fair Trade are
different with each approach. The remainder of
this guide considers each stage of a procurement
process for higher value contracts where a formal
call to tender is issued.

Despite the public demand for more


sustainably sourced products and the
legislative framework existing to allow this,
the public sector still faces a number of
barriers to procuring Fair Trade products at
scale, particularly on cotton. This guide aims
to demonstrate that these barriers can and
have been overcome, and how public sector
bodies can procure Fair Trade products
at scale.
This guide aims to demonstrate that these
barriers can and have been overcome,
and how public sector bodies can procure
Fair Trade products at scale.
There is an understandable focus on
cost and a requirement for the public
sector to achieve value for money when
awarding contracts.
However, as the market for Fairtrade
products has grown in recent years and
economies of scale have been realised,
it is no longer true that Fairtrade options
are always more expensive particularly
at scale. In some cases there will still be a
slight differential it costs more to ensure
that producers receive a price that covers
their sustainable costs of production,
and can operate in a socially and
environmentally sustainable way.
Coupled with this, public bodies are also
permitted to consider the full life-cycle
cost of products that provide best value.
This doesnt necessarily mean the lowest
priced product, but the one that offers best
value over the time it is used. As well as
fulfilling social and environmental criteria,
Fairtrade products can be of a higher quality
than conventional products.

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Fairtrade Cotton Procurement Guide

UK Central government has issued


clear advice on the subject of ethical
procurement. The governments policy is
for public procurers to assess the relevance
of ILO labour issues to their individual
procurements and where these issues are
assessed as either relevant to the subject
matter of the contract or where they relate
to the performance of the contract, this
should be reflected as appropriate in the
procurement process.

The EU Procurement Directives are less


concerned with what is bought rather than
how it is procured45. Therefore, public
bodies must adhere to the principles
of the Treaty and the rules set out in the
EU Directive and UK Regulations:

Legislation has never actually forbidden


the procurement of ethically sourced
materials43 however the North Holland case
(CJEU clarified on 12 May 2012) explicitly
refers to the acceptability of relevant labels
providing the criteria are detailed:

EU Procurement Thresholds
The European Public Contracts Directive
describes certain financial thresholds
below which its provisions do not apply
and public procurement is subject to
national law. Currently the threshold for
supplies is 173,934 and for small lots
is 69,574. Though it is likely that many
cotton procurement exercises would
fall beneath this threshold, the basic
principles of EC law (equal treatment,
non-discrimination, transparency and the
fundamental freedoms) still apply.46

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

Value for money


Acting fairly, defined as:
Non-discrimination, equal treatment,
transparency and proportionality.

ENGAGING WITH SUPPLIERS


Supplier engagement and pre-qualification questionnaires
are an opportunity to promote your organisational
commitment to Fair Trade and sustainable sourcing to
potential suppliers, and make it clear Fair Trade options
are welcomed.

General supplier days where public bodies


engage with potential providers offer an
opportunity to promote the organisational
policies of procuring Fair Trade.
This sends a strong message to the market
about expectations from the start and
provides suppliers with plenty of notice to
prepare for your requirements.
This serves three purposes:
1 Helping to understand the market
place and the products available
By engaging in a timely and effective
way with suppliers, public bodies can
understand what the market can provide.
Public bodies should consider which social
issues or obligations are likely to be relevant
to what they need to buy.47 Ensure that
the results of the dialogue (i.e. the final
tender documents) do not confer an unfair
advantage to any of the suppliers that
participated. Letting the market know well
in advance about tenders, which includes
informing suppliers about ethical criteria,
is advisable.

will enable all bidders to discuss


practicalities 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 restrict
suppliers access to contracts by not being
open enough about what is being procured
and how tenders will be evaluated.
By hosting supplier events, public bodies
can demonstrate that they have given
suppliers particularly SMEs (small and
medium-sized enterprises) maximum
opportunity to participate in the tendering
exercise. The selection and evaluation
criteria are then set out in the PQQ and
ITT documents. Once these have been
published there is very little scope to
change them as clarification meetings,
which are held after bids have been
submitted, may take place too late to
alter the content of the bid.

2 Helping suppliers understand


the requirements
Contracting authorities should consult
stakeholders including customers and
interest groups to help them understand
what is needed. In the case of Fairtrade
cotton, this would be an opportunity
for those clothing suppliers that do not
currently purchase Fair Trade cotton to learn
who the suppliers are. Covering ethics in
supplier meetings (pre-procurement) and in
clarification meetings (during procurement)

Fairtrade Cotton Procurement Guide

13

PRE-QUALIFICATION
QUESTIONNAIRE (PQQ)

Most institutions make potential


suppliers complete a Supplier Appraisal
questionnaire to check legal and financial
credentials of potential suppliers, however
these questionnaires are increasingly being
used to check the environmental and
sustainability policy/performance credentials
of 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.

