Background

With its 133,000 inhabitants, the City of Stavanger is the fourth largest city in Norway and the country’s densest populated municipality. The City adopted a long-term development strategy to tackle environmental issues, diversity, public health and societal security. It also has a long tradition of citizens’ involvement. Their procurement approach has a clear focus on innovation and social responsibility. Considering the medical sector’s potential for fostering sustainability, in 2021, the City of Stavanger teamed up with three other Norwegian municipalities (Sandnes, Sola, and Randaberg) to organise a joint call for tenders for a framework agreement for the supply of medical consumables.

Procurement objectives

This medical consumables tender was intended to serve a variety of institutions such as nursing homes, health and welfare centers, emergency rooms, housing associations, care homes, children’s care homes, home nursing and others. Stavanger acted as the lead procurer, with each City signing separate contracts with the winning firm.

This tender aimed to address social conditions in the sector, as medical consumables are often produced in countries with high risk of labour and human rights violations.

Due to the COVID-19 pandemic, the procurement was postponed. The Cities conducted their own risk analysis to determine which products to target in the award criteria.

During the planning stage, Stavanger analysed their 2021 procurement plans to identify transport-intensive activities and address the environmental impact of deliveries. The tender preparation started in May 2021 and the notice was published on the Tenders Electronic Daily portal in August 2021. The contract was also advertised through a PIN (Prior Information Notice) to get feedback from companies in advance. The contracting authorities held a marked dialogue with relevant stakeholders before publishing the tender on TED.

Criteria used

The tender documents establish basic requirements as selection criteria, and more ambitious levels of due diligence under the award criteria. This approach guarantees a minimum ethical standard and rewards the most advanced tenderers with higher scores.

Subject matter of the contract:

Supply of medical consumables: • Infection control equipment (i.e. disinfectant, nutrition, first aid, hygiene and personal care, incontinence products, cannulas/syringes, catheters/ urine bags/uridomes); • Consumables for stoma (i.e. wound treatment, various medical consumables); • Other related product groups, including medical gloves and surgical face masks.

Selection criteria:

Green criterion

Tenderers must have an environmental management system in place (ISO 14001, EMAS or equivalent, such as the Norwegian “Eco-Lighthouse” certification scheme).

Social responsibility criteria

Overall risk analysis of the supply chain The contracting authorities sought evidence of risk assessment systems being in place. Tenderers had to demonstrate that they had at least a “basic” ethical approach to trace and assess risks along the supply chain (minimum level of due diligence). An overall risk assessment of the supply chain must have been carried out within three months of the entry into force of the contract. The overall risk analysis must preferably been based on several sources.

But as a minimum, the supplier must have used the following recognised global sources to determine risk for workers’ and human rights abuses: • The U.S. Department of Labor’s List of Goods Produced by Child Labor or Forced Labor; • The Internationa Trade Union Confederation’s Annual Survey of violations of trade union rights; and • The U.S. State Department’s Annual Country reports on human rights practices (section 7). Based on the risk analysis, the tenderers must be able to minimise any risk with the relevant product/manufacturer throughout the contract execution period. The supplier’s overall goal must be to improve labour conditions where they appear to be at risk.

Technical specifications:

Green criteria

• Mandatory use of environmentallyfriendly products. The tenderers shallprovide details of the range and product selection to be provided (for instance by referring to products with an environmental label), so that the contracting authority can assess whether the environmental considerations were taken into account.

• If the goods have packaging, the supplier must document either membership in a return scheme (Grønt Punkt Norge AS or equivalent) or their own scheme for final processing of the packaging. The supplier shall maintain the return scheme throughout the agreement period.

Award criteria:

The contract was awarded on the basis of price (40% weight) plus other sustainability factors: environmental criteria (30% weight), social responsibility criteria (“ethical trade”) (30%).

Green criteria

Tenderer’s ability to use zero-emission or fossil-free vehicles:

• Using zero-emission or fossil-free vehicles for the main delivery (weighted 90%);

• Zero-emission or fossil-free vehicles for urgent deliveries (weighted 10%). The contracting authority’s evaluation considered the following fuel technologies: zero-emission vehicles (electric battery or hydrogen), biogas vehicles (compressed biogas (CBG) or liquefied biogas (LBG)), or vehicles that use other sustainable biofuels. Each vehicle was given points as ilustrated in Table 1.

Social responsibility criteria

The award criteria were based on the OECD’s Due Diligence Guidance For Responsible Business Conduct and consist of two sub-criteria, bearing the same weight: Ethical trade in the supplier’s own company This criterion was based on the OECD’s first recommended step (“Embed responsible business conduct into policy GPP Good Practice Issue 111 March 2022 and management systems”). The supplier must describe their Code of Conduct; systems for follow-up; termination of contracts that are non-compliant with the Code of Conduct; training of staff in ethical trade/sustainability; etc.

Traceability in the supply chain. The second criterion was based on the OECD’s second recommended step (“identify and assess adverse impacts in operations, supply chains and business relationships”), and focuses on traceability. The criterion refers to all the products included in the subject matter of the contract. However, the contracting authority stressed the importance of tracing medical gloves and bandages, highlighting risks connected with raw materials such as natural rubber, polyurethane, nitrile, and vinyl. They emphasised that gloves and bandages are considered high risk for human rights violations throughout the whole life cycle of these products.

