Public procurement is one of the areas where it is possible to achieve progress in making transnational corporations accountable, particularly with a view to making public policies consistent and coherent . Cities thus can play a fundamental role. In Europe, since the last revision of the EU directives on public procurement, there have been numerous examples of socially and environmentally responsible public procurement policies and practices , such as the 2018 framework agreement for energy supply developed by the Madrid council , or the regulations of the Molenbeek-Saint-Jean council in Belgium. The latter stipulates that international human rights law, humanitarian law and the right of peoples to self-determination have an erga omnes character (in other words, they apply to all actors without exception). Therefore, if a business contributes to activities that violate these rights, it is guilty of serious professional misconduct and can be excluded from public procurement .
The city of Barcelona can be considered as a pioneer in Europe in recognising the extra-territorial responsibility of its urban social metabolism, in particular to the extent that it affects the countries of the Global South. Since 2016, in addition to introducing a significant degree of transparency in its public spending, the city has adopted innovative regulations in this area, in the form of municipal decrees as well as guidelines and instructions applicable to the various sectors of procurement. However, there is still considerable room for improvement in monitoring public procurement contracts and their impact on human rights and the environment.
In 2017, the Municipal Group (including the city council and other municipal entities) recorded public procurement expenses of more than €1.265bn. Looking at the profile of suppliers, based on data from the city council (without the other municipal entities) for 2017, out of a total of 5,381 suppliers, 87.79% were headquartered in the province of Barcelona. 68.96% were self-employed, micro and small entrepreneurs, and 17.28% were non-profit organisations .
However if one looks at the amounts at stake, it becomes apparent that public procurement contracts mostly benefit a handful of large companies:
- Among these more than 5,000 suppliers, the five who received the most money represent 49% of all council procurement spending .
- Just one corporation, FCC, received 20% of the total procurement expenditure.
- Four of these five corporations are multinationals or subsidiaries of multinational groups: FCC, Ferrovial, ACS and ENEL (Endesa).
An examination of the suppliers who were awarded 22,564 contracts by the entire Municipal group in 2017, for more than €1.068bn, reveals that 152 are multinationals or belong to multinational groups which have been accused by civil society of violations of human rights and/or environmental destruction. In volume, they represent 20% of the contracts awarded (more than €211m) . These companies belong to 81 multinational groups.
The entity that has allocated most resources to corporations linked to human rights violations or the destruction of ecosystems in the Global South is the city council of Barcelona. For some municipal entities, such as Mercabarna (Barcelona wholesale and food markets), more than half of the procurement contracts awarded have benefited this type of corporation.
If a company that benefits from public procurement is part of a group whose practices are not compatible with human rights, labor rights or respect for the environment – principles which the city council considers as pillars of its procurement policy –, there is both a policy inconsistency and an opportunity to advance corporate accountability. Although public procurement law does not allow the corporate group to which a company belongs to be directly targeted, local authorities have explored this path with a view to achieving socially and environmentally responsible public procurement.
All measures aiming to bring public procurement into line with municipal objectives and values can have a significant impact, by affecting commercial conditions and the behaviour of companies, of their subcontractors and of their suppliers in supply chains. For this reason, and in order to progress in the inclusion of human rights and environmental criteria in public procurement, we recommend the fol- lowing three steps:
1. The creation of a complementary research, support and training organisation, responsible for developing guidelines for the introduction of social, environmental and innovation clauses in public procurement, including criteria assessing extraterritoriality and human rights.
2. The council must develop adequate tools for monitoring contracts, with mechanisms which make it possible to assess supply chains, and which could be integrated as solvency criteria in the contracting process.
3. We recommend that companies be required to increase transparency to allow for an improved control of contracts, including information on the corporate group of which they are part. Misleading information that may be identified in that provided by companies could be qualified as a serious fraud and, consequently, trigger a sanction, or even the termination of the contract and a ban on further contracting.