At this stage any institution that wishes


to address poverty as a serious issue in
procurement should add questions which
relate to poverty considerations. It is unlikely
that all suppliers will have taken poverty into
consideration. However, inclusion of such
issues at the qualification and appraisal
stages will send a powerful message from
the public sector that this is an increasingly
important issue. Encourage suppliers to
provide information on their awareness of
and responses to poverty and other social
issues. Example questions can include:

Does your organisation have a
sustainability or corporate social
responsibility (CSR) policy?
(if so, please include a copy)

Does your organisation have a
Fair Wages policy?
(if so, please include a copy)

Do you supply any products which
have Fairtrade or equivalent labels?
(if so, please specify).
These questions to suppliers will not be
capable of excluding suppliers from the
procurement process or influencing a
purchasing authoritys decision on contract
award, but they do present an important
opportunity to raise awareness.

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Fairtrade Cotton Procurement Guide

Fairtrade Cotton Procurement Guide

15

CITY OF PARIS:
STAFF WORKWEAR MADE WITH
FAIRTRADE CERTIFIED COTTON

Introduction
In 2008, Paris, operating within its
sustainable development policy, issued an
open tender for ethical clothing (including
Fair Trade cotton) for nearly 5,000 of its
technical agents.
The city first checked that the technical
performance of the clothing met its
demands. It verified that the supply chains
were reliable and that the guarantees for
Fairtrade cotton were transparent and
guaranteed that a fair price had been paid
to the producers. Once these requirements
were confirmed, the city awarded a public
contract for Fairtrade cotton for three years.
The contract was renewed in 2012 and
has been extended to 9,000 agents. This
contract amounts to more than 1 million.

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Fairtrade Cotton Procurement Guide

Verification
The technical specifications specified the
requirements in terms of social progress
and environmental and health protection
as follows:
1 The fabric dyes must not contravene
European Directives on health and
environmental protection
2 Limit environmental pollution using better
techniques and processes
3 List all the organisations in the
production line to ensure traceability
4 Implement all necessary procedures to
ensure compliance with the eight core
ILO Conventions regarding the principles
and fundamental rights to work, adopted
in 1998
5 Agree to be monitored on the above
points by an independent nongovernmental organisation approved
by the administration.

Annex IV of the tender documents required


evidence in the form of certificates from
the certifying body of Fair Trade cotton
production:
List the organisations in the production
line (cotton producers, cotton companies,
textile and manufacturing companies) as
well as the different certification reports,
approvals, and licences guaranteeing
Fair Trade standards and the fairness
of the production
Provide the licence from an accredited
independent body which proves
compliance with Fair Trade principles
Provide the percentage of the royalty
paid to the labelling system that aims
to improve the working conditions
of producers
Join the yearly audit certificate by
an approved international body.
This certificate 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 financed by
the Fair Trade premium.

Declaration on social and environmental


commitments:
The contracting authority can carry out
on-site checks of compliance of all social
and environmental criteria mentioned, at
every stage of the production process,
by an independent entity or a nongovernmental organisation.
Award/evaluation criteria (if applicable):
1 Technical value: 40%
Quality of manufacture of the final
product
Compliance of technical documentation
provided by the candidate with the
technical specifications required by the
contracting authority
Quality of finishing
2 Price (30%)
3 Delay of delivery (20%)
4 Environmental value (10%)

Fairtrade Cotton Procurement Guide

17

TECHNICAL SPECIFICATION
Technical specifications must only include criteria
which determine the characteristics of the finished
product not the conditions under which a supplier
purchases them and not simply require a specific
label, such as the FAIRTRADE Mark.

Technical specifications need to be related


to characteristics of the supply or service
being purchased and not to the general
capacities or qualities of the operator,
and must relate to the subject matter of
the contract. This means that rather than
requesting products with the FAIRTRADE
Mark in technical specifications, contracting
bodies should instead refer to the underlying
Fair Trade Criteria which are linked to the
subject matter of the product in question.
(see page 5-6).
Current interpretation of EU and UK
procurement guidelines suggest that
environmental criteria (included within
Fairtrade standards) are considered to
be product characteristics acceptable in
technical specifications, while social and
economic criteria are not and shouldnt be
included in a technical specification.
A certification standard, such as Fairtrade,
can only be used as a means of verification
and must be accompanied by the words
or equivalent In tender documents.
To demonstrate equivalence, suppliers
submitting tenders should be allowed to use
any form of evidence (such as a technical
dossier of the manufacturer or a test report
from a recognised body) that shows the
technical specification criteria are met.