Contract execution clauses:

Social responsibility criteria

The contract performance clauses were based on the UN’s Guiding Principles For Business And Human Rights, Business And Human Rights, where due diligence assessments along the supply chain are used as a method. The due diligence process aims to identify, prevent, mitigate and take account of how suppliers address actual and potential adverse impacts in their own operations, along their supply chain (including subcontractors), and with other business relationships. This is also recommended in the OECD’s Due Diligence Guidelines For Responsible Business Conduct.

The contract execution clauses include, among other things, compliance with the following:

• The ILO’s eight core conventions: Forced Labour Convention (No. 105), Minimum Age Convention (No.138), Discrimination (Employment and Occupation) Convention (No. 29), Freedom of Association and Protection of the Right to Organise (No. 87), Right to Organise and Collective Bargaining Convention (No. 98), Equal Remuneration Convention (No. 100), Discrimination (Employment and Occupation) Convention (No. 111), Worst Forms of Child Labour Convention (No. 182). Where conventions No. 87 and No. 98 are limited by national law, the employer shall facilitate alternative mechanisms to ensure the proper standard

• The UN Convention on the Rights of the Child, article 32

• Working environment legislations in production countries. Particularly relevant matters include, 1) wage and working time regulations, 2) health, environment and safety, 3) regular employment conditions, including employment contracts, as well as 4) statutory insurance and social schemes.

*Table 1. Environmental award criteria: maximum point assigned.

Results

Three companies submitted an offer. The framework agreement was awarded in December 2021. It came into effect in the same month and will end in December 2023, with a possibility of renewal for up to a maximum of four years. The total value of the contract is 160, 000,000 NOK (approximately 16, 300,000 EUR). The successful tenderer demonstrated an impressive due diligence approach, commensurate to the risks. The winner also comprehensively documented the traceability mechanism along its supply chain (from raw materials to assembly). Furthermore, the successful tenderer’s green solution was to use two electric trucks (medium heavy-duty vehicles) which will be charged on the supplier’s own solar PVs. To supplement the electric trucks the supplier will use several other zero-emission vehicles for the delivery.

Since the outset of the COVID19 crisis, Stavanger has been buying more infection control products. As such, organising the tender pricing form for this procurement, and predicting actual needs for 2022 and upcoming years was complex. After the framework agreement started, Stavanger conducted a preliminary cost analysis that showed slight cost reductions compared to previous similar contracts. Their analysis seems to indicate that including ambitious sustainability criteria has not led to increased costs or price. However, more data is needed to confirm this, as the framework agreement only recently started.

Environmental impacts

According to the EU GPP criteria for road transport and the technical background report, the key environmental impacts are associated with the use-phase of vehicles, especially GHG emissions, air pollutants and noise. The production of energy carriers (liquid or gaseous fuels or electricity), vehicle production, and EV battery manufacturing also have a significant environmental impact.

Social impacts

Stavanger’s social risk assessment was based, among other things, on The U.S. Department of Labor’s List of Goods Produced by Child Labor or Forced Labor, as well as on the Norwegian Directorate for Administration and Financial Management (DFØ)’s High Risk List. The latter contains information on products with a “high procurement risk”, which entails a systematic and documented high risk of human rights abuse along the supply chain, from raw material extraction to component production until final assembling.

According to a report by Swedwatch, disposable medical gloves are classified as presenting a high-risk of violations of workers’ and human rights with regard to assembly/manufacturing, components (plastic materials and synthetic rubber) and raw materials (natural rubber, oil). Dressings and plasters are high-risk products with regard to raw materials (oil, cotton, cellulose) and medium-high risk products with regard to assembly/ manufacturing and components (plastic materials and synthetic rubber). The production of disposable medical gloves (mostly in Asia) is generally characterised by dreadful labour conditions and elevated risks related to human rights and corruption. he supply chains for dressings, plasters and compresses are not very transparent. The information in the table below (Swedwatch 2017) was included in the tender documents and contains a summary of the most relevant risks associated with medical disposable gloves, and with dressings and plasters.

The European Commission is currently preparing a new legislative instrument to ban products made by forced labour from entering the EU market. More information is available in the Communication on Decent Work Worldwide of 23 February 2022. On the same day, the European Commission also adopted a proposal for a Directive on corporate sustainability due diligence, which focus on fostering sustainable and responsible corporate conduct along global value chains.

*Table 2. Relevant social impacts

Lessons learned

The medical consumable market was mature enough to meet both the social and the green criteria included in the tender documents. The City of Stavanger has been using ethical contract performance clauses as well as social selection criteria for several years now. This extensive experience helped them to pre-assess whether the market would be ready to meet their demand.

Stavanger has good experience with market dialogue and strongly recommends holding a market dialogue ahead of the tender. Not only does this exchange make the economic operators aware of what the contracting authority expects from them, the input received from suppliers is extremely useful to better define the level of ambition. For this specific tender the contracting authorities did not organise an extensive market dialogue, but published a Prior Information Notice (PIN) to get feedback from the market and organised a smaller market consultation.

The contracting authorities strongly believe that traceability is key to identifying and assessing adverse impact on human rights along the supply chain.

Thanks to the good results obtained for the green criteria on electric vehicles (heavy duty and light commercial vehicles), Stavanger will consider including the use of electric vehicles as a minimum requirement for the technical specification in upcoming tenders.

More information

For related information, please see the EU GPP criteria for Road Transport and the Technical Background Report.

The tender documents are available online.