In 2020, the Czech Republic adopted its Sustainable Procurement Strategy.
In the Czech Republic, the common practice of awarding contracts for cleaning services solely based on the lowest price has led to a decrease in the quality of the services offered. Some contracting authorities, such as the Czech Television, the Ministry of Labour and Social Affairs, the South-Moravian Region and Charles University, strived to find a solution to ensure good quality cleaning services for an adequate price.
Charles University was founded in 1348. Offering education to almost 50.000 students (2020 data) in 17 faculties, it is also the biggest university in the Czech Republic, with a budget of over 10 billion CZK (about 410 million EUR), and a large contracting authority. It is a member of the Platform for Responsible Public Procurement and in 2021 was granted the Czech Responsible Procurement Award.
While awarding contracts, Charles University pays attention to the respect of decent working conditions in supply chains, the implementation of socially responsible procurement, and environmentally friendly solutions.
The object of this tender was the provision of cleaning services of several buildings belonging to the University in the very centre of Prague.
The inclusion of social in the tender was not only due the Czech Sustainable Procurement Strategy, but also a result of considering the material quality of the subject matter of the contract at hand. Poor working conditions are likely to generate workers’ dissatisfaction, which often results in poor performance, decreased quality of the service provided and dissatisfaction of the contracting authority.
With this tender, Charles University aimed at ensuring decent working conditions for the workers and better quality of the cleaning service. It reserved the right to terminate the contract in case of serious breaches and award the service for the remaining time to the second ranked.
The tender documents included social criteria in exclusion grounds and award criteria. Contracts were awarded to the tenderers with the most economically advantageous tender, determined on the basis of the best price-quality ratio which was weighted 30/70.
Tender documents stated that bids under CZK 3,5 million (about EUR 143,500) would be deemed abnormally low and not in compliance with the minimum legal standards for wages. If the contracting authority determined that the selected supplier was subject to exclusion grounds pursuant to Section 48(8) or Section 48(9) of the Public Procurement Act, such supplier would have to be excluded from the procurement procedure.
The tender documents included the following award criterion: guaranteed minimum gross hourly wage of the cleaning staff performing the service, both employees of the supplier and subcontractors (weight of the criterion rate: 40%).
The guaranteed minimum gross hourly wage had to be at least the lowest level of the guaranteed wage set out in a specified minimum wage regulation (Government Regulation 567/2006 Coll.). Bidders were invited to propose in their offers the hourly wage for the workers. The contracting authority evaluated the amount of the guaranteed gross wage from a minimum amount of CZK 100 (approximately EUR 4) per hour, which would have received 0 points, to a maximum amount of CZK 150 (approximately EUR 6), which would have received a maximum of 100 points . For every 0,50 cents above the minimum wage level, the bidder would have received 1 point. Offers proposing more than CZK 150 would have received anyway a maximum of 100 points.
Seven bids were submitted in the respective tendering procedure. None of the bidders had to be excluded from the tender, nor were they called to explain the abnormally low bid-price. Most of bids obtained extra points for committing to pay wages over the minimum limit set by the contracting authority. Only one bid was very close to this minimum and did not obtain any point for this criterion. One of the bidders even offered wage on the level 180,00 CZK per hour.
The contract was awarded to a bidder, who committed to offer its workers CZK 150 per hour. This bidder was also the one offering the lowest bid-price.
The duration of the contract is 4 years, with a total estimated value of CZK 20 million (CZK 5 million per year).
Focusing on decent working conditions for the workers sets a solid basis for securing good quality of the service and at satisfaction of the workers, of the provider and of the contracting authority.
Using the reservation for change of the provider brings higher level of security to the contracting authority and allows them to have higher level of control over risks, which may occur during the contract performance.
- Although the contract covers three separate areas of the University, no division into lots was used. There is a question, whether using this measure could have motivated smaller bidders (small or medium-sized enterprises) to participate in this tender.
- Awarding extra points for a better remuneration of the workers engaged in the execution of the contract does not necessarily lead to an increase in price of the bids/contract. The successful tenderer offered the lowest bid-price.
Contact person: Zdeněk Cvejn, Head of Procurement, Charles University – Rector’s Office.
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Tender documents available online.