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Fairtrade Cotton Procurement Guide

Subject matter
The subject matter of the procurement
exercise (the product which is being
bought) is the most important aspect in the
tendering process because it determines
how and where criteria can be allocated
with regards to fairly traded goods from
suppliers. The European Fair Trade
Association (EFTA) advocates using a Fair
Trade title to illustrate the subject matter
of the contract such as Fair Trade coffee
supply or Fair Trade Catering Service
and cites the example of the City of Madrid
publishing a call for tender entitled, Supply
of Fair Trade T-shirts to promote Madrid as
the site of the Olympic Games.49
However, this approach has not been tested
before the courts and carries with it a risk
of breaching regulation 9(16) of the Public
Contracts Regulations. Before doing this,
we would advise taking legal advice on the
most up-to-date position with respect to
subject matter of procurement exercises.

EVALUATION OF BIDS
TWO AWARD BASES
The Most Economically Advantageous Tender
(MEAT) award basis is the only option in
which public bodies can specify fairly traded
products. The lowest price award basis can
only be evaluated on price.

Choosing the procedure


The preparatory stage of any procurement
procedure is crucial. When choosing a
procedure, public bodies should consider
at what stage they will be able to apply
Fair Trade criteria or considerations.
For example:
In an open procedure any operator may
submit a tender. All operators submitting
tenders that meet the pass/fail conditions
public bodies have specified will be eligible
to have their tenders assessed. Public
bodies will have access to the maximum
choice of potential ethically-procured
solutions but they will not be able to select
which suppliers are invited to tender based
on their ethical credentials. An advantage
of this procedure is the shorter time taken
when conducting the tender.
In a restricted procedure public bodies
can assess technical criteria in a prior stage
and cut down the number of operators
invited to tender. A minimum number of
five must be invited to tender, provided
there are sufficient suitable candidates.
This staged procedure may help public
bodies to determine the appropriate level
of ethical qualifications to aim for in their
specifications, award criteria and contract
performance clauses. However, by limiting
the number of competitors, it is possible
that public bodies will miss out on offers
with high ethical performance.

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 offer
a number of stages where Fair Trade
considerations can be applied:
Subject matter and technical
specifications
Selection criteria (i.e. exclusion criteria,
financial capacity and technical capacity
criteria)
Award criteria
Contract performance clauses
However, the scope for applying Fair Trade
criteria is limited in the subject matter and
the technical specification stage and it is
not until the award criteria stage that Fair
Trade considerations can really begin to
influence the procurement process.

Fairtrade Cotton Procurement Guide

19

AWARD CRITERIA AND CONTRACT


PERFORMANCE CONDITIONS
It is possible to include Fair Trade criteria at
this stage of the tender, providing they refer
to the subject matter of the contract, and
any reference to the FAIRTRADE Mark is
accompanied by or equivalent.

Award Criteria Similar labels


Specifying Fairtrade products exclusively
is not legally allowed as it could restrict
competition with other labelling schemes
that meet the same underlying criteria,
or with uncertified items supported by
appropriate evidence of compliance.
However, Fairtrade certification can be
cited as an example of a scheme which
meets the underlying Fair Trade criteria.
The CJEU concluded from the North
Holland case that referring to the three
pillars of sustainability (economic, social and
environmental) is permitted at the award
criteria stage (see page 6).
It is essential that in the tender document,
contracting bodies set out clearly the
award 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 meeting
the standards set out as necessary in the
criteria. This list cannot be exhaustive so
contracting bodies must state, for example,
FAIRTRADE Mark or equivalent.
Economic operators can use any form of
evidence to demonstrate equivalence to the
underlying standards set out in the criteria.
It is the responsibility of the contracting
bodies to prove lack of equivalence.50

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Fairtrade Cotton Procurement Guide

Weighting criteria
The contract will be awarded to the
most economically advantageous offer
determined by the criteria established
by the contracting body in the contract
documents.
Public bodies should set the weighting of
criteria for awarding contracts, taking into
account the number of potential offers
and sustainable development goals, while
keeping in mind proportionality with regards
to more conventional criteria.
The weighting of social and environmental
criteria, may for example, account for
between 10-20%, with more conventional
criteria such as price, quality and technical
criteria accounting for the rest.
Conditions for Performance
of Contracts
Providing it is clear from the outset
(in the contract notice or specifications)
that ethical criteria will be a contract
performance requirement, it is possible
to require that suppliers provide ethically
sourced products or review their
implementation of codes of conduct as
part of contract performance conditions.
Asking for evidence of how suppliers ensure
compliance with local labour laws or ILO
conventions is also allowed for the same
reason. Other issues then arise: defining
standards; what evidence it is reasonable to
expect and whether evidence is requested
or required. In practice such matters form
part of a process of engagement with
suppliers, adapted to market conditions
for particular product categories.

Smaller lots
Suppliers with high ethical standards
may be able to provide competitively
priced products for some items without
being able to supply the whole range.
In these cases, there may be a possibility
of dividing contracts into separate, smaller
lots to enable smaller and/or more ethical
companies to bid for them. This might
increase the chances of being able to
select more ethically sourced products on
the grounds of cost and quality, within the
legal requirement to achieve best value.
It would also fit other objectives, including
to avoid discriminating against SMEs and
to encourage social and ethical enterprises.
Under UK Procurement Regulations, the
combined value of the smaller lots will need
to be aggregated and taken into account
when deciding whether the procurement
is above threshold.

SHEFFIELD UNIVERSITY

The University of Sheffield does not


currently hold records of the total amount of
garments it purchases, though the university
was the first in the UK to affiliate to the
Workers Rights Consortium (WRC).
The WRC is an independent monitoring
organisation that supports workers in
the garment industry in defending their
workplace rights. Rather than relying
on infrequent checks by an outsider
with a clipboard, workers are trained in
labour rights and can lodge a confidential
complaint if they believe that there is a
violation in their workplace. The WRC
then conducts an independent in-depth
investigation and makes the results public.

Since affiliating to the WRC in 2011,


the university has developed a code of
conduct for suppliers, which sets out what
the university requires from suppliers in
terms of labour rights for their workers.
This code is the minimum that the university
expects from its suppliers and if as may
be disclosed in WRC factory reports
university suppliers are breaking this code,
then the university engages with the supplier
in question to make sure that it meets
these minimum requirements.
After talking to students who expressed
that Fairtrade was an important issue, the
Students Union led the way on Fairtrade
cotton uniforms for staff by switching
uniforms to Fairtrade cotton through policy
changes and embedding this in operational
procedures. In 2012, 10% of all staff
uniforms were changed over to Fairtrade
cotton and this was due to increase to
around 50% of all uniforms at the time of
writing. This yearly expenditure of around
7,500 marks a significant cultural shift.

Fairtrade Cotton Procurement Guide

21

SUPPLIERS
It is recommended to make all existing suppliers aware of your
Fair Trade requirements when sourcing products in any type of
procurement. For a full list of all suppliers, wholesalers and contract
caterers offering Fairtrade, use the National Fairtrade Purchasing
Guide available at fairtrade.org.uk/business.

Fairtrade cotton
workwear suppliers:

Further links:

Alvastone
alvastone.com

European observatory on Fair


Trade Public Procurement
fairprocurement.info

Cotton Roots
cottonroots.co.uk

Fairtrade Foundation:
fairtrade.org.uk

David Luke
davidluke.com

People and Planet:


peopleandplanet.org.uk

Epona
Eponaclothing.com
Kool Skools
koolskools.co.uk
Tarameen
tarameen.com

For larger contracts, there may


be suppliers based in other
European countries who can
meet your demands. Contact
commercial@fairtrade.org.uk

22

Fairtrade Cotton Procurement Guide

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

1

www.fairtrade.net/standards.html

21

 The Link to the subject-matter of the contract


in green and social procurement Marc Martens
and Stanislas de Margerie, EPPPL

37

http://www.europarl.europa.eu/sides/getDoc.
do?type=TA&language=EN&reference=P7TA-2011-586

22

 ara 85 of the judgement


P
(see footnote) 47

38

23

 The Link to the subject-matter of the contract


in green and social procurement Marc Martens
and Stanislas de Margerie, EPPPL

World Fair Trade Organisation and Fairtrade


Labelling Organisation A charter of Fair Trade
principles http://fairtrade-advocacy.org/
ftao-publications/other-publications-on-fairtrade/74-charter-of-fair-trade-principles

2

 Mode demploi de lachat public cologique


et socialement responsable achACT and
coconso, p.9, November 2012

24

 air Trade public procurement in France, EPPPL


F
special issue on sustainable procurement,
Lexxion, 2013 vol 8 number 1

EUROPEAN COMMISSION
Buying Social: A Guide to Taking account of
Social Considerations in Public Procurement,
2011

Ibid

25

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

26

 ali, Burkina Faso, Benin and Chad. These


M
countries form a specific coalition involved in
cotton negotiations at WTO ( http://www.wto.
org/english/tratop_e/agric_e/negoti_groups_e.
htm).

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


Netherlands, judgement of May 2012

Client Earths briefing Distinguishing technical


specifications and award criteria on the basis of
role, not content; May 2012

27

Ibid
Client Earths briefing The link to the subject
matter a question of importance for
sustainable public procurement; January 2013

 ource: Valerie Nelson & Sally Smith Fairtrade


S
cotton: assessing impact in Mali, Senegal,
Cameroon and India http://www.fairtrade.
net/fileadmin/user_upload/content/2009/
resources/2011_Fairtrade_Cotton_Assessing_
Impact_in_Mali__Senegal__Cameroon_and_
India__summary.pdf

10

28

http://www.cotton-made-in-africa.com/en/
cmia-news/news/detail/article/cotton-madein-africa-conserves-water-and-reducesgreenhouse-gas-emissions-1.html
http://www.befair.be/sites/default/files/all-files/
brochure/En%20version_0.pdf

11

Case C-448/01 of 4 December 2003

29

http://www.solidaridadnetwork.org/cotton

12

Client Earths briefing

30

 airtrade Foundation, Great Cotton StitchF


Up http://www.fairtrade.org.uk/includes/
documents/cm_docs/2010/f/2_ft_cotton_
policy_report_2010_loresv2.pdf

Client Earths briefing Distinguishing technical


specifications and award criteria on the basis of
role, not content; May 2012

13

Paras 73 and 89 of the judgement (see


footnote) 47

31

14

15

 ara 89 of the judgement


P
(see footnote) 47

16

 ara 90 of the judgement


P
(see footnote) 47

17

 ara 91 of the judgement


P
(see footnote) 47

18

 ara 74 of the judgement


P
(see footnote) 47

19

 ara 75 of the judgement


P
(see footnote) 47

20

 ara 76 of the judgement


P
(see footnote) 47

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

32

http://www.igidr.ac.in/pdf/publication/WP2012-014.pdf, http://farmersforum.in/policy/
study-on-socio-economic-impact-assessmentof-bt-cotton-in-india/

33

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

34

 ource: Valerie Nelson & Sally Smith Fairtrade


S
cotton: assessing impact in Mali, Senegal,
Cameroon and India http://www.fairtrade.
net/fileadmin/user_upload/content/2009/
resources/2011_Fairtrade_Cotton_Assessing_
Impact_in_Mali__Senegal__Cameroon_and_
India__summary.pdf

35

36

39

Resolution of the European Parliament of 6


July 2006 on Fair Trade and development
(2005/2245(INI))

40

Communication from the Commission to the


Council, the European Parliament and the
European Economic and Social Committee
Contributing to sustainable development: the
role of Fair Trade and non-governmental traderelated sustainability assurance schemes
COM (2009) 215, 5 May 2009

41

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

42

Ibid

43

EFTA, Fair Procura: Making Public Authorities


and Institutional Buyers Local Actors of
Sustainable Development, 2005, p16

44

http://www.fairtrade-advocacy.org/ftaopublications/press-releases/390-europeancourt-confirms-possibility-to-demand-fair-tradecriteria-in-public-procurement

45

EFTA, p19

46

47

OGC Buy and make a difference, 2008


EAUC, Poverty Aware Procurement: Guidance
for changing the procurement process, 2010,
p13

 FTA, p20
E
Ibid, p19
50
Ibid, p20
48
49

http://www.befair.be/sites/default/files/all-files/
brochure/En%20version_0.pdf
http://www.cotton-made-in-africa.com/en/
cmia-news/news/detail/article/cotton-madein-africa-conserves-water-and-reducesgreenhouse-gas-emissions-1.html

Fairtrade Cotton Procurement Guide

23

This document has been produced with the financial assistance


of the European Union. The contents of this document are the
sole responsibility of FTAO, Fairtrade Foundation and People
and Planet and can under no circumstances be regarded as
reflecting the position of the European Union.
The Fairtrade Foundation is very grateful to Catherine Wolfenden
of Osborne Clark, Christine Storry of Bristol City Council, Elba
Estrada from FTAO, and Ruth Millard for their contribution to
the production of this guide.

www.fairtrade.org.uk

Fairtrade Foundation, 3rd Floor,


Ibex House, 42-47 Minories,
London EC3N 1DY
Tel: +44 (0) 20 7405 5942 Email: mail@fairtrade.org.uk
Registered Charity No. 1043886
A company limited by guarantee,
registered in England and Wales No. 2733136